Chapter 8 Section 4: Employer-Employee Law Flashcards
What does FICA do?
What is it?
It provides workers and their dependents with benefits in case of death, disability, or retirement
It stands for the Federal Insurance Contribution Act
Who must participate in FICA?
Almost everyone
Who pays for FICA?
The employer and the employee
What does the employer pay for FICA?
They have to match the employee’s contribution
If they voluntarily pay the employee’s share it’s a deduction for the employer and taxable income to the employee
What does the employee pay for FICA?
They are taxed on gross wages (earned income)
What do self-employed people pay for FICA?
Both halves, on net income.
What does the employer deduct for FICA?
They deduct their contribution as an ordinary business expense
What do self-employed people deduct for FICA?
1/2 is deductible in arriving at AGI
Can you opt out of social security?
Nope. Thanks, Obama.
What is FUTA?
Federal Unemployment Tax Act
State-run system of insurance to provide income to workers who have lost their jobs
Who participates in FUTA?
Employers who have quarterly payrolls over $1,500 or who employ at least one person for 20 weeks in a year
Who pays for FUTA?
Employers only. They get a deduction as an ordinary business expense
For FICA and FUTA, are benefits limited to contributions?
No
What is worker’s comp?
State-run programs to enable employees to recover from injuries incurred while on the job.
Who is liable under worker’s comp?
What’s the exception?
The employers are strictly liable, regardless of fault. So as long as it was in the scope of employment, it can be due to negligence. The exception is fighting, intoxication, and self-inflicted wounds.
