ACCT 237 | Chapter 5

A separation report may be required when a worker becomes separated from employment. It provides which of the following information?

their wage and employment record reason for leaving

The purpose of _____ advances is to provide funds to states that cannot pay their unemployment compensation benefits.

Title XII

The services performed by a student for the school where he or she is attending classes are _____ from FUTA coverage.

exempted

The employer is required to deposit FUTA taxes electronically by ____.

using the EFTPS system EFTPS: Electronic Federal Tax Payment System

An employer who is subject to FUTA must file form _____ with the federal government. Normally, the form must be filed by _____; however if all deposits are made on a timely basis, the form may be filed by _____. The total taxable wages are computed by _____ exempt payments and wages paid each employees in excess of $__ _____ the total wages paid during the year.

940 January 31 February 10 deducting $7,000 from

In Part 2 of Form 940, contributions made on a pretax basis to a cafeteria plan are included on:

Line 4 and Line 6 as part of the subtotal

How often do employers file wage and contribution reports with their states?

Quarterly

In September 2016, Painter Wax Corporation began operations in a state that requires new employers of one or more individuals to pay a state unemployment tax of 4.1% of the first $7,000 of wages paid each employee. An analysis of the company's payroll for the year shows total wages paid of $212,640. The salaries of the president and the vice president of the company were $25,000 and $15,000, respectively, for the four-month period, but there were no other employees who received wages in excess of $7,000 for the four months. Included in the total wages were $900 paid to a director who only attended director meetings during the year, $6,300 paid to the factory superintendent, and $2,000 in employee contributions to a cafeteria plan made on a pretax basis-for both federal and state. In addition to the total wages of $212,640, a payment of $2,000 was made to Andersen Accounting Company for an audit it performed on the company's books in December 2016. Compute the following; round your answers to the nearest cent. a. Net FUTA tax b. SUTA tax

a. $1,102.44 math: 121,640 - 900 - 2,000 = 183,740 x 0.006 = 1,102.44 b. $7,533.34 math: 121,640 - 900 - 2,000 = 183,740 x 0.041 = 7,533.34

The partnership of Cox and Cohen paid the following wages during this year: M. Cox (partner) $45,000 S. Cohen (partner) 26,000 N. Tate (supervisor) 14,350 T. Gerenski (factory worker) 9,900 R. Sobowski (factory worker) 9,450 D. Brunder (factory worker) 8,910 S. Carsoni (bookkeeper) 11,100 C. Chu (maintenance) 3,900 In addition, the partnership owed $200 to Chu for work he performed during December. However, payment for this work will not be made until January of the following year. The state unemployment tax rate for the company is 2.95% on the first $9,000 of each employee's earnings. Compute: Round your answers to the nearest cent. a. Net FUTA tax for the partnership for this year b. SUTA tax for this year

a. $233.40 math: exclude partners 14,350 - 7,000 = 7,350 9,900 - 7,000 = 2,900 9,450 - 7,000 = 2,450 8,910 - 7,000 = 1,910 11,100 - 7,000 = 4,100 3,900 = 0 total excess 18,710 total wages 57,610 taxable FUTA wages 38,900 x 0.006 = 233.40 b. $1,439.90 math: exclude partners 14,350 - 9,000 = 5,350 9,900 - 9,000 = 900 9,450 - 9,000 = 450 8,910 - 9,000 = 0 11,100 - 9,000 = 2,100 3,900 = 0 total excess 8,800 total wages 57,610 taxable SUTA wages 48,810 x 0.0295 = 1,439.90

During 2016, Jake Gore worked for two different employers. Until May, he worked for Wonderman Construction Company in Kansas City, Kansas, and earned $21,500. The state unemployment rate for Wonderman is 4.6%. He then changed jobs and worked for Buxmont Improvement Company in Mobile, Alabama, and earned $33,100 for the rest of the year. The state unemployment rate for Buxmont is 5.1%. Determine the unemployment taxes (FUTA and SUTA) that would be paid by each company. Round your answers to the nearest cent. a. Wonderman Construction Company b. Buxmont Improvement Company

a. $594 math: 12,000 x 0.046 = 552 7,000 x 0.006 = 42 b. $450 math: 8,000 x 0.051 = 408 7,000 x 0.006 = 42

For any amendment in the information filled in prior Form 940, an employer must complete a new Form 940 for the year being amended and:

attach an explanation. check the "Amended" box.

A household employer is covered under FUTA if during the present or previous year, the household employer paid _____ or more during any quarter for household services in a private home, college club, or local fraternity or sorority club.

$1,000

If the employer's FUTA tax liability exceeds _____ at the end of a calendar quarter, the employer must pay the FUTA tax on or before the last day of the month following the end of the quarter.

$500

An employer, because of a favorable experience rating, is permitted to pay a state contribution at a reduced rate of 1.5 percent. What percentage of taxable wages must be paid in the aggregate to the federal and state governments?

2.10%

Under which situations can an employer be liable for a net FUTA tax greater than 0.6 percent?

An employer is tardy in paying the state contributions An employer is located in a state that has not met the repayment provisions of Title XII advances

For a company that has ceased operations during the year, the employer must:

Check the appropriate"Type of Return" box on Form 940. Attach a statement giving the name and address of the person(s) in charge of the required payroll records.

Which of the following types of payments are taxable under FUTA?

Commissions as compensation for covered employment and dismissal payments

How is the SUTA tax rate determined for a new employer?

Each state sets an initial contribution rate of not less than 1% for a specific period of time

_____ coverage includes service of any nature performed outside the United States by a citizen of the United States for an American employer. The major exception is service in any adjoining countries with which United States has an agreement relating to unemployment.

FUTA

To obtain the maximum credit of 5.4% against the FUTA tax, the employer must make 2017 calendar year state contributions on or before which date?

January 31, 2017

In 2015 _____ had the widest range of SUTA tax rates for employers and paid the highest weekly maximum benefit (excluding dependency allowances) to qualified unemployed workers. _____ had the highest taxable wage base for the SUTA tax.

Massachusetts Washington

Under FUTA, a person or a business is considered to be an employer for which of the below mentioned conditions?

Pays wages of $1,500 or more during any calendar quarter in the current or preceding calendar year. Employs one or more persons, on at least some portion of one day, in each of 20 or more calendar weeks during the current or preceding taxable year.

Under the Interstate Reciprocal Coverage Arrangement, the services of a worker can be covered in the state of the election of the employer under which of the following conditions?

The employee performs work in that state The employer has a place of business in that state The employee lives in that state