Other Laws n Regs

Question 1

What is the Federal Insurance Contributions Act (FICA)

Answer 1

Provides workers and their dependents with benefits in case of death, disability, or retirement

Question 2

Participating and Funding of FICA

Answer 2

All full time and part time employees must participate in the program

It is funded by taxing income earned from labor

Funded by both employers and employees, including self-employeed people

Question 3

What are the employees responsibilities for FICA

Answer 3

employee- Gross wages subject to FICA (6.2% FICA & 1.45% medicare)

Self-employed- pay in through self-employement tax (equal to employers n employees contribution - 15.3%) ONLY IMPOSED ON NET PROFITS (not gross wages)

Question 4

Who can deduct FICA

Answer 4

Employer’s contribution is deductible as an ordinary business exp

Employees can not deduct

Self-employed= can deduct one half of the self employment tax to arrive at AGI

Question 5

FICA- most important things to remember about Social Security

Answer 5

1) employer must pay the tax and collect an employees portion of the tax
2) all income derived from labor is taxed; unearned income is not taxed
3) all employees are subject to the tax up to a maximum dollar amount for the social security with no limit on the Medicare; self-employement income is subject to both employer and employee taxaction for income over $400

Question 6

T/F- all employers must participate is FUTA (fed unemployment)

Answer 6

False- must meet the minimum payroll requirement

Question 7

What employers must participate in FUTA (unemployment)?

Answer 7

• have quarterly payrolls of at least $1,500 OR

- employ at least one person for 20 weeks in a year

Question 8

Who can deduct FUTA (unemployment taxes)?

Answer 8

Only the employer (bc they pay it) not the employee

deductable as a business expense

Question 9

The purpose for workers comp

Answer 9

to enable employees to recover for work-related injuries regardless of negiligence

Question 10

Is workers comp deductible?

Answer 10

yes, by the company as a business exp

Question 11

benefits of workers comp for employee

Answer 11

for any injury/disease resulting from employment
-money for loss of income, disability, loss of limbs, prosthetic devices, medical services, burial costs, and surbivors benefits

-NOT limited to what was paid in on employees behalf

Question 12

Is any payments for the affordable care act deductible?

Answer 12

no

Question 13

Can minors collect workers comp?

Answer 13

yes

Question 14

who cannot collect workers comp?

Answer 14

temporary workers

Question 15

Under FICA (fed insurance contribs act) which acts caused by employer will result in penalties?

Answer 15

1) Failure to supply taxpayer identification numbers

2) Failure to make timely FICA deposits

Question 16

Only the first _____ of a covered employees wages is taxable under FUTA (fed unemployment act)

Answer 16

$7000

Question 17

T/F - social security benefits may include medicaid payments

Answer 17

False. only medicare, payments to divorced spouces, payments to disabled kids, etc.

Question 18

If a car is received as a productivity reward, would it be taxed under FICA?

Answer 18

Yes- for the FMV of the car

Question 19

The following forms of income are not subject to tax under FICA

Answer 19

• interest on municipal bonds
• capital gains
• dividends