Concepts Module 1 Flashcards
Employees can be paid by
Check, DD (EFT), Cash, paycards, payroll cards which are like debit cards used like cash
Employees pay
Federal income & employment taxes which are SS & MED
Fica is
Federal insurance contributions act, SS & Medicare taxes
Medicare taxes provide employees
With basic health insurance at 65 yrs old or earlier if they become disabled
Ss benefits
Pay retirement, disability, & survivor benefits
CMS , Center for Medicare & Medicaid services
Administers Medicare, for 65 & older, with certain disabilities, & or kidney failure
Unemployment Insurance Tax
Is based on a joint federal & state system
There are federal & state unemployment taxes
Alaska, NJ, PA employees pay part SUI. Employers pay all federal unemployment tax.
SDI: State Disability insurance only exist
In 5 states: CA, HAWAII, NJ, NY, RHODE ISLAND, + P.R
SDI
Pays state funds if injured not on the job , only in certain states. Employees & employers pay into these taxes
PFL
Is employee & employer paid. 10-11 states. CA, CO, CT, DC, MA , NJ, NY, OR, RI, WA . MD Oct 1 2024
Payroll challenges:
Complexity, communication, technology (automate timekeeping, record storage. Record retrieval,) & accuracy
Independent contractors
Pay both employer & employee SS & MED( SECA. )Self employment taxes.
An employee may qualify under common law test as employee but still can be a independent contractor based on the
Reasonable basis test
IRS Focus more payroll tax audits for
Worker misclassification. Because federal government has revenue losses due to independent contractors
Independent contractors get a
1099 NEC $600 OR MORE
Irs streamlined worker classification into
Behavioral control, financial control, & relationship of the parties
Federal tax law applies to all employees unless a
Corporations officer performing minor services & not entitled to compensation.
SS8 -
Determination of worker status for federal & income taxes WTH
While waiting for IRS to respond to SS8 companies should treat
Workers as a employee but won’t get refund for taxes
Reasonable basis test
Safe harbor rules 530 of the revenue act of 1978
Reasonable basis test include
Court decisions, irs rulings, irs audits, letter from attorney or CPA, a long history company practice
If doing worker classification audit
The IRS must give written notice of 530 safe harbor protections.
If doing worker classification audit
The IRS must give written notice of 530 safe harbor protections.
530 safe harbor , reasonable basis independent contractors must pay
Seca taxes by completing form 8919 for uncollected SS & MED Tax
FLSA Fair Labor Standards Act regulates
Minimum wage rates, OT pay, child labor, equal pay
Wage & hour division is the
DOL
Leased workers are often trained for the job
Not staffing agency workers
PEO professional employer organization
Can provide HR, Payroll, & benefits management. Leasing companies may have better benefits of use than a small company
CPEO Certified PEOs must meet
Tax status, background, experience, business location, annual financial audits, satisfy bond financial review, compute taxable income using accrual method & more, pay 1k annual fee etc
Can pay 24% backup withholding taxes if 1099
Payee failed to proVIDed TIN
THE TIN is incorrect
The irs notified the payer TIN is incorrect
The payee identifies they are subject to backup WTH. If pd reported on 945.
CPEOs can be penalized if
Schedule R not attached to 940 or 941. Or not including the EIN for each customer on schedule R, or if 940 or 941 not filed on a magnetic media
Non discretionary bonus are included in
regular rate of pay
When an employee receiving payments from a third-party sick pay provider fails to complete Form W-4S, Request for Federal Income Tax Withholding From Sick Pay, how much federal tax is withheld?
None
Under the FLSA, the calculation of a nonexempt employee’s regular rate of pay must include:
cost-of-living adjustments.
The FLSA exempts the following types of pay from the regular rate of pay –
gifts, paid time off, reimbursed expenses, discretionary bonuses, benefit plan contributions, and others.
Employers in the private sector can keep their expenses for employee overtime down and remain in compliance with the FLSA by doing which of the following:
Giving employees who are paid biweekly, semimonthly, or monthly time off during the same pay period in which the overtime was worked that is at least equal to one and one-half hours off for each overtime hour worked.
Under the FLSA white collar exemption rules, an exempt professional employee will meet all of the following requirements EXCEPT:
having authority to hire and fire employees.
After an employer receives an IRS penalty notice for an employee’s failure to provide a correct name and SSN, the employer must request the employee to complete a Form W-4 by
December 31st.
