Question 1

In 2016, Willow Corporation had three employees. Two of the employees worked full-time and earned salaries of $25,000 each. The third employee worked only part-time and earned $4,000. The employer timely paid state unemployment tax equal to 5.4 percent of each employee's wages up to $7,000. How much FUTA tax is due from Willow Corporation for 2016, after the credit for state unemployment taxes?

Accepted Answer

To calculate the FUTA tax, we need to first determine the taxable wages for each employee. For the two full-time employees, their taxable wages are $7,000 each ($25,000 - $7,000 = $18,000). For the part-time employee, their taxable wages are $0 ($4,000 is less than the $7,000 threshold).

Next, we calculate the total taxable wages for all employees:

$7,000 + $7,000 + $0 = $14,000

The FUTA tax rate for 2016 is 6.0%, but there is a credit of 5.4% for state unemployment taxes paid. Therefore, the net FUTA tax rate is 0.6%.

To calculate the FUTA tax due, we multiply the taxable wages by the net FUTA tax rate:

$14,000 x 0.6% = $84

Therefore, the FUTA tax due from Willow Corporation for 2016, after the credit for state unemployment taxes, is $108 ($84 x 1.28). The answer is C).

Question 2

The FUTA tax is paid by:

Accepted Answer

FUTA tax (Federal Unemployment Tax Act) is a tax paid by employers only. It is used to fund state unemployment programs and is separate from the taxes withheld from an employee's paycheck for Social Security and Medicare.

Question 3

A taxpayer would be required to pay Social Security and Medicare taxes for a domestic employee in all but one of the following situations. In which situation would this not be required?

Accepted Answer

According to current IRS guidelines, a taxpayer is not required to pay Social Security and Medicare taxes for a domestic employee if they earn less than $2,200 per year (as of 2020). Therefore, the baby-sitter who earns $1,300 a year would not require payment of these taxes.

Question 4

Lucinda is a self-employed veterinarian in 2016. Her Schedule C net earnings are $86,000 for the year. Calculate the total amount of Lucinda's self-employment tax liability for 2016.

Accepted Answer

The answer of Lucinda is a self-employed veterinarian in 2016....

Question 5

Sally is an employer with one employee, Sara. Sara earned $12,000 from January 1, 2016 through June 30, 2016, and the state unemployment tax rate is 5.4 percent. Calculate the following amount for Sally.
a.FUTA tax after the state tax credit
b.What form should Sally use to report her FUTA tax liability for 2016?

Accepted Answer

The answer of Sally is an employer with one employee,...

Question 6

Oliver has two employees who earned the following amounts during 2016: If Oliver timely pays 5.4 percent for state unemployment tax, what is the amount of his 2016 FUTA after the state tax credit?

Accepted Answer

The answer of Oliver has two employees who earned the...

Question 7

Household employers are not required to pay FICA taxes on cash payments of less than $2,000 paid to any household employee in a calendar year.

Accepted Answer

Household employers are not required to pay FICA taxes on cash payments of less than $2,000 paid to any household employee in a calendar year, according to IRS regulations.

Question 8

Which of the following types of income is subject to the self-employment tax?

Accepted Answer

Only income from a sole proprietor's activities is subject to self-employment tax. Interest income, dividends, and gain on the sale of real estate are not subject to self-employment tax.

Question 9

The FUTA tax for 2016 is based on 6.2 percent of each employee's wages up to $10,000.

Accepted Answer

The FUTA tax rate for 2016 was 6.0% on the first $7,000 of each employee's wages, not 6.2% on $10,000.

Question 10

Choose the correct answer. Self-employment taxes:

Accepted Answer

Self-employment taxes consist of Medicare tax and Social Security tax, which are based on the taxpayer's net earnings from self-employment. They are not affected by any wages earned as an employee, and apply to taxpayers with at least $400 in self-employment earnings. Self-employment taxes do not include unearned income such as interest and dividends.

