Deck 5: Unemployment Compensation Taxes

Question 1

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.

Answer 1

True

Question 2

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

Answer 2

True

Question 3

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

Answer 3

True

Question 4

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

Question 5

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

Question 6

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

Question 7

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

Question 8

Retirement pay is taxable wages for FUTA purposes.

Question 9

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

Question 10

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

Question 11

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

Question 12

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

Question 13

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

Question 14

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

Question 15

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

Question 16

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

Question 17

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 18

In the case of a part-time employee,the employer is not liable to pay any of the employee's earnings.

Question 19

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

Question 20

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

Question 21

FUTA tax deposits cannot be paid electronically.

Question 22

Schedule A of Form 940 only has to be completed by employers who are subject to the Title XII credit reduction.​

Question 23

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

Question 24

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 25

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

Question 26

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

Question 27

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

Question 28

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 29

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

Question 30

​Even if the duties of depositing the FUTA taxes and filing Form 940 have been outsourced,the employer is still the responsible party.

Question 31

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

Question 32

​An employer can use a credit card to pay the balance with Form 940 (under $500. )

Question 33

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

Question 34

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 35

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

Question 36

An employer can use a credit card to pay the quarterly deposit of FUTA taxes during the year.​

Question 37

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

Question 38

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

Question 39

If a company is liable for a credit reduction (due to Title XII advance),this extra tax must be paid along with each of the required deposits made during the year.​

Question 40

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 41

When making a payment of FUTA taxes,the employer must make the payment 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 42

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 43

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 44

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.

Question 45

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 46

Instruction 5-1
Use the net FUTA tax rate of 0.6% on the first $7,000 of taxable wages.
​
Refer to Instruction 5-1.Michael Mirer worked for Dawson Company for six months this year and earned $11,200.The other six months he earned $6,900 working for McBride Company (a separate company).The amount of FUTA taxes to be paid on Mirer's wages by the two companies is:
a)Dawson Company __________.
b)McBride Company __________.

Question 47

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 48

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 49

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 50

Instruction 5-1
Use the net FUTA tax rate of 0.6% on the first $7,000 of taxable wages.
​
Refer to Instruction 5-1.John Gercke is an employee of The Woolson Company.During the first part of the year,he earned $6,800 while working in State A.For the remainder of the year,the company transferred him to State B where he earned $16,500.The Woolson Company's tax rate in State A is 4.2%,and in State B it is 3.15% on the first $7,000.Assuming that reciprocal arrangements exist between the two states,determine the SUTA tax that the company paid to:
a)State A __________.
b)State B __________.

Question 51

Instruction 5-1
Use the net FUTA tax rate of 0.6% on the first $7,000 of taxable wages.
​
Refer to Instruction 5-1.Niemann Company has a SUTA tax rate of 7.1%.The taxable payroll for the year for FUTA and SUTA is $82,600.
a)The amount of FUTA tax for the year is __________.
b)The amount of SUTA tax for the year is __________.

Question 52

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 53

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 54

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 55

Instruction 5-1
Use the net FUTA tax rate of 0.6% on the first $7,000 of taxable wages.
​
Refer to Instruction 5-1.Stys Company's payroll for the year is $1,210,930.Of this amount,$510,710 is for wages paid in excess of $7,000 to each individual employee.The SUTA tax rate for the company is 3.2% on the first $7,000 of each employee's earnings.
a)The amount of FUTA tax for the year is __________.
b)The amount of SUTA tax for the year is __________.

Question 56

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 57

Instruction 5-1
Use the net FUTA tax rate of 0.6% on the first $7,000 of taxable wages.
​
Refer to Instruction 5-1.Aaron Norman earned $24,900 for the year from Marcus Company.The company is subject to a SUTA tax of 4.7% on the first $9,900 of earnings.Determine:
a)the employer's FUTA tax on Norman's earnings __________.
b)the employer's SUTA tax on Norman's earnings __________.

Question 58

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 59

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 60

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 61

Instruction 5-1
Use the net FUTA tax rate of 0.6% on the first $7,000 of taxable wages.
​
Refer to Instruction 5-1.Hunter Company had a FUTA taxable payroll of $192,700 for the year.Since the company is located in a state that has 1.5% FUTA credit reduction due to unpaid loans,determine Hunter's FUTA tax liability for the year.

Question 62

Instruction 5-1
Use the net FUTA tax rate of 0.6% on the first $7,000 of taxable wages.
​
Refer to Instruction 5-1.Queno Company had FUTA taxable wages of $510,900 during the year.Determine its:
a)gross FUTA tax __________.
b)FUTA tax credits (assuming no penalties)__________.
c)net FUTA tax __________.

Question 63

Instruction 5-1
Use the net FUTA tax rate of 0.6% on the first $7,000 of taxable wages.
​
In Part 5 of Form 940,Peterson Company reported FUTA tax liabilities as follows:
First quarter:
$397.50
Second quarter:
$209.10
Third quarter:
$274.50
Fourth quarter:
$262.20
List the amounts and the dates of each required FUTA tax deposit:
First Quarter Deposit
$__________
date
__________
Second Quarter Deposit
$__________
date
__________
Third Quarter Deposit
$__________
date
__________
Fourth Quarter Deposit
$__________
date
__________

Question 64

Instruction 5-1
Use the net FUTA tax rate of 0.6% on the first $7,000 of taxable wages.
​
Refer to Instruction 5-1.In the first quarter of the year,Henry Gibson earned $3,000 in wages and reported $2,400 in tips to his employer.How much would the employer's FUTA tax be for the first quarter on Gibson?

Question 65

Instruction 5-1
Use the net FUTA tax rate of 0.6% on the first $7,000 of taxable wages.
​
Refer to Instruction 5-1.Ted Carman worked for Rivertide Country Club and earned $28,500 during the year.He also worked part time for Harrison Furniture Company and earned $12,400 during the year.The SUTA tax rate for Rivertide Country Club is 4.2% on the first $8,000,and the rate for Harrison Furniture Company is 5.1% on the first $8,000.Calculate the FUTA and SUTA taxes paid by the employers on Carman's earnings.
FUTA
SUTA
a.Riverside
______________
_____________
b.Harrison Furniture Company
______________
_____________
​

Question 66

Instruction 5-1
Use the net FUTA tax rate of 0.6% on the first $7,000 of taxable wages.
​
Refer to Instruction 5-1.Sparks Company's SUTA rate for next year is 3.25% because its reserve ratio falls into the state's 10% to less than 12% category [(contributions - benefits paid)÷ average payroll = $414,867 ÷ $3,521,790 = 11.78%].If the next bracket (12% to less than 14%)would give the company a lower tax rate of 3.05%,what would be the least amount of the voluntary contribution needed to qualify the company for the 3.05% SUTA tax rate?

Question 67

Instruction 5-1
Use the net FUTA tax rate of 0.6% on the first $7,000 of taxable wages.
​
Refer to Instruction 5-1.Faruga Company had FUTA taxable payrolls for the four quarters of
2017 of $28,400;$19,600;$16,500;and $8,900,respectively.The company was located in a state
that was subject to a FUTA credit reduction of 1.5%.What was the amount of Faruga's first required
deposit of FUTA taxes?