Chapter 11

Question 1

What determines how often payroll taxes are paid?

Answer 1

The amount of taxes owed.

Question 2

How are taxes paid?

Answer 2

The Electronic Federal Tax Payment System. EFTPS. It is required for all annual FEDERAL deposits if they are more than 200k.

Question 3

If you are required to pay taxes on a monthly basis, what day of the month are they due?

Answer 3

The 15th day of the next month

Question 4

If you are required to pay quarterly when are the taxes due?

Answer 4

Every 3 months. On the last day of the last month of the quarter

Ex: Quarter 1 = January - March
Tax due: March 31

Question 5

Deposit schedules are based on the amount currently owed and the amount reported in the LOOKBACK PERIOD. When does the LOOKBACK PERIOD end?

Answer 5

June 30 of the preceding year. It is a four quarter period.

Question 6

Federal Tax deposit schedules are NOT based on how often employees are paid. How are they determined?

Answer 6

By totals currently owed and reported in the LOOKBACK PERIOD.

Question 7

What are the deposit schedules?

Answer 7

More than $50,000 - the employer must pay taxes based on the Semi-weekly Schedule rule.

Less than $50,000 but more than $2,500 the employer is subject to the Monthly Deposit Schedule Rule.

$2,500 or less follows a schedule determined on Form 941 during the lookback period. If there is no lookback period, the employer is required to follow the Monthly Deposit Schedule Rule.

Question 8

Where do you record Medicare and Social Security (FICA) withholdings?

Answer 8

All payroll deductions are debited to the Payroll Taxes Expense account and credited to the same liability accounts used to record the employees share of payroll tax.

Question 9

What form does an Employee receive at year end for Tax Purposes?

Answer 9

W-2 The Wage & Tax Statement

Question 10

How many copies are possibly generated?

Answer 10

One for each of the following:

1. Employer to send to the Social Security Admin
2. Employee to attach to Federal Income Taxes
3. Employee records
4. Employer records
   (2 more for state income tax)
5. Employee to attach to state income tax.
6. Employee for city/county income tax.

Question 11

Form W-3 collects what information from W-2 and must match the totals on what other form?

Answer 11

Collects income informatin from W-2 and must match totals submitted during the year on FORM 941.

Question 12

True or false. An employer can have their both state and fedral unemployment tax rates reduced through a merit rating system

Answer 12

False. ONLY the state unemployment is effected. The federal rate remains the same for everyone

Question 13

When are federal unemployment tax payments generally made?

Answer 13

Quarterly, on the last day of the month following the end of the quarter.

Ex: Jan-March=1st quarter. Payments are due March 31st.

Question 14

When determining FUTA tax, only compensation UNDER $7000 is taxed. If you paid 3 employees $1590, $2500, and $8500, how much is eligible for FUTA tax?

Answer 14

$1590
$2500
$7000
($1500 not taxable because it is OVER the $7000 limit)

Total Taxable amount: $11,090

Question 15

Workers Compensation rates differ according to position and risk. Would an office worker coverage be more or less than a factory worker?

Answer 15

Less, because their risk is less.

Question 16

Form 940 is used by the employer to report what?

Answer 16

ANNUAL Unemployment taxes for the calendar year

Question 17

What is Form 941 used for by the employer?

Answer 17

To report QUARTERLY payroll tax information relating to Social Security, Medicare, and employee income tax to the IRS.

Question 18

What is the difference between a W-2 and a W-3?

Answer 18

W-2’s are provided by the employer to the EMPLOYEE by January 31 for the previous year’s earnings.

Like a GIANT W-2 for the business, W-3’s are submitted by the EMPLOYER to the IRS by the last day of February and include W-2’s of every employee to report total Social Security, Medicare wages and tax withheld, total wages, tips, and ther compensation, total federal income tax withheld, and other information.

Question 19

State Unemployment Tax payable is what kind of account?

Answer 19

A liability. It increases as a CREDIT and decreases as a DEBIT. It’s counterpart account is PAYROLL TAXES EXPENSE and when paid, CASH is credited.