Question 1

The payments of FUTA taxes are included with the payments of FICA and FIT taxes and are paid as one lump sum.

Accepted Answer

FUTA taxes are separate from FICA and FIT taxes and are paid separately.

Question 2

The maximum credit that can be applied to the FUTA tax because of SUTA contributions is 5.4%.

Accepted Answer

The maximum credit that can be applied to the FUTA tax because of SUTA contributions is 5.4%. This is due to the Federal Unemployment Tax Act (FUTA), which allows employers to claim a credit against their federal unemployment tax liability for amounts paid into state unemployment insurance programs (SUTA). The credit is limited to 5.4% of taxable wages, which is the FUTA tax rate.

Question 3

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:

Accepted Answer

The answer of Instruction 5-1 
Use the net FUTA tax...

Question 4

If an employer pays a SUTA tax of 2.0%, the total credit that can be claimed against the FUTA tax is 2.0%.

Accepted Answer

The total credit that can be claimed against the FUTA tax for SUTA taxes paid is up to 5.4%, not the exact percentage paid for SUTA. This means if an employer pays a SUTA tax of 2.0%, they can still claim a credit of up to 5.4% against their FUTA tax, assuming they meet eligibility requirements, not just the 2.0% they paid.

Question 5

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 $38,400; $29,600; $16,500; and $8,900, respectively. What was the amount of Faruga's first required  deposit of FUTA taxes?

Accepted Answer

The answer of Instruction 5-1 
Use the net FUTA tax...

Question 6

For the purpose of the FUTA tax, members of partnerships are considered employees.

Accepted Answer

Members of partnerships are not considered employees for the purpose of the FUTA tax. Instead, they are subject to self-employment tax on their share of the partnership's earnings.

Question 7

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?

Accepted Answer

The answer of Instruction 5-1 
Use the net FUTA tax...

Question 8

In the case of an employee who changes jobs during the year, only the first employer must pay FUTA tax on that employee's earnings.

Accepted Answer

All employers must pay FUTA tax on the wages paid to an employee until the employee's wages exceed the FUTA wage base for the year, regardless of how many employers the employee has had.

Question 9

FUTA coverage does not include service of any nature performed outside the United States by a citizen of the United States for an American employer.

Accepted Answer

FUTA (Federal Unemployment Tax Act) coverage generally includes services performed outside the United States by a citizen of the United States for an American employer, as exceptions to this coverage are limited and specific.

Question 10

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?

Accepted Answer

The answer of Instruction 5-1 
Use the net FUTA tax...

Question 11

Instruction 5-1 
Use the net FUTA tax rate of 0.6% on the first $7,000 of taxable wages. 
a.  Complete Part 2 of Form 940 based on the following information:   b. Complete Part 5 of Form 940 for the employer given the breakdown of FUTA taxable

Accepted Answer

The answer of Instruction 5-1 
Use the net FUTA tax...

Question 12

A bonus paid as remuneration for services is not considered taxable wages for unemployment tax purposes even if the employee has not exceeded the taxable wage base.

Accepted Answer

Bonuses paid as remuneration for services are considered taxable wages for unemployment tax purposes, regardless of whether the employee has exceeded the taxable wage base or not.

Question 13

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.

Accepted Answer

The answer of Instruction 5-1 
Use the net FUTA tax...

Question 14

The federal unemployment tax is imposed on employers, and thus, is not deducted from employees' wages.

Accepted Answer

The federal unemployment tax (FUTA) is required to be paid by employers and is not deducted from employees' wages.

Question 15

If an employer's FUTA tax liability for the 1st quarter is $935, no payment is required for the 1st quarter.

Accepted Answer

Employers must deposit their FUTA tax by the last day of the first month that follows the end of the quarter if their quarterly liability exceeds $500. Since $935 exceeds this threshold, a payment is required.

Question 16

Employer contributions made to employees' 401(k) plans that are included in total payments on Form 940 are also then deducted as exempt payments.

Accepted Answer

Employer contributions to employees' 401(k) plans are excluded from wages subject to FICA taxes and are therefore deducted as exempt payments on Form 940.

Question 17

The location of the employee's residence is the primary factor to be considered in determining coverage of an employee who works in more than one state.

Accepted Answer

The primary factor for determining coverage for an employee who works in more than one state is usually based on where the employee's primary place of business or base of operations is, not merely the location of their residence. Factors such as where the work is directed and controlled, and where the employee returns between assignments, are also considered.

Question 18

Educational assistance payments to workers are considered nontaxable wages for unemployment purposes.

Accepted Answer

Educational assistance payments to workers are not considered taxable wages for unemployment purposes. This means that workers who receive educational assistance payments from their employers may still be eligible for unemployment benefits if they become unemployed.

Question 19

E-pay or a major debit or credit card can be used to pay the required FUTA deposits during the year.

Accepted Answer

The answer of E-pay or a major debit or credit...

Question 20

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.

Accepted Answer

The answer of Instruction 5-1 
Use the net FUTA tax...

Quiz 5: Unemployment Compensation Taxes

The payments of FUTA taxes are included with the payments of FICA and FIT taxes and are paid as one lump sum.

The maximum credit that can be applied to the FUTA tax because of SUTA contributions is 5.4%.

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:

If an employer pays a SUTA tax of 2.0%, the total credit that can be claimed against the FUTA tax is 2.0%.

For the purpose of the FUTA tax, members of partnerships are considered employees.

In the case of an employee who changes jobs during the year, only the first employer must pay FUTA tax on that employee's earnings.

FUTA coverage does not include service of any nature performed outside the United States by a citizen of the United States for an American employer.

Instruction 5-1 Use the net FUTA tax rate of 0.6% on the first $7,000 of taxable wages. a. Complete Part 2 of Form 940 based on the following information: b. Complete Part 5 of Form 940 for the employer given the breakdown of FUTA taxable

A bonus paid as remuneration for services is not considered taxable wages for unemployment tax purposes even if the employee has not exceeded the taxable wage base.

The federal unemployment tax is imposed on employers, and thus, is not deducted from employees' wages.

If an employer's FUTA tax liability for the 1st quarter is $935, no payment is required for the 1st quarter.

Employer contributions made to employees' 401(k) plans that are included in total payments on Form 940 are also then deducted as exempt payments.

The location of the employee's residence is the primary factor to be considered in determining coverage of an employee who works in more than one state.

Educational assistance payments to workers are considered nontaxable wages for unemployment purposes.

E-pay or a major debit or credit card can be used to pay the required FUTA deposits during the year.