Question 1

FUTA tax deposits cannot be paid electronically.

Accepted Answer

FUTA tax deposits can be paid electronically using the Electronic Federal Tax Payment System (EFTPS).

Question 2

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

Accepted Answer

The answer of Schedule A of Form 940 only has...

Question 3

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

Accepted Answer

In some states, employers are offered the option to make voluntary contributions to the state's unemployment compensation fund in exchange for reduced unemployment tax rates.

Question 4

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.

Accepted Answer

This is true according to the rules of the Federal Unemployment Tax Act (FUTA). The penalty for a credit reduction is assessed and paid in the last quarter of the year.

Question 5

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

Accepted Answer

Form 940 must be filed and any taxes owed must be deposited by January 31. However, if all taxes are deposited on time, employers have until February 10 to file Form 940.

Question 6

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

Accepted Answer

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

Question 7

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

Accepted Answer

Some states do require employees to contribute to the unemployment insurance program. For example, states like New Jersey, Pennsylvania, and Alaska have provisions where employees contribute to the state unemployment insurance fund through payroll deductions.

Question 8

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.

Accepted Answer

Employers can claim a maximum credit of 5.4% against the federal unemployment tax (FUTA) if they have paid their state unemployment tax (SUTA) contributions by the due date of Form 940. If the SUTA contributions are not paid on time, the credit amount will be reduced. Therefore, it is important for the employer to make timely payments of SUTA contributions to maximize the credit against FUTA.

Question 9

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

Accepted Answer

On Form 940, if the total FUTA tax is more than $500, employers are required to list their quarterly federal unemployment tax liabilities in Part 3 of the form.

Question 10

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

Accepted Answer

Even if the duties have been outsourced, the employer remains legally responsible for ensuring that FUTA taxes are deposited correctly and Form 940 is filed on time.

Question 11

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

Accepted Answer

According to the IRS, the mailing of Form 940 is considered timely if it is postmarked on or before the due date.

Question 12

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

Accepted Answer

According to the IRS, an employer can use a credit card to pay the balance due on Form 940 if the amount is under $500.

Question 13

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

Accepted Answer

This statement is false. There is a penalty for late filing of Form 940. The penalty is assessed at a rate of 5% per month on any unpaid tax, up to a maximum of 25%.

Question 14

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.

Accepted Answer

This statement is true. The employer's quarterly tax liability of $525 must be paid on or before the last day of the month following the end of the quarter.

Question 15

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

Accepted Answer

Although some states have a reciprocity agreement that allows employers to have the same SUTA tax rate, in most cases the SUTA tax rates vary between states based on factors such as the employer's industry, history of layoffs, and experience rating.

Question 16

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

Accepted Answer

Employers cannot directly use a credit card to pay FUTA taxes; they must use the Electronic Federal Tax Payment System (EFTPS) or a check/money order if applicable.

Question 17

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

Accepted Answer

Each state has its own unemployment insurance program, and therefore the rate and duration of benefits can vary from state to state.

Question 18

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

Accepted Answer

Dumping is illegal in all states according to the Resource Conservation and Recovery Act (RCRA) of 1976.

Question 19

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.​

Accepted Answer

The extra tax due to a credit reduction is calculated at the end of the year when Form 940 is filed, not with each of the required quarterly deposits.

Question 20

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.

Accepted Answer

Employers in a state are subject to a credit reduction only if the state has outstanding Title XII advances on January 1 of two consecutive years and has not repaid the full amount before November 10 of the second year. Repaying the advances before this deadline avoids the credit reduction for employers.

Quiz 5: Unemployment Compensation Taxes