CPP Module 2 Flashcards
Calculations of Pay
Percentage used for optional flat rate method
22%
Common paymaster requires:
all wages for employees working for one or more related companies concurrently are combined, taxed, paid, and reported as a single transaction for each employee
Employee/Employer Social Security Rate
6.2%
FICA Public Sector Exemption is
Public employees are only subject to SS tax when covered by a 218 agreement or when not eligible for a public employee retirement plan.
Who can be paid as a tipped employee?
A worker who regularly receives $30 in tips per month.
How often should imputing occur?
Taxable non-cash benefits should be included in employee’s income at least once per year. It is recommended to impute more frequently to reduce impact on employee’s pay.
Mandatory Flat Rate Method
37%. Must be used when paying supplemental wages who’s YTD supplement wage’s exceed $1,000,000.
Methods to calculate Federal Income Tax Withholding (FITW)
Wage Bracket or Percentage - Regular Wages
Optional Flat Rate, Mandatory Flat Rate, and Aggregate Method for supplemental wages.
Optional Flat Rate Method
22%. Can be used if an employee’s YTD supplement wage is under $1,000,000 and they have had FITW in the current or preceding year.
Social Security tax age limit
There is none. All employees are subject to the SS tax
Merger Alternate Procedure
The predecessor pays final wages and furnishes successor with all wages paid taxes withheld. THe successor then pays the remaining wages and furnishes W-2s.
Social Security Wage Base
$168,600
Constructive Payment
When wages have been made available to the employee without substantial limitation or restriction. When an amount becomes taxable.
Medicare Tax Rate
1.45% for both employees/employers. Employees with wages in excess of $200,000 pay an additional 0.9%
What is the gross up formula?
When calculating gross earnings, divide the desired net pay the employee is to receive (100% less the employee’s total percentage of all tax rates)
