Answer:
$9,800
Explanation:
Given:
Cohle's taxable payroll = $350,000
FUTA tax rate = 6.2%
State contribution rate = 5.4%
Since the company is subject to state unemployment insurance tax (state contribution), It can avail FUTA credit of 5.4%.
So, Cohle's FUTA tax rate become 6.2% - 5.4% = 0.8%
FUTA tax = 0.008 × 350,000 = $2,800
State rate is reduced to 2%
State rate = 0.02 × 350,000 = 7,000
Total tax payable = 7,000 + 2,800
= $9,800