Question 11

Melody and Todd are married and have employee wages of $250,000 each in 2016. They have no other income. How much additional 0.9% Medicare surtax will Melody and Todd have to pay or receive as a refund when they file their 2016 income tax return? ​

Accepted Answer

The 0.9% Medicare surtax applies to individuals earning more than $200,000 ($250,000 for married filing jointly). For Melody and Todd, the surtax would be calculated as follows:

($250,000 + $250,000 - $250,000) x 0.9% = $2,250

However, the surtax is only applied to the extent that their wages exceed $250,000. Since their wages are exactly $250,000 each, the surtax is not applicable. Therefore, no refund or additional payment will be due with their return for the Medicare surtax.

Question 12

Tom had net earnings of $80,000 from the plant nursery he owns. What is his liability for FICA taxes on his earnings?

Accepted Answer

The answer of Tom had net earnings of $80,000 from...

Question 13

The FUTA tax is a voluntary unemployment tax which an employer may or may not wish to contribute towards.

Accepted Answer

The FUTA tax is not a voluntary tax, but rather a mandatory federal tax that all employers must pay. It helps fund unemployment benefits for workers who have lost their jobs.

Question 14

A credit against the FUTA tax is available for state unemployment tax paid by the employer.

Accepted Answer

This is true. Employers can receive a credit against their Federal Unemployment Tax Act (FUTA) tax for state unemployment taxes paid, up to a certain limit. This credit is designed to encourage employers to contribute to state unemployment programs, which provide benefits to workers who have lost their jobs.

Question 15

Household employers are not required to pay FICA taxes on part-time household employees.

Accepted Answer

Household employers are required to pay FICA taxes on household employees if they pay them more than $2,300 in wages in a year. This includes part-time employees.

Question 16

The Wash Your Paws Self-Service Dog Wash, a California business, had two employees during the year. Lindsey worked from January through March 15 and earned $2,750. Avery worked for the whole year and earned $20,000. The State of California assesses unemployment tax at the rate of 5.4 percent. Calculate the total FUTA tax after the credit for the state unemployment tax.

Accepted Answer

The answer of The Wash Your Paws Self-Service Dog Wash,...

Question 17

George has four employees who earned $75,000, $27,000, $2,100, and $6,200 during 2016, respectively. He paid 5.4 percent for state unemployment tax. How much FUTA tax will George owe for the four employees?

Accepted Answer

The FUTA tax rate is 6.0 percent, but employers are allowed a credit of up to 5.4 percent for state unemployment taxes paid. George paid 5.4 percent for state unemployment tax, so he will owe 0.6 percent for FUTA tax. 0.6 percent of $110,300 is $661.80.

Question 18

In 2016, Willow Corporation had three employees. Two of the employees worked full-time and earned salaries of $25,000 each. The third employee worked only part-time and earned $4,000. The employer timely paid state unemployment tax equal to 5.4 percent of each employee's wages up to $7,000. How much unemployment tax was paid to the state from Willow Corporation for 2016?

Accepted Answer

The answer of In 2016, Willow Corporation had three employees....

Question 19

For purposes of the new additional 0.9% Medicare surtax on earned income, a single taxpayer having earned income of more than $200,000 is generally subject to the tax.

Accepted Answer

This statement is true. Single taxpayers with earned income exceeding $200,000 are generally subject to the additional 0.9% Medicare surtax.

Question 20

Emily is a self-employed attorney.
a.​
Assuming that Emily earns $20,000 from her practice, calculate the total amount of her self-employment tax liability for 2016.
b.​
Assuming that Emily earns $135,000 from her practice, calculate the total amount of her self-employment tax liability for 2016.

Accepted Answer

The answer of Emily is a self-employed attorney.
a.​
Assuming that Emily...

Quiz 9: Withholding Estimated Payments and Payroll Taxes

The FUTA tax is paid by:

A taxpayer would be required to pay Social Security and Medicare taxes for a domestic employee in all but one of the following situations. In which situation would this not be required?

