Chapter 3- Social Security Taxes

True

A child working for his father's corporation is not exempt from coverage under FICA.

Independent Contractor

A person who follows an independent trade, business, or profession and offers services to the public.

Deposit by the next banking day

Accumulated taxes of $100,00 or more in the look back period?

Condition for covered employee

An individual must do work for the benefit of the employer, must not be exempt from the provision of fica taxes, common law relationship between the employee and employer.

In order to be classified as a "covered" employee.

An individual must perform services where the common-law relationship of employer and employee exists.

SS4

Application for employer ID#

Form SS-4

Application for employer identification number.

Taxable wage base

Applies only to the OASDI portion of the FICA tax.

No

Are Real Estate agents considered independent contractors?

Yes

Are employers responsible to collect FICA taxes on tips reported by employees and for wages paid to tipped employees?

No

Are federal government employees hired after 1983 subject to full FICA coverage?

Yes

Are full time insurance salespersons covered as statutory employees for social security, medicare, and FUTA tax purposes?

Yes

Are partners' earning considered a drawing or withdrawal, not a salary payment.

Monthly depositor

By the 15th day of the following month.

Taxable for FICA

Cash values of meals provided for employees' convenience.

Yes and also applicable for self employment

Employee HI, Plus an additional 0.9% on wage over $200,000.

6.2 percent and 1.45 percent

Employee's FICA tax rates

Form SS-5

Employee's application for social security card.

However, the employer's matching contributions are tax free.

Employee's pretax contributions into a qualified deferred compensation plan are subject to FICA tax.

SS5

Employees application for social security card

Nontaxable for FICA

Employer's matching contributions into employees' deferred compensation arrangements.

Form 941

Employer's quarterly federal tax returns

False

Every employer has the right to choose the method (electronic or paper coupon) of depositing employment taxes.

The maximum self-employment taxable income is $118,500.

For computing the OASDI taxes, the minimum self-employment taxable income of any individual is $118,500.

The common-law relationship of employer and employee must exist and the person must employ one or more individuals for the performance of services in the United States.

For social security purposes, what conditions must an individual meet to be classified as a "covered" employer?

The common-law relationship of employer and employee must exist. The person must employ one or more individuals for the performance of services in the United States.

For social security purposes, what conditions must an individual meet to be classified as a "covered" employer?

5

Form 941 is divided into ___________ parts.

False, its quarterly return

Form 941 refers to Annual Return of Withheld Federal Income Tax

ACH debit method, ACH credit method

How are the electronic tax deposits transferred from the employer's account to the IRS?

Each calendar quarter

How often must an employer file a Form 941?

Yes

If personal use of a company vehicle for non-business related activities constitutes a taxable fringe benefit.

10% of the undeposited taxes

If the employer made deposits at an unauthorized financial institution or directly to the IRS, as a penalty, what percent of the taxes will be added?

5% of the undeposited taxes

If the employer made the required deposits in an authorized government depository 14 days late, what percent of the undeposited tax will be added?

True

If the self-employed individual is also an employee of another company, the wages received can reduce the amount of self-employment income that is taxed.

Yes

Is severance pay taxable for FICA

No, only the employees

Is the employers matching contributions into an employees deferred compensation arrangement taxable for FICA?

Deposit by the end of the month following the quarter, or mail taxes with Form 941

Less than $2,500 for the quarter

a. 1. not more than one month: 5% of the net amount of tax. 2. an additional 5% is levied for each additional month or fraction of month, not to exceed 25% in the aggregate. Willfully evading payment of taxes or not filing a return or filing a false return may be fined up to 25% or imprisoned for not more than 1 year or both (upon conviction). b. 5% undepositied taxes. c. 2% of the amount of taxes. If a check is tendered in good faith and the employer can prove that, no penalty.

List the penalties imposed on the employer for the following: a. Filing Form 941 late. b. Seven days late making a deposit. c. Issuing a bad check to the IRS.

Semiweekly Depositor

More than $50,000 in employment taxes in the lookback period.

False

Once a person reaches the age of 65, social security taxes are not taken out of his or her paycheck.

False

Once, the initial Form 941 is filed by a company, the company does not need to file Form 941 for a quarter in which there are not taxes to report.

No, the deposit is part 2

Part 3 of Form 941 deals with deposit schedule and tax liability for the quarter.

Yes

Payments by employers for involuntary separation of an employee from the employers service are taxable under FICA

Keep a specific form of record-keeping.

Penalties are imposed on employers who fail to do the following except:

12.4 percent and 2.9 percent

Self-employed's FICA tax rates

50,000

Semiweekly depositor, more then _______ in employment in the look back period.

Yes

The first six months of sick pay received by an employee is considered to be wages. Is this amount subject to withholding for FICA tax purposes?

12.4 percent for OAISD, and 2.9 percent for HI. Self employment income is subject to 0.9 percent additional HI tax on earned income in excess of $200,000.

The self-employment tax rates for 2016 on net earnings

Deposit taxes semiweekly

What deposit rule apply to $50,000 or less in the look back period?

A person who performs household services in or around your home subject to your will and control. Examples: Babysitters, cooks, drivers, gardeners, nannies, housekeepers, maids, and caretakers.

What is a household employee?

When they have one or more employees.

When does an employer need an EIN?

An independent contractor is a person.

Who follows an independent trade, business, or profession and offers services to the public.