Employers do not pay payroll taxes on payments made to independent contractors.
For FUTA purposes, the cash value of remuneration paid in any medium other than cash
is not considered taxable wages.
Since the credit against the FUTA tax (for SUTA contributions) is made on Form 940,
the employers payroll tax entries should include the FUTA tax at the gross amount
(6.0%).
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. Kevin
Kurtz is a newly hired exempt employee who earns an annual salary of $67,600.
Form 944 (annual form) can be used by all new employers instead of Form 941.
The FICA taxes on the employer represent both business expenses and liabilities of the
employer.
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.
Eager, a tipped employee, reported to his employer that he had received $320 in tips
during March. On the next payday, April 1, he was paid his regular salary of $400.
(a) The amount of OASDI taxes to withhold from Eagers pay
(b) The amount of HI taxes to withhold from Eagers pay?
The FLSA sets no limits upon the number of hours that a 15-year-old person may work
so long as the overtime pay provisions are met.
Under the piece-rate system, workers are paid according to their output.
Domestics are excluded from coverage under the FLSA individual employee coverage.
Although commissions are considered payments for hours worked, in all cases they are
excluded when determining the regular hourly rate.
There is no limit to the amount of educational assistance that is exempt from federal
income tax withholdings.
To calculate the overtime pay rate for a commissioned worker, divide the total
commission by the hours worked, and then take one-half of the resulting rate of pay.
Posting to the general ledger for payroll entries is done only at the end of each calendar
year.
Once a company attains the status of employer for FUTA purposes, that status continues
for four calendar years.
A monthly depositor is one who reported employment taxes of $50,000 or more for the
four quarters in the lookback period.
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. Ralston is the sole proprietor of Cut & Curl. During the year, hisnnet
earnings were $79,700. What are his self-employment taxes (OASDI and HI) on these
earnings?
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. Beginning with the first pay of the year, Carson will make $2,700 each
week. In which numbered pay of the year will Carson hit the OASDI taxable limit?
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.
Stacy Forvour is a salaried employee who works fluctuating workweeks.
She is paid $680 per workweek. This week, she worked 46 hours.