8.3 FEDERAL LAWS AND REGULATIONS ON EMPLOYMENT TAXES

Question 1

WHAT IS THE FEDERAL INSURANCE CONTRIBUTION ACT?

Answer 1

FICA - COVER SOCIAL SECURITY AND MEDICARE
1) SS - REPLACING EARNING FOR WORKERS WHO RETIRE.
2) MEDICARE - COVERS THE COST OF HOSPITALIZATION AND MEDICAL BENEFITS OF INSURED WORKERS WHO ARE 65 AND OLDER.

EMPLOYERS SPLIT COST OF FICA WITH EMPLOYEES 7.65% EACH FOR A TOTAL OF 15.3% (6.2% SS & 1.45% MEDICARE)

*SS IS PAID ON ONLY A BASE AMOUNT OF INCOME (160,200 IN 2023) MEDICARE IS NOT CAPPED

Question 2

WHAT IS THE FEDERAL UNEMPLOYMENT TAX ACT?

Answer 2

FUTA - PROVIDE UNEMPLOYMENT COMPENSATION BENEFITS TO WORKERS WHO LOOSE JOBS AND CANNOT FIND NEW ONES. THERE ARE BOTH FEDERAL AND STATE TAX RATES.

FEDERAL - EMPLOYER MUST PAY 6% OF THE FIRST $7,000 FOR EACH EMPLOYEE

STATE - FEDERAL GOV GIVES A CREDIT FOR A LOW STATE TAX RATE TO EMPLOYERS OF UP TO 90% (5.4%) AGAINST THE FEDERAL TAX RATE. I.E.,THE FEDERAL 6% CAN DROP TO ONLY 0.6% AFTER RECEIVING THE CREDIT.

Question 3

WHAT QUALIFIES AN EMPLOYEE TO RECEIVE UNEMPLOYMENT COVERAGE?

Answer 3

SEE SCREENSHOT

Question 4

WHAT IS THE PENALTY FOR FAILURE TO PAY PAYROLL TAXES?

Answer 4

100% OF THE AMOUNT NOT PAID, THE BUSINESS ENTITY IS NOT ONLY LIABLE FOR PAYMENT OF THE TAXES DUE BUT ALSO ANY ASSESSED PENALTY.

Question 5

WHAT IS WORKERS COMPENSATION LAW?

Answer 5

WORKERS COMPENSATION LAWS GUARANTEE AN EMPLOYEE COMPENSATION FOR A JOB-RELATED INJURY OR ILLNESS.

THE LAWS MAKE EMPLOYERS STRICTLY LIABLE FOR AN EMPLOYEE’S JOB-RELATED INJURY OR SICKNESS, EVEN IF THE EMPLOYER IS NOT AT FAULT

FYI - EMPLOYERS ARE ENTIRELY RESPONSIBLE FOR WORKERS COMPENSATION COST.