Payroll Chapter 5 – Flashcards

Unemployment taxes (FUTA and SUTA) do not have to be paid by an employer who has only part-time employees.

The Social Security Act ordered every state to set up an unemployment compensation program.

Partnerships do not have to pay unemployment taxes on the wages of their employees.

Once a company attains the status of employer for FUTA purposes, that status continues for four calendar years.

A traveling salesperson who solicits and transmits to the principal orders for merchandise for resale is considered an employee under FUTA.

Services performed by a child under the age of 21 for a parent-employer are excluded from FUTA coverage.

Services performed in the employ of a religious organization that is exempt from federal income tax are also exempt from FUTA coverage.

Directors of corporations who only attend and participate in board of directors meetings are not covered as employees under FUTA.

Insurance agents paid solely on a commission basis are not considered employees under FUTA.

If an employee works in more than one state, the employer must pay a seperate SUTA tax to each of those states in which the employee earns wages.

For FUTA purposes, the cash value of renumeration paid in any medium other than cash is not considered taxable wages.

Advance payments for work done in the future are not taxable wages for FUTA purposes.

FUTA and SUTA coverages extend to U.S. citizens working abroad for American employers.

In the case of a part-time employee, the employer pays a FUTA tax on only the first $14,000 of earnings (double the regular limit).

Christmas gifts, excluding noncash gifts of nominal value, are taxable wages for unemployment purposes.

Retirement pay is taxable wages for FUTA purposes.

Educational assistance payments made to workers to improve skills required of their jobs are nontaxable for unemployment purposes.

If an employee has more than one employer during the year, the taxable wage base applies separately to each of those employers, unless one employer has transfered the business to the second.

Every employer is entitlesd to a 5.4 percent credit against the gross FUTA tax of 6 percent.

For FUTA purposes, an employer must pay a higher FUTA tax rate on executives than on nonsupervisory personnel.

In order to obtain the manimum credit allowed against the federal unemployment tax, the employer must have paid its SUTA contributions by the due date of Form 940.(January 31)

Even if a state repays its Title XII advances, all employers in that state are subject to a credit reduction in the year of the advance.

If an employer is subject to a credit reduction because of Title XII advances, the penalty for the entire year will be paid only with the deposit for the last quarter of the year.

There is a uniform rate of unemployment benefits payable by all states.

If an employer pays unemployment taxes in two states, it will have the same SUTA tax rate in both states

Currently, none of the states imposes an unemployment tax on employees.

In some states, employers may obtain reduced unemployment compensation rates by making voluntary contributions to the fund.

"Dumping" is legal in all but a few states.

On Form 940, even if the total FUTA tax is more than $500, there is no listing of quarterly federal unemployment tax liabilites.

Form 940 must be efiled or mailed to the IRS by January 15.

The mailing of Form 940 is considered timely if it is postmarked on or before the due date.

If an employer's quarterly tax liability is $525, it must be paid on or before the last day of the month following the end of the quarter.

FUTA tax deposits cannot be paid electronically.

Unlike Form 941, there is no penality for the late filing of Form 940.

In most states, the contribution reports and the wage information reports are filed quarterly.