Fpc module 1
What is the federal minimum wage?
$7.25 per hour
An independent contractor invoiced a company $3000.00 for services performed. The contractor did not provide a TIN before the payment was made. Calculate the federal income tax that must be withheld from the contractor's payment.
$720 Independent contractors failing to provide a TIN will have 24% withheld for backup withholding from the payment.
What is a workweek?
A WORKWEEK CONSISTS OF 7 CONSECUTIVE 24-HOUR PERIODS A 168 HOUR PERIOD. EMPLOYERS SET WHEN A WORKWEEK BEGINS. WORKWEEKS ARE INTENDED TO BE PERMANENT BUT CAN BE CHANGED WHEN A BUSINESS NEED OCCURS.
A company is required to withhold taxes from an independent contractor when:
A company is required to withhold backup withholding tax from an independent contractor when a TIN is not provided.
When are meal periods time worked?
A meal period that is not at least 30 minutes of uninterrupted time is time worked under the FLSA
What is a nondiscretionary bonus?
A nondiscretionary bonus is a contractual or agreed-upon bonus or incentive. Nondiscretionary bonuses paid to nonexempt employees are included in the regular rate of pay in the week earned.
An employee who is a full-time student is claimed as a dependent by her parents. What conditions must exist for the employee to claim exempt status on Form W-4?
An employee claimed as a dependent by her parents, may claim exempt status on Form W-4 if her total income is not more than $1,050.00 including unearned income of not less than $350.00.
An employee completed Form W-4 claiming married with three allowances when hired. The employee must complete a new Form W-4:
An employee must complete a new Form W-4 when marital status changes or allowances decrease. The employee must file an amended Form W-4 within 10 days.
Which employee can file Form W-4 claiming exempt?
An employee who had no tax liability last year and expects to have no tax liability this year can file Form W-4 claiming exempt.
When an employee wants to continue her exempt status the next year, she must file a new Form W-4 by:
An employee with an exempt W-4 on file, must file a new Form W-4 by February 15 of the next year.
An employee's Form W-4 is complete when the form includes:
An employee's Form W-4 is complete when the form includes a signature and date.
Professional employee's duties?
An exempt professional employee is either a learned or creative professional. Learned Professionals' work requires advanced knowledge. Creative professionals' work involves invention or talent.
In which situation would the employer set an employee's withholding status to single and 0 allowances?
An incomplete Form W-4 is invalid. WHen an employee submits an invalid form W-4 and the employer doesn't have a previous W-4 in file, the employee's withholding must be single and zero allowances.
What is backup withholding?
Backup withholding is 24% FITW on reportable non-payroll payments when a TIN is not provided or the organization is notified by the IRS. It's reported annually on Form 945
Child labor age 14 & 15
Child labor laws allow 14 & 15 years olds to work 3 hours a day and 18 hours a week while school is in session and 8 hours a day and 40 hours a week when school is not in session.
Child labor rues under age 14:
Child labor laws generally prohibit employment of minors under age 14, unless the minor works for a parent or in some situations, actors, batboys, or girls and ballboys or girls.
Under FLSA, rounding of recorded employee time must be?
Consistent and to the nearest tenth (6 minutes) or quarter (15 minutes) of an hour
What is E-verify?
E-verify is an online tool that allows verification of a new hire's identity and eligibility to work in the U.S. government contractors and employers in some states are required to use e-verify
How can Form-I-9 be completed?
Form I-9 can be completed using a paper copy of the form or electronically.
What is Form I-9?
Form I-9, employment eligibility verification, Part is completed by the employee providing personal information. Employers complete part 2 with identity/eligibility to work in the us documents.
What is form SS-8
Form SS- 8, determination of worker status for purposes of federal employment taxes and income tax withholding, is filed with the IRS to obtain a determination of a worker's status.
Form SS-5 is used to:
Form SS-5, Application for a Social Security Card, is used only to obtain a new social security card or have a card reissued.
What is Form W-4?
Form W-4 employees withholding allowance certificate, is used by employees to provide their employer their name, address, SSN, marital status and allowances. It may also indicate exempt status
What is Form W-9?
