Legal Environment - Employment/Labor Law

Which of the following statements is correct regarding the taxes payable under the Federal Unemployment Tax Act (FUTA)? a. The amount is withheld from the wages of all employees. b. Credits for this tax are allowed to employers for certain state unemployment taxes paid by the employer. c. The amount is determined as a percentage of all compensation paid to an employee. d. Liability arises only when wages are actually, not constructively, paid to employees.

b. Credits for this tax are allowed to employers for certain state unemployment taxes paid by the employer. Credit for SUTA caps at 5.4% of the first $7,000 wages.

Syl Corp. does not withhold FICA taxes from its employees' compensation. Syl voluntarily pays the entire FICA tax for its share and the amounts that it could have withheld from the employees. The employees' share of FICA taxes paid by Syl to the IRS is a. Subject to prescribed penalties imposed on Syl for its failure to withhold required payroll taxes. b. Deductible by Syl as additional compensation that is includible in the employees' taxable income. c. Not deductible by Syl because it d

b. Deductible by Syl as additional comepensation that is includible in the employees' taxable income. The employer is required to withhold the employees' share of FICA taxes from its employees' wages. However, on these facts, the employer is treated as having paid additional compensation to the employees in the amount of the employees' share. This additional compensation is a deductible ordinary and necessary business expense.

Andrea Company is a monthly depositor of federal payroll taxes. Its prior-quarter employment tax liability was $1,800. Which action by Andrea results in penalties? a. Withholding Medicare taxes of 1.45% from employees' wages. b. Depositing 90% of the tax liability on the 10th day of each month. c. Supplying taxpayer identification numbers with the quarterly tax return. d. Deducting employer payroll taxes on the employer's tax return.

b. Depositing 90% of the tax liability on the 10th day of each month. 100% of the tax liability must be deposited.

An employer who fails to withhold Federal Insurance Contributions Act (FICA) taxes from covered employees' wages, but who pays both the employer and employee shares, will a. Be allowed no federal tax deduction for any payments. b. Have a right to be reimbursed by the employees for the employees' share. c. Be entitled to a refund from the IRS for the employees' share. d. Owe penalties and interest for failure to collect the tax.

b. Have a right to be reimbursed by the employees for the employees' share. Employer has a right to reimbursement if they pay the employee's portion.

Which of the following payments are deducted from an employee's salary? Unemployment Compensation Insurance Workers' Compensation Insurance a. Yes Yes b. No No c. Yes No d. No Yes

b. No No both are employer's responsibility to pay.

After serving as an active director of Lee Corp. for 20 years, Ryan was appointed an honorary director with the obligation to attend directors' meetings with no voting power. In the current year, Ryan received an honorary director's fee of $5,000. This fee is a. Considered to be a gift not subject to Social Security self-employment or income tax. b. Reportable by Ryan as self-employment income subject to Social Security self-employment tax. c. Reportable by Lee as employee compensation subj

b. Reportable by Ryan as self-employment income subject to Social Security self-employment tax. While Ryan is not an employee, these wages are earned as he is acting as a director.

Funding from FICA contributions is provided to assist qualifying individuals in each of the following groups, except a. Survivors of deceased workers. b. Unemployed workers. c. Elderly individuals requiring medical services or hospitalization. d. Retirees.

b. Unemployed workers. Unemployed workers are assisted through FUTA. FICA assists survivors of deceased workers, elderly requiring medical services, and retiress.

Taxes payable under the Federal Unemployment Tax Act (FUTA) are a. Calculated as a fixed percentage of all compensation paid to an employee. b. Payable by employers for all employees. c. Deductible by the employer as a business expense for federal income tax purposes. d. Withheld from the wages of all covered employees.

c. Deductible by the employer as a business expense for federal income tax purposes. FUTA tax is NOT withheld from employee. It is paid directly by employer and therefore deductible by employer

Tower drives a truck for Musgrove Produce, Inc. The truck is owned by Musgrove. Tower is paid on the basis of a formula that takes into consideration the length of the trip, cargo, and fuel consumed. Tower is responsible for repairing or replacing all flat tires. Musgrove is responsible for all other truck maintenance. Tower drives only for Musgrove. If Tower is a common-law employee and not an independent contractor, which of the following statements is true? a. Musgrove would not have to with

c. Musgrove remains primarily liable for Tower's share of FICA taxes if it fails to withhold and pay the taxes on Tower's wages. An employer that underwithholds and underpays is liable for the unpaid balance of the employee's share.

