Deck 5: Unemployment Compensation Taxes

Question 1

For FUTA purposes, an employer must pay a higher FUTA tax rate on executives than on nonsupervisory personnel.

Answer 1

False

Question 2

Christmas gifts, excluding noncash gifts of nominal value, are taxable wages for unemployment purposes.

Answer 2

True

Question 3

Once a company attains the status of employer for FUTA purposes, that status continues for four calendar years.

Answer 3

False

Question 4

Every employer is entitled to a 5.4 percent credit against the gross FUTA tax of 6.0 percent.

Question 5

A traveling salesperson who solicits and transmits to the principal orders for merchandise for resale is considered an employee under FUTA.

Question 6

FUTA and SUTA coverages extend to U.S. citizens working abroad for American employers.

Question 7

Services performed in the employ of a religious organization that is exempt from federal income tax are also exempt from FUTA coverage.

Question 8

If an employee works in more than one state, the employer must pay a separate SUTA tax to each of those states in which the employee earns wages.

Question 9

Partnerships do not have to pay unemployment taxes on the wages of their employees.

Question 10

Insurance agents paid solely on a commission basis are not considered employees under FUTA.

Question 11

If an employee has more than one employer during the current year, the taxable wage base applies separately to each of those employers, unless one employer has transferred the business to the second.

Question 12

Retirement pay is taxable wages for FUTA purposes.

Question 13

In the case of a part-time employee, the employer pays a FUTA tax on only the first $3,500 of earnings (one-half the regular limit).

Question 14

Advance payments for work done in the future are not taxable wages for FUTA purposes.

Question 15

Services performed by a child under the age of 21 for a parent-employer are excluded from FUTA coverage.

Question 16

The Social Security Act ordered every state to set up an unemployment compensation program.

Question 17

Educational assistance payments made to workers to improve skills required of their jobs are nontaxable for unemployment purposes.

Question 18

Directors of corporations who only attend and participate in board of directors' meetings are not covered as employees under FUTA.

Question 19

Unemployment taxes (FUTA and SUTA) do not have to be paid by an employer who has only part-time employees.

Question 20

For FUTA purposes, the cash value of remuneration paid in any medium other than cash is not considered taxable wages.

Question 21

"Dumping" is legal in all but a few states.

Question 22

Included under the definition of employees for FUTA purposes are:

A) independent contractors.
B) insurance agents paid solely on commission.
C) student nurses.
D) officers of a corporation.
E) members of partnerships.

Question 23

In order to obtain the maximum credit allowed against the federal unemployment tax, the employer must have paid its SUTA contributions by the due date of Form 940.

Question 24

In most states, the contribution reports and the wage information reports are filed quarterly.

Question 25

The mailing of Form 940 is considered timely if it is postmarked on or before the due date.

Question 26

On Form 940, even if the total FUTA tax is more than $500, there is no listing of quarterly federal unemployment tax liabilities.

Question 27

Form 940 must be mailed to the IRS by January 15.

Question 28

Currently, none of the states imposes an unemployment tax on employees.

Question 29

In some states, employers may obtain reduced unemployment compensation rates by making voluntary contributions to the state fund.

Question 30

There is a uniform rate of unemployment benefits payable by all states.

Question 31

An aspect of the interstate reciprocal arrangement concerns:

A) the status of Americans working overseas.
B) the taxability of dismissal payments.
C) the determination of an employer's experience rating.
D) the transfer of an employee from one state to another during the year.
E) none of the above.

Question 32

A federal unemployment tax is levied on:

A) employees only.
B) both employers and employees.
C) employers only.
D) government employers only.
E) no one.

Question 33

Unlike Form 941, there is no penalty for the late filing of Form 940.

Question 34

If an employer pays unemployment taxes to two states, it will have the same SUTA tax rate in both states.

Question 35

Which of the following is not a factor considered in determining coverage of interstate employees?

A) Location of base of operations
B) Place where work is localized
C) Location of company's payroll department
D) Location of employee's residence
E) Location of place from which operations are controlled

Question 36

For FUTA purposes, an employer can be any one of the following except:

A) an individual.
B) a partnership.
C) a trust.
D) a corporation.
E) All of the above can be employers.

Question 37

FUTA tax deposits cannot be paid electronically.

Question 38

Even if a state repays its Title XII advances, all employers in that state are subject to a credit reduction in the year of the advance.

Question 39

If an employer's quarterly tax liability is $525, it must be paid on or before the last day of the month following the end of the quarter.

Question 40

If an employer is subject to a credit reduction because of Title XII advances, the penalty for the entire year will be paid only with the deposit for the last quarter of the year.

Question 41

Which of the following payments are taxable payments for federal unemployment tax?

A) Christmas gifts, excluding noncash gifts of nominal value
B) Caddy fees
C) Courtesy discounts to employees and their families
D) Workers' compensation payments
E) Value of meals and lodging furnished employees for the convenience of the employer

Question 42

Which of the following provides for a reduction in the employer's state unemployment tax rate based on the employer's experience with the risk of unemployment?

A) Voluntary contribution
B) Title XII advances
C) Pooled-fund laws
D) Experience-rating plan
E) None of the above

Question 43

An employer must pay the quarterly FUTA tax liability if the liability is more than:

A) $3,000.
B) $500.
C) $1,000.
D) $1.
E) $100.

Question 44

In order to avoid a credit reduction for Title XII advances, a state must repay the loans by:

A) the end of the year of the loans.
B) the end of the year the credit reduction is scheduled to take effect.
C) the end of the third year after the year of the loans.
D) November 10 of the year the credit reduction is scheduled to take effect.
E) June 30 of the year after the loans.

Question 45

Deposit by the:

A) end of the month after the quarter.
B) 15th of the month after the quarter.
C) 10th of the month after the quarter.
D) end of the following quarter.
E) same day of the FICA and FIT deposits.

Question 46

If the employer is tardy in paying the state contributions, the credit against the federal tax is limited to what percent of the late payments that would have been allowed as a credit if the contributions had been paid on time?

A) 6.2%
B) 90%
C) 5.13%
D) 20%
E) 0%

Question 47

Which of the following types of payments are not taxable wages for federal unemployment tax?

A) Retirement pay
B) Cash prizes and awards for doing outstanding work
C) Dismissal pay
D) Bonuses as remuneration for services
E) Payment under a guaranteed annual wage plan

Question 48

Voluntary contributions to a state's unemployment department are:

A) allowed in all states.
B) designed to increase an employer's reserve account in order to lower the employer's contribution rate.
C) capable of being paid at any time with no time limit.
D) returned to the employer at the end of the following year.
E) sent directly to the IRS.

Question 49

If the employer has made timely deposits that pay the FUTA tax liability in full, the filing of Form 940 can be delayed until:

A) December 31.
B) February 15.
C) February 10.
D) February 1.
E) March 31.

Question 50

The person who is not an authorized signer of Form 940 is:

A) the individual, if a sole proprietorship.
B) the accountant from the company's independent auditing firm.
C) the president, if a corporation.
D) a fiduciary, if a trust.
E) All of the above are authorized signers.