Other Federal Regulations Flashcards
Under the Social Security Act, how does an individual acquire an insured status?
By spending a certain amount of time working
Under the Social Security Act, what can cause a person’s earned benefits to reduce?
- retiring early
- working after retiring
- earning more than a base level of income
Do unemployment benefits count as part of one’s income?
Yes, they are part of one’s taxable income
What do most states require within their unemployment laws?
All states require a significant amount of past employment, and most require the unemployed person not to be at fault
Self-employed persons cannot receive unemployment benefits
What is the Federal Insurance Contributions Act (FICA)?
A tax on wages with two components, one for Social Security and one for Medicare
Both the employee and the employer must make a contribution, set at 7.65% for 2013
How is the FICA tax ordinarily paid?
The employee’s share must be withheld from his wages as they are paid
Failure to do so may make the employer responsible for a double tax liability – both his and the employee’s share of taxes
Are FICA contributions tax-deductible?
The employer’s contribution can be deducted insofar as the wages are for business-oriented work
The employee’s contribution cannot be deducted
How do FICA contributions work for self-employed people?
They must make a double contribution, just as if there were a separate employer and employee contribution
Same rules for tax-deductibility apply – so he can ordinarily deduct half
What is the Unearned Income Medicare Contribution tax?
As of 2013, a 3.8% tax upon the net investment income of high-income taxpayers
How are unemployment insurance programs ordinarily financed?
Through the Federal Unemployment Tax Act (FUTA) and State Unemployment Tax Act (SUTA)
What is required under FUTA?
Employers who either (a) pay wages of at least $1,500 during any calendar quarter or (b) employ someone at least one day per week for 20 weeks must pay the tax
Paid only on first $7,000 per employee per year, and tax-deductible
How does SUTA relate to FUTA?
The state unemployment tax can vary, but certain states also permit state unemployment tax payments to be credited to employers’ FUTA liability, up to 90%
Per the Social Security Act, who counts as an “employee”?
Part-time employees do
Partners, independent contractors, or self-employed persons do not – they’re deemed self-employed
Some officers or directors do not count either
Per the Social Security Act, what services cannot count as “employment”?
Services performed by ministers, student nurses, nonresident aliens, and some public employees
Moreover, employment must be recurring/continuous
Per the Social Security Act, what payments count as “wages”?
(1) bonuses
(2) vacation and severance pay
(3) commissions
(4) tips, if at least $20 per month
Per the Social Security Act, what payments do not count as “wages”?
(1) reimbursed travel expenses
(2) compensation over the maximum wage base
(3) insurance premiums paid by an employer
(4) retirement benefits paid by an employer
Can employees elect not to be covered by the Social Security Act?
No, it is mandatory
Are workers’ compensation laws designed to recover only for those injuries not caused by negligence?
No, it also covers for injuries caused by negligence
What are the four purposes of workers’ compensation laws?
(1) providing benefits quickly
(2) providing a single and simple remedy
(3) shifting the burden of covering injuries from charities to the industries themselves
(4) incentivizing employers to be more concerned with employee safety
Does workers’ compensation apply to all workers?
No, e.g. not to employees of common carriers
Most states apply it to minors
From whom can employers purchase insurance for workers’ compensation?
Some states require it to be purchased from a state fund, but most permit it to be from a private insurance firm too
Employers can be self-insured if they desire
Can an employee sue for damages after receiving workers’ comp?
No, although a third party can
What occurs if an injured worker recovers from a third party?
The employer is entitled to recover the workers’ comp paid to the injured worker to the extent that it is covered by the third party’s damages
The injured worker can keep any excess
Can an employer elect not to abide by workers’ compensation laws?
Yes, the workers’ comp statutes can be elective rather than compulsory
But since this opens up employers to huge legal claims, accepting workers’ comp laws is effectively mandatory
What are the four usual kinds of workers’ compensation benefits?
(1) cash
(2) medical
(3) death benefits
(4) rehab
All amounts received are tax-deductible
What are the different kinds of cash benefits under workers’ comp?
Impairment benefits and disability benefits
What is generally included within death benefits under workers’ comp?
An allowance for burial/funeral expenses in addition to a % of the weekly wage – though that usually ends if the spouse remarries
What are the different kinds of rehab benefits under workers’ comp?
Medical or vocational, if the injury requires job (re)training
For workers’ comp, what is the employee required to do when reporting his injury?
Must report injury to employer promptly, generally within 30 days
Must file claims with the state in some period, ordinarily 60 days to two years – not doing so can invalidate the employee’s claim, depending on the state
Under what circumstances may an employee sue an employer after having received workers’ comp?
If the employer intentionally harmed the employee, and if the employee seeks damages beyond what workers’ comp provides
What injuries are generally excluded from receiving workers’ compensation?
(1) injuries in traveling to/from work
(2) self-inflicted injuries
(3) injuries suffered while drunk