For the entire year, Ral Supermarket, Inc., conducted its business operations without any permanent or full-time employees. Ral employed temporary and part-time workers during each of the 52 weeks in the year. Under the provisions of the Federal Unemployment Tax Act (FUTA), which of the following statements is true regarding Ral's obligation to file a federal unemployment tax return for the year? a. Ral is obligated to file a FUTA return only if at least one worker earned $50 or more in any c

c. Ral must file a FUTA return because it had at least one employee during at least 20 weeks of the year. Under FUTA, an employer must file a return if it employs at least one person for at least 20 weeks of the year (does not have to be full-time).

Which of the following statements is correct regarding the Federal Unemployment Tax Act (FUTA)? a. The Act is intended to assist workers who are permanently out of work and need assistance in supporting themselves. b. The federal unemployment system is funded by both employer and employee taxes. c. The unemployment insurance system is administered by the states through their employment laws. d. An employee, who resigns, regardless of cause, is eligible for unemployment benefits.

c. The unemployment insurance system is administered by the states through their employment laws. State run system.

Snowball Enterprises withheld employment taxes from all of its employees' wages. Which of the following is a violation of the federal requirements for withholding of employment taxes? a. 1.45% of all wages for 2023 for the Medicare portion of the tax imposed by the FICA. b. 6.2% of the first $147,000 of wages for 2023 for the Social Security portion of the tax imposed by the FICA. c. 0.9% of the wages of a single taxpayer in excess of $200,000 as Additional Medicare Tax. d. 6% of the first $7

d. 6% of the first $7,000 of wages paid as unemployment taxes. FUTA is not to be withheld, it is to be paid directly by the employer.

The Federal Unemployment Tax Act (FUTA) a. Requires both the employer and employee to pay FUTA taxes, although the amounts to be paid by each are different. b. Does not apply to businesses with fewer than 35 employees. c. Does not apply to employers that conduct business in only one state and employ only residents of that state. d. Allows the employer to take a credit against the FUTA tax if contributions are made to a state unemployment fund in full by the due date of the FUTA return.

d. Allows the employer to take a credit against the FUTA tax if contributions are made to a state unemployment fund in full by the due date of the FUTA return. SUTA 5.4% credit.

In general, which of the following statements is true with respect to unemployment compensation? a. An employee who is unable to work because of a disability is entitled to unemployment compensation. b. The maximum period during which unemployment compensation may be collected is uniform throughout the United States. c. The maximum amount of weekly unemployment compensation payments made by a state is determined by federal law. d. An individual who has been discharged from employment because of

d. An individual who has been discharged from employment because of work-related misconduct is ineligible for unemployment comepensation. In order to collect unemployment the worker must (1) be laid off through no fault of themselves (2) file claim (3) be able, available, and willing to work but cannot find employment

Other than the net investment income (NII) tax, which of the following types of income is subject to taxation under the provisions of the Federal Insurance Contributions Act (FICA)? a. Interest earned on municipal bonds. b. Dividends of $2,500. c. Capital gains of $3,000. d. Car received as a productivity award.

d. Car received as a productivity award. First three are not even earned wages...

Under the Federal Insurance Contributions Act (FICA), all of the following are considered wages except a. Contingent fees. b. Bonuses. c. Commissions. d. Reimbursed travel expenses.

d. Reimbursed travel expenses. other forms of wages such as bonuses, commissions, vacation pay, severance allowances, tips etc. are considered. wages.

The following information is from Holly's W-2 form for the calendar year just ended. Holly is married but filing separately. Wages, tips, other compensation $150,000 Federal income tax withheld 20,000 Social Security tax withheld 9,300 Medicare tax withheld 2,175 Additional Medicare Tax withheld 225 Of the amounts listed above, which line item is incorrect? a. Additional Medicare Tax. b. Medicare tax withheld. c. Federal income tax withheld. d. Social Security tax withheld.

d. Social Security tax withheld. For 2023, an employer must withhold 6.2% of the first $147,000 of an employees earned income.