On Exam Flashcards
Reconcile payroll output reports to external sources. (401(k), FSA vendors
We run a repot and send files
Purpose of SS-8
Form SS-8 to request a determination of the status of a worker under the common law rules for purposes of federal employment taxes and income tax withholding. can request determination form IRS
5 parts
3 concentrate on components of the common law, behavioral control, financial control and relationship of the worker and firm.
Types of workers
employees
Independent contractors
temporary service workers
leased workers
Common law test
- Behavioral control - level of instruction, training
- Financial control- unreimbursed business expenses, worker’s investment, services available to public, worker pay, Profit/loss
- relationship to the parties- written contracts, benefits, relationship key aspects of operations
Reasonable Basis test
Section 530 Court decision or IRS private letter ruling Previous IRS audit Accepted industry practice advisement by outside council
Classification under FLSA
Two classifications are exempt and non-exempt employees
CPEO
A certified PEO (CPEO) is a Professional Employer Organization that has met the rigorous background, financial, and reporting requirements set by the IRS. Certification ensures financial protections and tax benefits to clients of a certified PEO that clients of non-certified PEOs do not necessarily have.
Statutory employees
- Statutory employees- distribution driver, full-time life insurance agent, at-home worker, full-time traveling sales person not for resale.
DISH- Drivers, Insurance, Sales persons, Homeworkers
No federal income but yes SS, Medicare and FUTA only for drivers and sales
They have W-2 boxes 1, 3-6 and 13
Statutory Nonemployees
Direct Sellers and Qualified real estate agents
REDS- Real State and Direct Sellers
Tax treatment-all payments related to sales rather than hours worked, written contract not treated as employees
Reporting 1099-NEC Box 1
Overage under FLSA
Fair Labor Standards Act
Federal Minimum Wage- $7.25
Equal Pay
Overtime
Minors
FLSA Tips and Tip Credit
Under FLSA required to pay tipped employees $2.13 per hour in wages as long as the employee’s tips are enough to make up remainder of the minimum hourly wage.
1. Employee must be informed about the credit provisions of the law before it is taken.
2.All tips much be kept by the employee
3. credit card tips must be given to the employ by next payday % charge can be deducted.
4. tip credit may not be increased for overtime hours worked that are paid at a premium rate.
5. ee must actually receive at least as much in tips as the credit by employer.
So tip credit for employer is $5.12
8/80 Rule
Allow hospitals and nursing homes to continue their scheduling practices for nonexempt employees without increasing overtime cost. employees to elect a 14-day work period instead of the 7-day workweek.
Employees must receive at least 1.5 times their regular rate of pay for hours worked over 8 in any workday or over 80 in the 14-day work period whichever is greater.
Fluctuating workweek
pay these employees a fixed weekly salary even though their hours fluctuate form week to week. Courts ruled that the fluctuating workweek can be used when an employee is paid a performance based commission in additional to the fixed salary.
Meal Period and Rest periods
Meal period: Not time worked if the employee is relieved of all duties and responsibilities during that time. must be at least 30 minutes.
Rest period: coffee breaks, shorter period must be paid as worktime. are not required under the FLSA but may be under state law.
Waiting time
Engaged to be waiting - would go towards overtime and time would be compensated.
Waiting to be engaged- on call if the employee is not physically at the employer’s premises but asked to stay by phone and con conduct personal business. does not include in overtime.
Unauthorized Overtime
If the employ is permitted to work must be compensated and pay.
Wage and Hour Rounding accepted
is to the nearest tenth 6 minutes or 15 minutes of a hour. has to be at start and end of actual time worked
Form 8027
for Tip Allocations With mroe than 10 employees must allocate tips if the amount of tips reported by employees for a payroll is less than 8% of the extablishement’s gross sales
White Collar
Exemptions
types
Salary Requirements
Public Sector employees in bonsaied executive, administrative and professional capacities and paid a salary basis.
