Payroll Chapter 5

Caruso Company's SUTA rate for next year is 2.9% because its reserve ratio falls in its state's 8% to less than 10% category (contributions - benefits paid ÷ average payroll = $93,500 $971,500 = 9.62%).If the next category (10% to less than 12%) would give Caruso a lower tax rate of 2.3%, what would be the amount of the voluntary contribution needed to get Caruso to that next category?

$3650

A new employer will be assigned a SUTA contribution rate: A.) that is reasonable and then will be adjusted in the future B.) that is reasonable and will not be changed

A

For SUTA wage calculation purposes, dismissal payments: A.) are usually considered wages whether or not the employer must legally make the payments B.) are never included C.) are treated like tips

A

The wage base for unemployment compensation taxes are: A.) all wages actually paid or constructively paid B.) all wages that are considered to be constructively paid plus wages payable C.) all wages paid or payable for the period

A

Voluntary contributions are made in order to: A.) decrease the employer's future SUTA rates by an amount more than the voluntary contribution B.) decrease an employer's reserve account balance

A

Wage information reports are primarily intended to:

Convey employee's names, SSN's, taxable wages and tips and number of credit weeks earned by each employee during the quarter

Difference between filing FUTA and SUTA

FUTA is filed annually and SUTA is filed quarterly

All of the states allow employers to make voluntary contributions into their state unemployment fund so that a lower tax contribution rate would be assigned.

False

Employers have to pay a FUTA tax on only the first $3,500 of each part-time employee's earnings (1/2 of the full $7,000 limit).

False

FUTA coverage does not include service of any nature performed outside the United States by a citizen of the United States for an American employer.

False

For the purpose of the FUTA tax, members of partnerships are considered employees.

False

If a business has ceased operations during the year, as long as the deposits of the FUTA taxes have been made, a Form 940 does not need to be completed for that year.

False

If an employer pays a SUTA tax of 2.0%, the total credit that can be claimed against the FUTA tax is 2.0%.

False

If an employer's FUTA tax liability for the 1st quarter is $935, no deposit is required for the 1st quarter.

False

If the employer pays all of the state unemployment contributions after the filing date for Form 940, the maximum credit that can be claimed against the FUTA tax is 90% of 6.2%.

False

In the case of an employee who changes jobs during the year, only the first employer must pay FUTA tax on that employee's earnings.

False

The deposits of FUTA taxes are included with the deposit of FICA and FIT taxes and are paid as one lump sum.

False

The location of the employee's residence is the primary factor to be considered in determining coverage of an employee who works in more than one state.

False

Interstate reciprocal agreements are designed for what

To preclude an employer from having to pay into multiple states

Fred Stone is an employee of Henrock Company. During the first part of the year, Stone earned $4,340 while working in State Q. For the remainder of the year, the company transferred him to State S where he earned $27,000. Henrock Company's tax rate in State Q is 4.6%, and in State S, 4.0% on the first $7,000. If reciprocal arrangements exist between the two states, determine the SUTA tax that the company paid on Stone's earnings in State S.

Not $136.40

Leinart Company had taxable wages (SUTA and FUTA) totaling $175,000. During the year, the company was late in paying its state contributions of 3.6% and is subject to the FUTA credit reduction. Determine the amount of net FUTA tax.

Not $2065

Jason Jeffries earned $10,200 while working for Brown Company. The company's SUTA tax rate is 2.9% of the first $7,000 of each employee's earnings. Compute the total unemployment taxes (SUTA and FUTA) that Brown Company should pay on Jeffries' earnings.

$245

Truson Company paid a 4% SUTA tax on taxable wages of $108,500. The taxable wages under FUTA were $89,400. What was the net FUTA tax of Truson Company?

$536.40

Englesbe Company's FUTA tax liability was $289.50 FUTA tax for the 1st quarter; $129.80 for the 2nd quarter; $123.00 for the 3rd quarter; $16.00 for the 4th quarter. The amount of the company's first required deposit of FUTA taxes is

$542.30

A positive employee balance has

A reserve account whereby the benefits paid out are less than the taxes paid in

A schedule a (attached to form 940) is prepared when: A.) an employer pays wages of more than 7k a year B.) an employer operates in more than one state C.) a paid preparer signs the form 940

B

All of the following are considered taxable for unemployment purposes except: A.) dismissal payments B.) caddy fees C.) prizes for outstanding work

B

When an employee works for more than one employer in one state in a year: A.) there is a mandatory employee contribution B.) the taxable wage base applies desperately to each employer C.) the laws regarding the application of the taxable wage base differ

B

Which of the following payments are exempt from unemployment taxable wage base: A.) noncash Christmas gifts B.) a unions payment to its striking members C.) standby payments

B

In 2019, an employer's general ledger showed 805,000 of wage expense. Of this amount, 12,000 will be paid on January 5, 2020. Wages paid in excess of 7,000 per employee is 459,000. The gross FUTA tax imposed on the employer is: A.) 2,076 B.) 20,040 C.) 48,300

B FUTA = .6% x total taxable wages

If total FUTA after adjustment are 11,475.28 and line 13 of form 940 is 10,649.32 what is line 14?

Line 12- line 13 = 1,095.96

The report that determines the employer's liability for making contributions into the state unemployment fund is

Status report

Contributions made on a pretax basis to a cafeteria plan are included in total payments on Form 940 and then deducted as exempt payments.

True

Educational assistance payments to workers are considered nontaxable wages for unemploymentpurposes.

True

Form 940 can also be used to file an amended return.

True

Form 940 mailed by the due date is timely filed even if received by the IRS after the due date.

True

In certain circumstances, a FUTA tax payment can be remitted with Form 940.

True

The federal unemployment tax is imposed on employers, and thus, is not deducted from employees' wages

True

The maximum credit that can be applied to the FUTA tax because of SUTA contributions is 5.4%.

True

Voluntary contributions by employers into a state's unemployment fund in order to receive a reduced unemployment compensation rate are not permitted by all states.

True