Form W-9, request for taxpayer identification number and certification, is used by a payee to provide their taxpayer identification number (TIN), which can be a SSN or EIN.
Traits of an employee
Has taxes withheld from wages, reimbursed expenses, complied with employer's instructions about when, where, and how to work, work is done personally, performs services under company's name
An employer's responsibilities with Form W-4 include:
IRS regulations require employers remind their employees by December 1 each year to review their W-4 marital status and allowance
A Taxpayer identification number and name reported on form 1099-MISC can be checked using the:
IRS's TIN Matching system.
If an employee's spouse dies, the employee must submit an amended form W-4 by?
If an employee's dies, the employee must submit an amended Form W-4 by January 1st of the following year.
An employee is paid on the 1st and 15th of each month. The employee submits a new Form W-4 on June 10. The employer must implement the new W-4 no later than the:
July 15th payroll. After an employee files an amended Form W-4, the change must be reflected in withholding no later than the first payroll period ending on or after the 30th day after receiving the amended Form W-4.
Immigration Reform and Control Act of 1986
Makes it illegal for an employer to hire an unauthorized worker and requires verify the identity and right to work for all employees hired after November 6 1986
When must a Form W-4 be completed?
New employees complete form W-4 before their first payroll is calculated to avoid having FITW calculated using single with 0 allowances. Others must complete W-4 when their allowances decrease.
What is allowable tip credit?
No more than $5.12 per hour
Administrative employee's duties are:
Performing non manual or office work directly related to management of business operations of the employer or customers
Child labor under age 18:
Restricts minors under the age of 18 from working in a job that has been declared hazardous by the DOL
Traits of an independent contractor?
Sets own hours; determines own sequence of work; works for multiple organizations; self-employed; works by the job; employs assistants.
What is SSNVS?
Social Security Number verification service is SSA's system that allows employers to verify if an employee's name and SSN match SSA's records.
Who uses economic realities factors?
THE DOL USES THE ECONOMIC REALITIES FACTORS TO DETERMINE IF A WORKER IS AN EMPLOYEE OR AN INDEPENDENT CONTRACTOR UNDER THE "TO SUFFER OR PERMIT TO WORK" CONCEPT.
What is the "opportunity" wage?
The "opportunity" wage for teenagers is a lower minimum wage for newly hired employees who are under the age of 20. This lower wage is $4.25 per hour. The teenagers may be paid this rate for the first 90 consecutive calendar days after they are hired.
What is 8/80 rule?
The FLSA 8/80 rule is a workweek exception for hospitals and nursing homes. Employers using this rule pay over time for work over 8 hours a day or 80 hours in a 2-week period.
A 16-year-old employee works part-time during the summer. Under the FLSA, what is the maximum hours, if any, the employee can work during a workweek?
The FLSA does not limit the number of hours that can be worked by employee's 16-years of age or older. State child labor laws many limit the number of hours employees 16-years of age.
Under the FLSA, when determining whether a nonexempt employee is to be paid overtime, the employer uses the hours worked in a:
The FLSA requires that nonexempt employees be paid at least 150% of their regular rate of pay for all hours physically worked over 40 in a workweek.
What does FLSA cover?
The FLSA sets minimum wage, overtime requirements, child labor rules, and equal pay rules.
How much FMLA leave is guaranteed?
The FMLA guarantees eligible emploees 12 weeks of unpaid leave in a 12 month period.
IRS misclassification penalties:
The IRS can assess penalties of 1.5% of wages and 20% of the employee's share of social security and medicare taxes when a worker is unintentionally misclassified as an independent contractor.
An employee lives in a state that has a minimum wage of $7.25 per hour but works in another state where the minimum wage is $7.85 per hour. What is the minimum hourly rate the employee must be paid?
The correct answer is: $7.85 The minimum wage in the state where the work is preformed or the federal minimum wage whichever is greater must be paid.
Tipped employees may be paid:
Tipped employees may be paid no less than $2.13 per hour.
Minimum weekly exempt salary:
Under the FLSA, White collar exemption rules, exempt employees must be paid a minimum salary of $455 per week. Teachers, lawyers, and attorneys are not required to be paid a salary.