Executive, Administrative employees, professional and outside salespeople
Salary requirements
Minimum weekly salary $684 for Ex, Admin and Professionals
Computer professionals paid by the hour may also be exempt if their hourly rate is at least $27.63
Child Labor
Under 14 -Forbidden form work with exception of family farm
14 to 15- permitted work (Office, creative work, cashier, art modeling, advertising department work, comparative shopping, marking prices, bagging, deliveries not in car, clean-up work, food service, lifeguards only 15
Work Hours:
When school in session only 7am-7pm 3 hours per day 18 hours per week
No School 7am -9pm 8 hours a day or 40 per week
16-17- any with exceptions of hazardous jobs NO hour limits
Davis-Bacon Act
Authorizes the Secretary of Labor to set minimum pay standards for laborers and mechanics working on federally financed construction contracts of $2,000 or more.
Walsh-Healey Act
governs wages and hours of employees of manufacturers and dealers furnishing the federal government with materials, supplies, articles, or equipment under contracts exceeding $10,000
- Payment of prevailing minimum wage for hours worked.
- 1.5 times the basic rate for hours worked in excess of 40 in one week
- No person under 16 years of age
- prohibition convict labor
- maintenance of sanitary and nonhazardous working conditions.
- posting the Act’s requirements in a prominent place.
Service Contract Act
Services to federal agency or organization under fed government with prevailing wage and benefit payment requirements
Applies to contracts over $2,500
include wages over FLSA Min wage
include Fringe benefits in similar employment or collective bargaining agreement, or equivalent cash or benefits
Notice to employees of required compensation.
944
For small businesses that have a payroll tax liability (including Social Security, Medicare, and Federal income taxes of less than $1,000 annually
940
Report Federal unemployment taxes (FUTA) you paid throughout the year. Filed annually, employers are responsible for depositing taxes owed on a quarterly basis.
941
Company withholding more than $1,000 annually in Social Security, Medicare, and federal income tax form your employee’s wages done ever quarter
943
For farmworkers that are subject to federal income or FICA taxes, filed annually
W-3
Used to share all information form your employee’s w-2s with the Social Security administration it serves as a summary sheet providing the totals.
If more than 250 W-2’s issued have to file electronically and W-3 is not required
1099-MISC
Contractors must receive used for
- at least $10 royalties or broker payments
- at least $600 in rents, services, prizes and awards, other income payments, medical and health care payments.
- at least $600 gross proceeds paid to an attorney for legal services
- fishing boat proceeds
- beneficiary or estate payment
1099-NEC
Nonemployee Compensation
Use box 1- nonemployee compensation
Box 4 Federal income tax withheld
Box 5 to 7 state income tax
1096
Submitted with 1099-NAC, 1099-MISC and 1099-R that shows that annual summary similar to W-3 with the W-2
1099-R
For Retirement or pensions, IRAs, 403b
1042, 1042-S and 1042-T
1042-Amounts paid and taxes withheld from nonwage compensation must be reported by payer annually. Annual withholding tax return for U.S. Source income of Foreign persons.
1042-S: income received by nonresident alien that does not have to be reported on W-2 Sent to alien and IRS
1042-T:
Penalties Late return 1042
with in 30 days after due date- $50/return, Maximum $565,000($197,500 for small business)
More then 30 but by August 1st- $110/return Max $1,696,000 (Small 565000)
After August 1st or no correct form is filed: $280/return, max $3,392,000 (S $1,130,500)
Misclassification Penalty
- Not withholding federal income tax- 1.5% of wages paid
- 1 and failure to file Form 1099-Misc for the worker- 3% of wages paid
- Not withholding employee’s share for social security and Medicare taxes - 20% of employee’s share
- 3 and failure to file 1099-Misc for worker- 40% of employee’s share
Can have more then one penalty
Penalties for Form I-9 Noncompliance
Knowingly hire or continue to employ unauthorized aliens
$573-$4,586 for each worker hired for first offense
$4,586-$11,463 for a second offense
$6,878-$22,927 for more than two offenses.
Fail to comply with verification requirements fined $230-$2,292 for each person If patterned and practice can face criminal penalties of up to $3,000 and or 6 months in prison.
If minor may just get warning notice.
U.S. Citizenship and Immigration Services (USCIS)
E-Verify
FMLA
Family and Medical Leave Act required covered employers to provide up to 12 or 26 weeks of unpaid leave under specific circumstances.
May get credit if leave is paid at least 50% credit will be 12.5% and increases by .25% for each percentage point that exceeds 50%
Max credit is 25%
workplace with 50 or more employees
