FPC Exam

FPC Exam Complete Solutions SS8 Ans- Determination of worker status for purposes of federal employment taxes and income tax withholding; requests clarification on worker status Acceptable work time rounding practices Ans- Can round to the nearest quarter hour or 15 minutes; 1 to 7 minutes can be rounded down, 8 to 14 minutes must be rounded up Exempt employee classification Ans- Not entitled to the benefits and protections of the FLSA. May not have to be paid minimum-wage White collar exemption classifications Ans- Executive, administrative, and professional 14 and 15-year-olds child labor restrictions Ans- Nonschool days less than eight hours; during the school week no more than 18 hours; no more than 40 hours when school is out FUTA Rate Ans- Rate is set at 6% of the first 7000$ and employer in a year FUTA Credit Ans- The credit claimed cannot exceed 5.4% whenever the maximum credit is applied against the federal rate, the effective rate will fall to 0.6% 2016 social security wage base Ans- $118,000 Medicare tax withholding rate Ans- 1.45% over $200,000 add extra 0.9% Back up withholding Ans- Withholding on taxes on certain type of income if the employee does not provide his or her Social Security number rate of 28% Form 940 Ans- Employers annual federal unemployment tax return; to report the annual federal unemployment tax liabilities for employers subject to FUTA Form 941 Ans- Employers quarterly federal tax return; it's to report by employers to the IRS the total amount of wages paid, income taxes withheld, and Social Security and Medicare taxes due (both portions). Form 941 Ans- Due date is the end of the month which follows the end of each quarter. However, if all amounts due are timely deposited in the quarter, an automatic extension of 10 days is added. Schedule B Ans- Of form 941 is intended to reconcile the tax liability amount for so called semi weekly depositors. Form 943 Ans- Employers annual federal tax return for agricultural employees Form 944 Ans- Employers annual federal tax return those with A combined annual liability for income, Social Security and Medicare taxes of no more than $1000; IRS does not notify eligible employers Form 945 Ans- Annual return of withheld federal income tax, is for payers to report to the IRS the amount of federal income tax withheld on non payroll payments ex: pensions, military retirement, Indian gaming profits, voluntary withholding, back up withholding Form W3 Ans- Transmittal of wage and tax statements; to summarize the transmittal of paper copies of form W-2; only required when submitting via paper forms Decrease of allowances Ans- Must file new W4 within 10 days Form SS5 Ans- Application for a Social Security card NACHA Ans- Nonprofit organization that acts as the self regulatory body for the ACH process $20 Ans- Minimum tipped dollar amount reportable; Minimum amount to withhold federal taxes from Tips USCIS Retention Ans- Three years from date of hire or one year from date of termination; I -9 IRS Retention Ans- Four years; tax forms, employer/employee info FLSA Retention Ans- Three years; workweek, additions/deductions to payroll; two years for basic information System security Ans- Segregation of job duties, rotation of job assignments, paychecks only deliver to employees, physical payouts, background check of employees Batch totals Ans- Control totals that facilitate input and output controls Integrated system Ans- A system that two departments use that has real time results Customer service principles Ans- Reliability, responsiveness, assurance, empathy, tangibles Internal controls Ans- Series of checks and balances; purpose of ensuring accurate records Liabilities Ans- Accounts payable, notes payable, salary payable, FICA tax payable, employee income tax payable; typically credit Assets Ans- Items of value owned by business. Example: cash accounts receivable, inventory for resale, buildings, machinery; typically debit Assets Ans- Liability plus equity equals Resources for Regulatory Changes Ans- Federal tax resources are provided by the Internal Revenue Service and include the following: • Internal Revenue Code and Regulations • Revenue Rulings, Revenue Procedures and Publications • Internal Revenue Bulletins Federal statutory activity can be monitored via the following: • Congressional Record • Federal Register • SSA/IRS Reporter (Social Security Administration, Internal Revenue Service) constructive receipt Ans- determines when wages are taxable pay frequency/method Ans- governance the process is left to regulation by each of the states. ACH process Ans- •Employer - initiates the electronic file containing the payment information. • Originating Financial Institution - receives the file from the employer and initiates processing through the ACH network. • ACH Network - settles the transactions between the financial institutions. • Receiving Financial Institution - designated by the employee, receipt of funds is posted to the employee account. • Employee - designates the receiving financial institution and accesses funds as required. escheat laws Ans- Most states have an annual November 1 deadline for filing and remitting unclaimed property; states dictate how long employer must hold Common Law Test Ans- Worker classification criteria for establishing if worker is an employee or contractor Leased employee Ans- the workers generally are employees of the leasing company, which is responsible for all withholding and employment taxes as well as the administration and funding of any benefits 8/80 Ans- 14 day period instead of workweek; overtime after 8hrs in a day or 80 in 14 days, whichever is more favorable FLSA Components Ans- Sets min wage & overtime rates; requires record keeping by all covered employees; places restrictions on the types of work minors can do & the hours they can work;mandates equal pay for equal work IRCA Ans- Act of 1986; makes it illegal for an employee to hire an unauthorized worker Flat rate method Ans- Wages in excess of $1,000,000; 39.6% Taxable wages Ans- All remuneration for services including non cash benefits. Nontaxable benefits Ans- IRC Section 132; de minimis fringes; working condition fringes; no additional cost services; qualified employees discounts Qualified Plan Ans- Profit sharing plans; defined contribution plans; defined benefit plans; 401k plan; complies with Section 401 of IRC Nonqualified Plan Ans- Compensation that will be deferred to a later date; does not meet requirements of IRC; deferred compensation plan; can be discriminatory Grossing up Ans- Desired net pay divided by 100% - total of all tax paid ACA Ans- Affordable Care Act