Lucinda is a self-employed veterinarian in 2016. Her Schedule C net earnings are $86,000 for the year. Calculate the total amount of Lucinda's self-employment tax liability for 2016.

Oliver has two employees who earned the following amounts during 2016: If Oliver timely pays 5.4 percent for state unemployment tax, what is the amount of his 2016 FUTA after the state tax credit?

Household employers are not required to pay FICA taxes on cash payments of less than $2,000 paid to any household employee in a calendar year.

Which of the following types of income is subject to the self-employment tax?

The FUTA tax for 2016 is based on 6.2 percent of each employee's wages up to $10,000.

Choose the correct answer. Self-employment taxes:

Melody and Todd are married and have employee wages of $250,000 each in 2016. They have no other income. How much additional 0.9% Medicare surtax will Melody and Todd have to pay or receive as a refund when they file their 2016 income tax return?

Tom had net earnings of $80,000 from the plant nursery he owns. What is his liability for FICA taxes on his earnings?

The FUTA tax is a voluntary unemployment tax which an employer may or may not wish to contribute towards.

A credit against the FUTA tax is available for state unemployment tax paid by the employer.

Household employers are not required to pay FICA taxes on part-time household employees.

George has four employees who earned $75,000, $27,000, $2,100, and $6,200 during 2016, respectively. He paid 5.4 percent for state unemployment tax. How much FUTA tax will George owe for the four employees?

For purposes of the new additional 0.9% Medicare surtax on earned income, a single taxpayer having earned income of more than $200,000 is generally subject to the tax.

Emily is a self-employed attorney. a. Assuming that Emily earns $20,000 from her practice, calculate the total amount of her self-employment tax liability for 2016. b. Assuming that Emily earns $135,000 from her practice, calculate the total amount of her self-employment tax liability for 2016.

Quiz 9: Withholding Estimated Payments and Payroll Taxes

The FUTA tax is paid by:

A taxpayer would be required to pay Social Security and Medicare taxes for a domestic employee in all but one of the following situations. In which situation would this not be required?

Lucinda is a self-employed veterinarian in 2016. Her Schedule C net earnings are $86,000 for the year. Calculate the total amount of Lucinda's self-employment tax liability for 2016.

Oliver has two employees who earned the following amounts during 2016: If Oliver timely pays 5.4 percent for state unemployment tax, what is the amount of his 2016 FUTA after the state tax credit?

Household employers are not required to pay FICA taxes on cash payments of less than $2,000 paid to any household employee in a calendar year.

Which of the following types of income is subject to the self-employment tax?

The FUTA tax for 2016 is based on 6.2 percent of each employee's wages up to $10,000.

Choose the correct answer. Self-employment taxes:

Melody and Todd are married and have employee wages of $250,000 each in 2016. They have no other income. How much additional 0.9% Medicare surtax will Melody and Todd have to pay or receive as a refund when they file their 2016 income tax return? ​

Tom had net earnings of $80,000 from the plant nursery he owns. What is his liability for FICA taxes on his earnings?

The FUTA tax is a voluntary unemployment tax which an employer may or may not wish to contribute towards.

A credit against the FUTA tax is available for state unemployment tax paid by the employer.

Household employers are not required to pay FICA taxes on part-time household employees.

George has four employees who earned $75,000, $27,000, $2,100, and $6,200 during 2016, respectively. He paid 5.4 percent for state unemployment tax. How much FUTA tax will George owe for the four employees?

For purposes of the new additional 0.9% Medicare surtax on earned income, a single taxpayer having earned income of more than $200,000 is generally subject to the tax.

Melody and Todd are married and have employee wages of $250,000 each in 2016. They have no other income. How much additional 0.9% Medicare surtax will Melody and Todd have to pay or receive as a refund when they file their 2016 income tax return?