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Note: For this textbook edition the rate 0.6% was used for the FUTA tax rate for employers. Example 5-4 Sutcliffe Company had taxable wages totaling $87,500 in 2017. During the year, the company paid some of its state contributions after the January 31, 2018, cutoff. The penalty for tardiness is shown in the following calculation of the firm's net FUTA tax for 2017: Amount of gross FUTA tax ($87,500 x 6.096) State taxable wages Sutcliffe's SUTA tax rate Sutcliffe's SUTA tax Breakdown of Sutcliffe's SUTA tax payments: Before 1/31/18-$3,000 x 100% credit After 1/31/18-$1,725 x 90% credit Amount of net FUTA tax $5,250.00 $87,500 x 5.4% $4,725 (3,000.00) (1,552.50) $697.50 If the company had made timely payments of its state contributions, the amount of its net FUTA tax would have been reduced to $525, for a savings of $172.50, as follows: $5,250.00 Amount of gross FUTA tax ($87,500 6.0%) Total taxable wages Credit against tax $87,500 x 5.4% Note: For this textbook edition the rate 0.6% was used for the FUTA tax rate for employers. Example 5-4 Sutcliffe Company had taxable wages totaling $87,500 in 2017. During the year, the company paid some of its state contributions after the January 31, 2018, cutoff. The penalty for tardiness is shown in the following calculation of the firm's net FUTA tax for 2017: Amount of gross FUTA tax ($87,500 x 6.096) State taxable wages Sutcliffe's SUTA tax rate Sutcliffe's SUTA tax Breakdown of Sutcliffe's SUTA tax payments: Before 1/31/18-$3,000 x 100% credit After 1/31/18-$1,725 x 90% credit Amount of net FUTA tax $5,250.00 $87,500 x 5.4% $4,725 (3,000.00) (1,552.50) $697.50 If the company had made timely payments of its state contributions, the amount of its net FUTA tax would have been reduced to $525, for a savings of $172.50, as follows: $5,250.00 Amount of gross FUTA tax ($87,500 6.0%) Total taxable wages Credit against tax $87,500 x 5.4%

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