A 15-year-old employee works part-time while school is in session. Under the FLSA, which of the following hours can the employee work?
Under the FLSA, a 15-year-old employee can work while school is in session from 7:00 a.m. to 7:00 p.m. 14 and 15 year-olds cannot work during school hours. 14 and 15 year-olds can only work 3 hours per day and 18 hours per week while school is in session.
During the workweek, a high school teacher spent 39 hours in the classroom, worked 10 hours grading papers and was required to work 6 hours on Saturday at a school-sponsored science fair. Under the FLSA, for how many overtime hours, if any, must the teacher be paid?
Under the FLSA, a teacher meeting the professional employee exemption is not paid overtime. A exempt professional teacher works for an educational institution with the teachers primary duty is teaching, tutoring, instructing, or lecturing students
Under the FLSA, a workweek consists of how many hours?
Under the FLSA, a workweek consists of 168 consecutive hours (seven consecutive 24-hour periods).
Who is an exempt employee?
Under the FLSA, exempt employees perform job duties meeting certain requirements and be paid a weekly salary of $455 per week. The exempt employees are exempt from minimum wage, and overtime.
A 15-year-old employee works part-time. Under the FLSA, what hours can the employee work?
Under the FLSA, when school is not in session, 14 and 15-year-old employees can only work between 7:00 a.m. and 9:00 p.m. When school is in session, 14 and 15-year-old employee can only work between 7:00 a.m. and 7:00 p.m. and cannot work during school hours.
What is waiting to be engaged?
Waiting to be engaged is not time worked because the employee is free to pursue personal business
When is an amended W-4 implemented?
When an employee submits an amended form w-4, it must be implemented with the first payroll no later than 30 days after the form is submitted.
What does an exempt w-4 mean?
When an employee submits an exempt form W-4, the employee will have no income tax withheld for the remainder of the year. Exempt w-4s expire on February 15th of the year after it's submitted
An employee's Form W-4 claiming single with 2 allowances expires:
With the exception of exempt W-4 forms, a W-4 remains valid until amended by the employee.
What is excluded from regular rate of pay?
gifts, reimbursed expenses, PTO, stock options, discretionary bonuses, and overtime premiums in excess of the prem. required by the FLSA are not included in the regular rate of pay
Under the FLSA, an employee is engaged to be waiting when the employer:
restricts the employee's behavior and does not permit personal business.
The reasonable basis test is:
The reasonable basis test allows a worker classified as an employee under the common law test to be treated as an independent contractor.
Employees are covered under FLSA by:
Employees are covered by the FLSA under either the enterprise coverage test or the individual employee coverage test.
An employee must complete a new Form W-4:
Employees must complete a new W-4 when their change in status requires more income tax to be withheld (the employee has fewer allowances).
What is engaged to be waiting?
Engaged to be waiting is time worked because the employer requires the employee to wait to begin work
By claiming the tip credit under the FLSA, what is the minimum hourly cash wage employers can pay employees who report at least $30.00 per month in tips?
The correct answer is: $2.13 Under the FLSA, the minimum hourly rate an employer can pay a tipped employee is $2.13 per hour as long as the employee's cash wages and tips are equal to or greater than $7.25 times the hours worked in the workweek.
Exempt employees are determined by:
The employee's primary job duties and weekly salary.
The initial determination of whether a worker is an employee or an independent contractor is made by the:
The employer determines whether to classify workers as employees or as independent contractors. In addition, the IRS and DOL may conduct an audit of a company's classification of a worker as an employee or independent contractor.
IRS misclassification penalties: #2
The employer is liable for 100% of FIT and 100% social security and medicare (both employee and employer share) when a worker is intentionally misclassified as an independent contractor.
What is the federal wage and hour law?
The fair labor standards act (FLSA)
What is the regular rate of pay?
The formula for the regular rate of pay is: the total pay divided by the total number of hours worked. The regular rate of pay is used to calculate a nonexempt employee's overtime premium
Four types of exempt employees:
The four white collar types of exempt employees are administrative, executive, professional, and outside sales.
Executive employee's primary duties:
The management of the business, directing 2 or more full-time employees, the authority to recommend hiring & firing .
