Payroll Computations, Records, and Payment

Question 1

Employee

Answer 1

hired by and works under direction of employer
earnings subject to payroll taxes, reported on calender-year basis

Question 2

Independent Contractor

Answer 2

• paid to carry out specific task/job
• IRS has specific guidelines for meeting def of independent contractor
• contractor responsible for payroll taxes related to income

Question 3

The Fair Labor Standards Act

Answer 3

• 1938. Wage and Hour Law/FLSA
• sets min hour rate/max hrs per week
• sets standard for overtime, at least one-half times reg rate(time and a half)

Question 4

Social Security Tax

Answer 4

• Federal Insurance Contributions Act, FICA, passed in 1930s
• employer required to withhold ss tax from employee pay
• paid to fed based on IRS schedule
• 6.2 percent of first 132,900

Question 5

Social Security Benefits

Answer 5

• retirement benefits when one reaches retirement age
• for dependents of retired workers
• disability benefits

Question 6

Medicare Tax

Answer 6

• levied equally on employees and employers for medical care for employee and spouse after age 65