Exam 3: Social Security Taxes

Under the safe harbor rule, when employers deposit their tax liabilities, they may have a shortfall of no more than $200 without incurring any penalty.

Form 944 (annual form) can be used by all new employers instead of Form 941.

Instruction 3-1 *Employee HI: Plus an additional 0.9% on wages over $200,000. Also applicable to self-employed. Rounding Rules: Unless instructed otherwise compute hourly rate and overtime rates as follows: 1. Carry the hourly rate and the overtime rate to 3 decimal places and then round off to 2 decimals places (round the hourly rate to 2 decimal places     before multiplying by one and one-half to determine the overtime rate). 2. If the third decimal place is 5 or more, round to the next higher cent. 3. If the third decimal place is less than 5, drop the third decimal place. Also, use the minimum hourly wage of $7.25 in solving these problems and all that follow. Refer to Instruction 3-1 . Crow earned $585.15 during the week ended March 1, 20--. Prior to payday, Crow had cumulative gross earnings of $4,733.20.

The Social Security Act requires workers to obtain a new account number each time they change jobs.

Which of the following deposit requirements pertains to a nonagricultural employer who has employer FICA taxes and withheld employee FICA taxes and income taxes of $125,000 at the end of payday on Friday, August 14, 20--?

Instruction 3-1 *Employee HI: Plus an additional 0.9% on wages over $200,000. Also applicable to self-employed. Rounding Rules: Unless instructed otherwise compute hourly rate and overtime rates as follows: 1. Carry the hourly rate and the overtime rate to 3 decimal places and then round off to 2 decimals places (round the hourly rate to 2 decimal places     before multiplying by one and one-half to determine the overtime rate). 2. If the third decimal place is 5 or more, round to the next higher cent. 3. If the third decimal place is less than 5, drop the third decimal place. Also, use the minimum hourly wage of $7.25 in solving these problems and all that follow. Refer to Instruction  3-1 . Eager, a tipped employee, reported to his employer that he had received $320 in tips during March. On the next payday, April 6, he was paid his regular salary of $400.

Form 941 is due on or before the 15th day of the month following the close of the calendar quarter for which the return is made.

FICA defines all of the following as wages except :

If the accumulated employment taxes during a quarter are less than $2,500, no deposits are required.

Employer payments made directly to employees in lieu of health insurance coverage are taxable wages.

Employers file Form 941 with the IRS center of the region in which the employer's principal place of business is located.

The taxes imposed under the Social Security Act consist of:

State and local government employers must make their tax deposits according to a different schedule than private employers.

To be designated a semiweekly depositor, how much in employment taxes would an employer have reported for the four quarters in the lookback period?

FICA includes partnerships in its definition of employer .

Each year, the FICA (OASDI portion) taxable wage base is automatically adjusted whenever a cost of living raise in social security benefits becomes available.

The requirements for depositing FICA taxes and income taxes withheld from employees' wages vary according to the amount of such taxes reported during a "lookback period."

Instruction 3-1 Use the following tax rates and taxable wage bases: Employees' and Employer's OASDI-6.2% both on $132,900; HI-1.45% for employees and employers on the total wages paid. Employees' Supplemental HI of 0.9 percent on wages in excess of $200,000 was not applicable. Refer to Instruction 3-1. At Haddon, Inc., the office workers are employed for a 40-hour workweek and are paid on either an  annual, monthly, or hourly basis. All office workers are entitled to overtime pay for all hours worked  beyond 40 each workweek at 1.5 times the regular hourly rates. Company records show the following information for the week ended December 26, 20--. On the form below, calculate for each worker: (a) regular earnings, (b) overtime earnings, (c) total  regular and overtime earnings, (d) FICA taxable wages, (e) FICA taxes to be withheld, and (f) net  pay for the week ended December 26, 20--. Assume that there are 52 weekly payrolls in 20--.  Also, determine the total for each of these six items.

Instruction 3-1 Use the following tax rates, ceiling and maximum taxes: Employee and Employer OASDI:     6.20%                  $132,900                          $8,239.80 Employee* and Employer HI:           1.45%                  No limit                           No maximum Self-employed OASDI:                      12.4%                  $132,900                        $16,479.60 Self-employed HI:                                2.9%                    No limit                          No maximum *Employee HI: Plus an additional 0.9% on wages over $200,000. Also applicable to self-employed. Rounding Rules: Unless instructed otherwise compute hourly rate and overtime rates as follows: 1. Carry the hourly rate and the overtime rate to 3 decimal places and then round off to 2 decimals places (round the hourly rate to 2 decimal places     before multiplying by one and one-half to determine the overtime rate). 2. If the third decimal place is 5 or more, round to the next higher cent. 3. If the third decimal place is less than 5, drop the third decimal place. Also, use the minimum hourly wage of $7.25 in solving these problems and all that follow. Refer to Instruction 3-1 . Ralston is the sole proprietor of Cut & Curl. During the year, his net earnings were $79,700. What are his self-employment taxes (OASDI and HI) on these earnings?

Self-employed persons who also work other jobs as employees do not have to pay any FICA taxes on their net self-employment earnings.