Payroll Accounting: Employer Taxes and Reports

A self-employment tax is required of an individual who owns his or her own business and makes

$400 or more.

Employers are required to file an annual report of federal unemployment tax using _____________ .

Form 940

Employers report payroll taxes withheld each quarter using ______________.

Form 941

Every employee hired after November 6, 1986 must complete a _______________.

Form I-9

By January 31 of each year, employers must provide each employee with a Wage and Tax Statement called ______________ .

Form W-2

Employers use the ___________________ to transmit employees' W-2 forms to the Social Security Administration.

Form W-3

Because there is no maximum earnings on the Medicare component of the Social Security tax, the Medicare tax rate of 1.45% is applied to total earnings.

True

By January 31 each year, employers must furnish each employee with a Wage and Tax Statement.

True

Employers are allowed a credit against the FUTA tax for participation in state unemployment programs.

True

Employers' payroll taxes include FICA, FUTA, and SUTA taxes.

True

Form 941, Employer's Quarterly Federal Tax Return, must be filed with the IRS at the end of the month following each calendar quarter.

True

In general, the larger the amount of Social Security and Medicare taxes due from an employer, the more frequently payments must be made.

True

In most states, if an employer has very few former employees who collect unemployment compensation, the employer qualifies for a lower state unemployment tax rate.

True

In most states, the state unemployment tax is levied only on employers.

True

Most employers have to pay FICA and FUTA taxes.

True

One-half of the self-employment tax is really a personal expense to the owner of the business.

True

Persons earning self-employment income of $400 or more must pay a self-employment tax

True

SUTA tax payments vary among states but are usually required on a quarterly basis.

True

Self-employed individuals can be viewed as both employer and employee.

True

Self-employment tax is a contribution to the FICA program.

True

Self-employment tax is double the Social Security and Medicare rates.

True

Social Security, Medicare, FUTA, and SUTA taxes have separate liability accounts.

True

The EFTPS is an electronic funds transfer system for making federal tax deposits.

True

The Social Security, Medicare, FUTA, and SUTA tax accounts normally have credit balances.

True

The Social Security, Medicare, and FUTA tax accounts are debited when the taxes are actually paid to the IRS.

True

The amount of employers' Medicare taxes is computed by multiplying total earnings by 1.45%.

True

The cost of workers' compensation insurance to a construction company with 15 employees would likely be higher than the cost of insurance to a small candy company with 15 employees.

True

The date by which federal income tax withholding, Social Security, and Medicare taxes must be paid depends on the amount of these taxes.

True

The due date for payroll taxes is not the same date for all employers.

True

The employer FICA tax is levied on employers at the same rate and on the same earnings bases as the employee FICA tax.

True

The payroll register is a key source of information for computing employer payroll taxes.

True

Workers' compensation provides insurance for employees who suffer a job-related illness or injury.

True

The employer usually pays the entire cost of

Workers' Compensation Insurance.

____________________ provides insurance for employees who suffer a job-related illness or injury.

Workers' compensation insurance

When all taxes have been paid, the Social Security Tax Payable account will have

a zero balance.

After estimating its payroll for the year, an employer usually pays workers' compensation insurance

at the beginning of the year.

To journalize the payment of Medicare taxes to the IRS, the correct entry would be

debit Medicare Tax Payable and credit Cash.

The adjustment to journalize an additional premium due at the end of the year for workers' compensation insurance (WCI) is

debit WCI Expense and credit WCI Payable.

The date on which an employer must pay Social Security and Medicare taxes is

dependent on the amount of the taxes.

The tax rates for the self-employment tax are

double the Social Security and Medicare rates.

Taxes levied on employers at the same rates and on the same earnings bases as the employee Social Security and Medicare taxes are known as ___________________ .

employer FICA taxes

The federal unemployment tax is levied on

employers and is not deducted from employees' earnings.

The _____________________ encourages employers to provide regular employment to workers.

experience-rating system

Employers who have less than $2,500 due in federal income tax withholding and Social Security and Medicare taxes at the end of the quarter should journalize the debt and pay at the end of the

month following the end of the quarter.

The total payroll cost to an employer of an employee who has gross earnings of $78,000 is

more than $78,000.

Employers who have $100,000 or more due in federal income tax withholding and Social Security and Medicare taxes on any day during the current quarter should journalize the debt and pay at the end of the

next banking day.

A key source of information for computing employer payroll taxes is the

payroll register.

The cost of workers' compensation insurance for the employer depends on all of the following EXCEPT the riskiness of the jobs the employees perform. the amount of FICA, FUTA, and SUTA taxes due. the company's accident history. the number of employees.

the amount of FICA, FUTA, and SUTA taxes due.

The employer pays which of the following to the Internal Revenue Service? sales taxes no taxes property taxes the employer's Social Security and Medicare taxes

the employer's Social Security and Medicare taxes

Melissa Taylor has gross earnings of $425 and withholdings of $26.35 for Social Security tax, $6.16 for Medicare tax, and $35 for federal income tax. Her employer pays $26.35 for Social Security tax, $6.16 for Medicare tax, $3 for FUTA tax, and $9 for SUTA tax. The total cost of Melissa to her employer is

$469.51.

Compute the amount of employer Social Security taxes by multiplying the Social Security taxable earnings by ___________ .

6.2%

The rules by which employers must deposit Social Security and Medicare taxes can be found in the

Circular E—Employer's Tax Guide.

A system for making federal tax deposits electronically is called the _____________________.

Electronic Federal Tax Payment System

Form 941 is a(n)

Employer's Quarterly Federal Tax Return.

Employer payroll taxes include FUTA, SUTA, and ______________ taxes.

FICA

The self-employment tax is a contribution to the _____________ program.

FICA

Employees usually pay the entire cost of workers' compensation insurance.

False

Employer payroll taxes clearly are an insignificant cost of doing business.

False

FUTA taxes are deposited and an annual report of federal unemployment tax is filed using Form 8109.

False

Form 940 is called the Employer's Quarterly Federal Tax Return.

False

If an employer qualifies for a lower state unemployment tax rate, this lowers the credit allowed in computing the federal unemployment tax due.

False

If an employer wishes, the FUTA tax may be deducted from employees' earnings.

False

Journalizing payroll taxes for the employer will require several debit entries but only one credit entry.

False

Self-employment income is the gross income of a trade or business run by an individual.

False

Self-employment tax is a contribution to the unemployment compensation program.

False

The FUTA tax applies to all employee earnings throughout the year.

False

The Self-Employment Contributions Act requires self-employed individuals earning net self-employment income of $1,000 or more to pay a self-employment tax.

False

The due date for payroll taxes is the last day of each fiscal quarter: March 31, June 30, September 30, and December 31.

False

The employer must pay the amount owed for Social Security and Medicare by the business to the IRS; however, the employees pay for Social Security and Medicare directly to the IRS.

False

Which of the following is a payroll tax normally paid by both the employee and the employer?

Medicare tax

To journalize the employer's payroll taxes, we need to credit all of the following accounts EXCEPT Social Security Tax Payable. FUTA Tax Payable. Medicare Tax Payable. Payroll Taxes Expense.

Payroll Taxes Expense.

Which of the following tax programs often has an experience-rating system to encourage employers to provide regular employment for workers? FUTA workers' compensation insurance SUTA FICA

SUTA

The _______________________ tax is levied on employers to raise funds to pay unemployment benefits.

SUTA state unemployment

A self-employment tax is a contribution to the

Social Security and Medicare programs.

The self-employment tax rate is double the rate of

Social Security and Medicare taxes.