Employees must complete a new W-4 when
their change in status requires more income tax to be withheld. Tax liability increases
Form W-4S ALLOWS the third-party sick pay provider to withhold federal income tax based on:
a flat amount.
Which of the following factors is NOT used in determining a state’s right to unemployment claim coverage?
Length of service
Employers will consider the following four factors in descending order of importance: localization of services, base of operations, place of direction or control, and place of residence.
Employers must remind employees to complete an amended Form W-4 if they have any changes in status
by December 1 of each year.
What does the perjury statement on Form W-4 indicate?
The perjury statement on Form W-4 indicates the employee attests to the accuracy of the data on the form.
If an employee lives in a state with a minimum wage of $8.00 and works in a state with a minimum wage of $7.75, what is the minimum wage that must be paid the employee?
$7.75 The greater of the minimum wage in the state where the work is preformed or the federal minimum wage must be paid.
Under the FLSA, an employee’s work time commences when the employee
begins performing principal activities.
The FLSA exempts attorneys, physicians and teachers from the white collar
minimum salary requirement.
Under the FLSA, an exempt executive’s primary duty must include
managing an enterprise, department, or subdivision, direct the work of at least two or more full-time equivalent employees, and have the authority to hire and fire other employees.
An exempt executive employee must manage
a customarily recognized department, direct the work of two or more full-time employees, and be paid a weekly salary of at least $684.00.
All of the following are statutory employees EXCEPT: FT Real estate agent
There are four categories of statutory employees: agent-drivers/commission-drivers, life insurance salespersons, homeworkers, and traveling or city salespersons.
In addition to the FLSA, the following federal laws regulate minimum wages and overtime pay to employees working for employers who are federal government contractors EXCEPT:
The Copeland Anti-Kickback Act
Under the FLSA, police officers’ overtime pay is calculated based on
the work period basis. The work period may consist of 7 to 28 consecutive days.
The FLSA regulates
overtime, minimum wage, child labor, and equal pay.
Under the FLSA, when a highly compensated exempt employee receives less than $107,432.00 in compensation during the year, the employer may
Under the FLSA, when a highly compensated exempt employee receives less than $107,432.00 in compensation during the year, the employer may
Under the FLSA, an employee is engaged to be waiting when
the employer restricts the employee’s behavior and does not permit personal business.
Under IRS regulations, which of the following is NOT included in evaluating whether an employee is a student exempt from FICA taxation?
Eligibility for student discounts from vendors and suppliers
Under the FLSA, the tipped employee’s total compensation (cash wages plus tips) must be a minimum of $7.25 per hour.
7.25 * 40
The E-Verify program checks which databases to verify employment authorization of newly hired employees?
The E-Verify program checks SSA (Social Security Administration) and DHS (Department of Homeland Security) databases to verify employment authorization of newly hired employees.
Under the FLSA white collar exemption rules, an exempt administrative employee must meet all of the following requirements EXCEPT:
managing a customarily recognized department. Exempt administrative employees must perform non-manual work relating to the general business operations, exercise discretion on matters of significance, and be paid a weekly salary of $684.00.
When an employer receives a lock-in letter from the IRS, the employer first must
provide a copy of the lock-in letter to the employee within 10 business days of the lock-in letter’s receipt.
If an individual does not submit a valid Form W-4P, how does the payer calculate federal income tax withholding from the distribution?
as if the filing status is single with no adjustments in Steps 2 - 4.
Under the FLSA, when school is not in session, 14 and 15-year-old employees
can only work between 7:00 a.m. and 9:00 p.m. When school is in session, 14 and 15-year-old employee can only work between 7:00 a.m. and 7:00 p.m. and cannot work during school hours.
Statutory employees are workers who are not subject
to federal income tax withholding but are subject to social security and Medicare taxes while having their wages reported on Form W-2.
Under the FLSA, all of the following types of compensation are included when determining if an employee meets the highly compensated definition for the white collar exemption EXCEPT:
employee benefits. fringe benefits, board and lodging etc
Which of the following items can periodic pension recipients specify on Form W-4P to determine their federal income tax withholding?
Dependents and other adjustments
An employee claimed as a dependent by her parents, may claim exempt status on Form W-4 if the employee’s total income
is not more than $1,300.00 including unearned income of not less than $450.00.
If an employee files w4 as an exempt, the employee has til when to file a new form
Feb 15 of the next year to continue the exempt status
Employers must follow IRCA and verify e verify program to work
identify for right to work
