need this done by the 12th.

please follow the directions.

There are 2 problems.

the 2nd problem needs a 941, 940 and OH SUTA form with it.

thanks

Final Exam - Problem 2 941, SUTA and 940 Tax Return Preparation Ingram Heating & Cooling reports the following earnings and deductions for their employees for the 1st quarter of the year: Total Federal Social State SS # Earnings Inc. Tax Security Medicare Inc. Tax Roy Bell 123-45-6789 10699.00 1066.00 663.39 155.09 187.20 Karl Radek 234-56-7890 10387.00 1209.00 644.02 150.67 228.67 Marie Rossi 345-67-8900 10582.00 1131.00 656.11 153.40 191.49 John Scott 456-78-9999 10075.00 1170.00 624.65 146.12 228.67 1st quarter totals 41743.00 4576.00 2588.17 605.28 836.03 City Total Net Inc. Tax Deductions Pay 224.68 2296.36 8402.64 218.13 2450.49 7936.51 222.22 2354.22 8227.78 211.58 2381.02 7693.99 876.60 9482.08 32260.92 Requirements: Use the forms attached. Attach document with calculations for partial credit. 1. Prepare the quarterly Form 941 Monthly 941 liabilities:Jan. $ 3,471.15, Feb. $3,643.95, March $3,847.58 Monthly deposits for the quarter were: $3,471.15, Feb. $3641.45, March $3847.58 Do not worry about their EIN Number or Address. 2. Prepare the quarterly SUTA Form 3. Prepare the annual Form 940. Assume that the second, third, and the fourth quarter earnings are the same as the 1st qtr for each employee. Assume all Ohio SUTA contributions were made timely. They did not make any FUTA deposits this year. Final Exam - Problem 1 50 Points Name: 1. Complete the Weekly Payroll Register Below Including Totals for Each Column. Show and label all work for partial credit. You can attach another document or add it below the problem. Assume all wages are taxable for FIT, OASDI, HI, Ohio Inc. Tax, CIT, FUTA andSUTA Use the Ohio Withholding Tables in the Chapter 4 lecture notes for the Ohio Inc. Tax. 2. Record the journal entries below. Use 3% as the SUTA Rate. PAYROLL REGISTER EMPLOYEE 11 Williams, R. 12 Carey, I. 13 Jackson, C. 21 Walters, R. 22 Kramm, C. 31 Ruffert, C. 32 Dott, W. 33 Willman, S. 51 Baker L. 99 Colewater, M. Totals RATE PER HOUR AMOUNT S 1 40 $ 18.50 S 0 40 $ 19.25 M 2 38.5 $ 17.80 M 3 40 $ 20.70 S 2 40 $ 23.80 M 3 40 800.00 M 4 40 780.00 S 1 40 807.69 M 5 40 1038.46 M 7 40 1500.00 DEDUCTIONS OVERTIME EARNINGS HOURS WORKED REGULAR EARNINGS HOURS WORKED NO. OF W/H ALLOW. January 8, 20 - MARITAL STATUS FOR PERIOD ENDING 10 7 1 1/4 5 RATE PER HOUR TOTAL AMOUNT EARNINGS Ohio FICA OASDI HI FIT 2.10% NET Inc. Tax CIT AMOUNT Record the following entries: Entry to Journalize the payment of the wages: Taxable JOURNAL Earnings DESCRIPTION DEBIT CREDIT SUTA OASDI HI Entry to Record the employer payroll taxes: Entry to Record the 941 deposit: Rate Net FUTA 0.03 Tax Form 940 for 2015: Employer's Annual Federal Unemployment (FUTA) Tax Return Department of the Treasury Internal Revenue Service Employer identification number (EIN) 850113 OMB No. 1545-0028 Type of Return (Check all that apply.) Name (not your trade name) a. Amended Trade name (if any) b. Successor employer Address c. No payments to employees in 2015 d. Final: Business closed or stopped paying wages Number Street Suite or room number Instructions and prior-year forms are available at www.irs.gov/form940. City ZIP code State Foreign country name Foreign postal code Foreign province/county Read the separate instructions before you complete this form. Please type or print within the boxes. Part 1: Tell us about your return. If any line does NOT apply, leave it blank. See instructions before completing Part 1. 1a 1b If you had to pay state unemployment tax in one state only, enter the state abbreviation . 1a If you had to pay state unemployment tax in more than one state, you are a multi-state employer . . . . . . . . . . . . . . . . . . . . . . . . . . . 1b 2 If you paid wages in a state that is subject to CREDIT REDUCTION . Part 2: Total payments to all employees . . . . . . . 4 Payments exempt from FUTA tax . . . . . . . . . . . . . . . . Check here. Complete Schedule A (Form 940). 2 7 Total taxable FUTA wages (line 3 - line 6 = line 7) (see instructions) 8 FUTA tax before adjustments (line 7 x .006 = line 8) . . . . . . . . . . . . . . . . . 4e . 3 Other . Subtotal (line 4 + line 5 = line 6) . . . Retirement/Pension Dependent care 6 . . 4 Check all that apply: 4a Fringe benefits 4c 4b Group-term life insurance 4d Total of payments made to each employee in excess of $7,000 . . . . . . . . . . . . . . . . 5 Part 3: . Determine your FUTA tax before adjustments. If any line does NOT apply, leave it blank. 3 5 . . . . . . . . . . . . . 6 . . . . . . . . 7 . . . . . . . . 8 10 11 If credit reduction applies, enter the total from Schedule A (Form 940) Part 4: . . . . . . . . . . 11 Determine your FUTA tax and balance due or overpayment. If any line does NOT apply, leave it blank. 12 Total FUTA tax after adjustments (lines 8 + 9 + 10 + 11 = line 12) . . . 12 13 FUTA tax deposited for the year, including any overpayment applied from a prior year . 13 14 Balance due (If line 12 is more than line 13, enter the excess on line 14.) If line 14 is more than $500, you must deposit your tax. If line 14 is $500 or less, you may pay with this return. (see instructions) . . 14 15 . . . Determine your adjustments. If any line does NOT apply, leave it blank. If ALL of the taxable FUTA wages you paid were excluded from state unemployment tax, multiply line 7 by .054 (line 7 .054 = line 9). Go to line 12 . . . . . . . . . . . 9 If SOME of the taxable FUTA wages you paid were excluded from state unemployment tax, OR you paid ANY state unemployment tax late (after the due date for filing Form 940), complete the worksheet in the instructions. Enter the amount from line 7 of the worksheet . . 10 9 Check here. Complete Schedule A (Form 940). . . . . . . . . . . . Overpayment (If line 13 is more than line 12, enter the excess on line 15 and check a box below.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 You MUST complete both pages of this form and SIGN it. Check one: Apply to next return. . . . . Send a refund. Next For Privacy Act and Paperwork Reduction Act Notice, see the back of Form 940-V, Payment Voucher. