Question 1

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

Accepted Answer

Partnerships are not exempt from paying unemployment taxes on their employees' wages.

Question 2

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

Accepted Answer

According to IRS guidelines, Christmas gifts, even noncash gifts of value, are considered taxable wages for unemployment purposes.

Question 3

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.

Accepted Answer

False

Question 4

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

Accepted Answer

This is false. The FUTA tax rate is the same for all employees, regardless of their position or level within the organization.

Question 5

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

Accepted Answer

According to the FUTA, a traveling salesperson who solicits and transmits orders for merchandise for resale is considered an employee, and their wages are subject to unemployment taxes.

Question 6

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

Accepted Answer

Directors of corporations are not considered employees for tax purposes and therefore are not covered under the Federal Unemployment Tax Act (FUTA) even if they attend and participate in board of directors' meetings.

Question 7

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

Accepted Answer

Services performed by a child under the age of 21 for a parent-employer are excluded from FUTA (Federal Unemployment Tax Act) coverage.

Question 8

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

Accepted Answer

The statement is false. Employers with part-time employees are still required to pay unemployment taxes, including the Federal Unemployment Tax Act (FUTA) and State Unemployment Tax Act (SUTA), if applicable. The amount of taxes owed may vary based on factors such as the number of employees, wages paid, and the employer's location.

Question 9

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

Accepted Answer

The Social Security Act did indeed order every state to establish an unemployment compensation program to provide temporary financial assistance to qualified individuals who became unemployed through no fault of their own.

Question 10

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

Accepted Answer

Educational assistance payments made to workers to improve job-related skills are generally not considered taxable income for unemployment purposes. This means that they will not be factored into calculations of unemployment benefits or eligibility.

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.

Accepted Answer

Each employer is responsible for paying Social Security taxes on wages up to the taxable wage base for their respective employees. If an employee has multiple employers, each employer must withhold and pay taxes based on the wages earned by the employee at their particular company. The only exception would be if one employer transferred their business to the second employer, in which case they may be considered a single employer for tax purposes.

Question 12

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).

Accepted Answer

The FUTA tax applies to the first $7,000 of an employee's earnings, regardless of whether they are part-time or full-time.

Question 13

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

Accepted Answer

Insurance agents who are paid solely on a commission basis are considered as self-employed individuals and not as employees under FUTA (Federal Unemployment Tax Act). Hence, they are not subject to the FUTA taxes.

Question 14

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

Accepted Answer

The company's status as employer for FUTA purposes continues indefinitely, unless it meets certain requirements to terminate its status or it ceases to meet the criteria for employer status.

Question 15

Retirement pay is taxable wages for FUTA purposes.

Accepted Answer

Retirement pay is not considered wages for Federal Unemployment Tax Act (FUTA) purposes and therefore is not subject to FUTA taxes.

Question 16

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

Accepted Answer

The answer of FUTA and SUTA coverages extend to U.S.citizens...

Question 17

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

Accepted Answer

The answer of Advance payments for work done in the...

Question 18

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

Accepted Answer

The answer of Every employer is entitled to a 5.4...

Question 19

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

Accepted Answer

According to the IRS, the cash value of remuneration paid in any medium other than cash is considered taxable wages for FUTA (Federal Unemployment Tax Act) purposes. This includes payments made in the form of goods, services, or other property.

Question 20

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

Accepted Answer

Services performed for a religious organization that is exempt from federal income tax are also exempt from FUTA (Federal Unemployment Tax Act) coverage, according to the Internal Revenue Service (IRS). This exemption also applies to other types of tax-exempt organizations, such as schools, universities, and hospitals.

Quiz 5: Unemployment Compensation Taxes