The IRA format of the SIMPLE plan allows employees to make tax-free contributions
of up to $12,500.
NOTE: In all problems, unless instructed otherwise, compute the hourly and overtime
rates as follows:
1) Carry the hourly rate and the overtime rate to 3 decimal places and then round off to
2 decimal places (round the hourly rate to 2 decimal places before multiplying by one
and one-half to determine the overtime rate).
2) If the third decimal place is 5 or more, round to the next higher cent.
3) If the third decimal place is less than 5, drop the third decimal place.
Also, use the minimum hourly wage of $7.25 in solving these problems and all that
follow. Ides receives 16 cents for every unit produced. Ides produces 2,976 pieces in a
43-hour workweek. For overtime, Ides is paid a sum equal to one-half the regular
hourly pay rate multiplied by the number of overtime hours.
By completing Form W-4P, a person can elect to have no income tax withheld from the
annuity amounts the person receives.
The withholding of federal income and FICA taxes from a tipped employee is made
from the employees wages that are under the employers control.
By the use of executive orders, the federal government has banned discrimination in
employment on government contracts.
FIT Payable is a liability account used to record employees withheld federal income tax
and also the employers match of that tax.
Services performed by a child under the age of 21 for a parentemployer are excluded
from FUTA coverage.
NOTE: In this chapter and in all succeeding work throughout the course, unless
instructed otherwise, use the following rates, ceiling, and maximum taxes.
For rounding rules refer to page 2-33.
*Employee HI: Plus an additional 0.9% on wages over $200,000. Also applicable to
self-employed.
Lidge Company of Texas (TX) pays its employees monthly. The following payroll
information is for the second quarter of 20–.
The number of employees on March 12, 20– was 11.
Complete the following portion of Form 941.
Since not-for-profit corporations are exempt from federal income taxes, they are not
defined as employers under the federal income tax withholding law.
Under FMLA, the time off must be used in one uninterrupted period of time.
Partnerships do not have to pay unemployment taxes on the wages of their employees.
Note: Use the tables on the following pages to calculate the answers to the problems
listed.
Source: Internal Revenue Service.
Edward Dorsey is a part-time employee, and during the biweekly pay period he earned
$395. In addition, he is being paid a bonus of $300 along with his regular pay. If Dorsey
is single and claims two withholding allowances, how much would be deducted from
his pay for FIT? (There are two ways to determine his deductiondo not use table for
percentage method.)
The employees of a semiweekly depositor are paid every Tuesday. The accumulated
payroll taxes must be deposited on or before the following Friday.
Hourly employees who take work home without the permission of the employer do not
have to be paid for the work done at home.
Unlike Form 941, there is no penalty for the late filing of Form 940.