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On January 31, AC Baking Company prepared its Employer’s Annual Federal Unemployment Tax Return, Form 940. During the previous year, the business paid total wages of $462,150 to its 14 employees. Of this amount, $98,000 was subject to FUTA tax.

Using a rate of 0.6 percent, determine the FUTA tax owed and the balance due on January 31, 2019, when Form 940 was filed. A deposit of $300 was made during the year.

Answer :

The FUTA tax owed by AC Baking Company can be calculated using the following steps Determine the taxable wages: The total wages paid by the company to its employees during the previous year was $462,150. However, only $98,000 of this amount was subject to FUTA tax.

Calculate the FUTA tax amount: The FUTA tax rate is 0.6 percent. To determine the FUTA tax owed, multiply the taxable wages by the tax rate. Determine the balance due: The balance due is the total FUTA tax owed minus any deposits made during the year. In this case, the company made a deposit of $300. Therefore, the balance due is $588 - $300 = $288.

So, the FUTA tax owed by AC Baking Company is $588 and the balance due on January 31, 2019, when Form 940 was filed, is $288. Please note that these calculations are based on the given information and assumptions. It's important to double-check the tax regulations and requirements specific to your jurisdiction for accurate and up-to-date information.

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