Payroll Tax Chapter 5

46. Which of the following payments are taxable payments for federal unemployment tax? a. Christmas gifts, excluding noncash gifts of nominal value b. Caddy fees c. Courtesy discounts to employees and their families d. Workers' compensation payments e. Value of meals and lodging furnished employees for the convenience of the employer

ANSWER: a

29. On Form 940, even if the total FUTA tax is more than $500, there is no listing of quarterly federal unemployment tax liabilities. a. True b. False

ANSWER: False

3. Partnerships do not have to pay unemployment taxes on the wages of their employees. a. True b. False

ANSWER: False

30. Form 940 must be mailed to the IRS by January 15. a. True b. False

ANSWER: False

33. FUTA tax deposits cannot be paid electronically. a. True b. False

ANSWER: False

34. Schedule A of Form 940 only has to be completed by employers who are subject to the Title XII credit reduction. a. True b. False

ANSWER: False

35. If a company is liable for a credit reduction (due to Title XII advance), this extra tax must be paid along with each of the required deposits made during the year. a. True b. False

ANSWER: False

37. An employer can use a credit card to pay the quarterly deposit of FUTA taxes during the year. a. True b. False

ANSWER: False

39. Unlike Form 941, there is no penalty for the late filing of Form 940. a. True b. False

ANSWER: False

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

ANSWER: False

13. FUTA and SUTA coverages extend to U.S. citizens working abroad for American employers. a. True b. False

ANSWER: True

15. Christmas gifts, excluding noncash gifts of nominal value, are taxable wages for unemployment purposes. a. True b. False

ANSWER: True

17. Educational assistance payments made to workers to improve skills required of their jobs are nontaxable for unemployment purposes. a. True b. False

ANSWER: True

18. If an employee has more than one employer during the current year, the taxable wage base applies separately to each of those employers, unless one employer has transferred the business to the second. a. True b. False

ANSWER: True

2. The Social Security Act ordered every state to set up an unemployment compensation program. a. True b. False

ANSWER: True

21. In order to obtain the maximum credit allowed against the federal unemployment tax, the employer must have paid its SUTA contributions by the due date of Form 940. a. True b. False

ANSWER: True

23. 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. a. True b. False

ANSWER: True

27. In some states, employers may obtain reduced unemployment compensation rates by making voluntary contributions to the state fund. a. True b. False

ANSWER: True

31. The mailing of Form 940 is considered timely if it is postmarked on or before the due date. a. True b. False

ANSWER: True

32. 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. a. True b. False

ANSWER: True

36. An employer can use a credit card to pay the balance with Form 940 (under $500.) a. True b. False

ANSWER: True

38. Even if the duties of depositing the FUTA taxes and filing Form 940 have been outsourced, the employer is still the responsible party. a. True b. False

ANSWER: True

40. In most states, the contribution reports and the wage information reports are filed quarterly. a. True b. False

ANSWER: True

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

ANSWER: True

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

ANSWER: True

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

ANSWER: True

8. Directors of corporations who only attend and participate in board of directors' meetings are not covered as employees under FUTA. a. True b. False

ANSWER: True

9. Insurance agents paid solely on a commission basis are not considered employees under FUTA. a. True b. False

ANSWER: True

26. Currently, none of the states imposes an unemployment tax on employees. a. True b. False

ANSWER: False

28. "Dumping" is legal in all but a few states. a. True b. False

ANSWER: False

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

ANSWER: False

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

ANSWER: False

11. For FUTA purposes, the cash value of remuneration paid in any medium other than cash is not considered taxable wages. a. True b. False

ANSWER: False

12. Advance payments for work done in the future are not taxable wages for FUTA purposes. a. True b. False

ANSWER: False

14. In the case of a part-time employee, the employer is not liable to pay any of the employee's earnings. a. True b. False

ANSWER: False

16. Retirement pay is taxable wages for FUTA purposes. a. True b. False

ANSWER: False

19. Every employer is entitled to a 5.4 percent credit against the gross FUTA tax of 6.0 percent. a. True b. False

ANSWER: False

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

ANSWER: False

22. 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. a. True b. False

ANSWER: False

24. There is a uniform rate of unemployment benefits payable by all states. a. True b. False

ANSWER: False

25. If an employer pays unemployment taxes to two states, it will have the same SUTA tax rate in both states. a. True b. False

ANSWER: False

47. Which of the following types of payments are not taxable wages for federal unemployment tax? a. Retirement pay b. Cash prizes and awards for doing outstanding work c. Dismissal pay d. Bonuses as remuneration for services e. Payment under a guaranteed annual wage plan

ANSWER: a

54. When making a payment of FUTA taxes, the employer must make the payment by the: a. end of the month after the quarter. b. 15th of the month after the quarter. c. 10th of the month after the quarter. d. end of the following quarter. e. same day of the FICA and FIT deposits.

ANSWER: a

51. Voluntary contributions to a state's unemployment department are: a. allowed in all states. b. designed to increase an employer's reserve account in order to lower the employer's contribution rate. c. capable of being paid at any time with no time limit. d. returned to the employer at the end of the following year. e. sent directly to the IRS.

ANSWER: b

52. The person who is not an authorized signer of Form 940 is: a. the individual, if a sole proprietorship. b. the accountant from the company's independent auditing firm. c. the president, if a corporation. d. a fiduciary, if a trust. e. All of the above are authorized signers.

ANSWER: b

55. An employer must pay the quarterly FUTA tax liability if the liability is more than: a. $3,000. b. $500. c. $1,000. d. $1. e. $100.

ANSWER: b

41. A federal unemployment tax is levied on: a. employees only. b. both employers and employees. c. employers only. d. government employers only. e. no one.

ANSWER: c

44. Which of the following is not a factor considered in determining coverage of interstate employees? a. Location of base of operations b. Place where work is localized c. Location of company's payroll department d. Location of employee's residence e. Location of place from which operations are controlled

ANSWER: c

53. If the employer has made timely deposits that pay the FUTA tax liability in full, the filing of Form 940 can be delayed until: a. December 31. b. February 15. c. February 10. d. February 1. e. March 31.

ANSWER: c

43. Included under the definition of employees for FUTA purposes are: a. independent contractors. b. insurance agents paid solely on commission. c. student nurses. d. officers of a corporation. e. members of partnerships.

ANSWER: d

45. An aspect of the interstate reciprocal arrangement concerns: a. the status of Americans working overseas. b. the taxability of dismissal payments. c. the determination of an employer's experience rating. d. the transfer of an employee from one state to another during the year. e. none of the above.

ANSWER: d

49. Which of the following provides for a reduction in the employer's state unemployment tax rate based on the employer's experience with the risk of unemployment? a. Voluntary contribution b. Title XII advances c. Pooled-fund laws d. Experience-rating plan e. None of the above

ANSWER: d

50. In order to avoid a credit reduction for Title XII advances, a state must repay the loans by: a. the end of the year of the loans. b. the end of the year the credit reduction is scheduled to take effect. c. the end of the third year after the year of the loans. d. November 10 of the year the credit reduction is scheduled to take effect. e. June 30 of the year after the loans.

ANSWER: d

42. For FUTA purposes, an employer can be any one of the following except: a. an individual. b. a partnership. c. a trust. d. a corporation. e. All of the above can be employers.

ANSWER: e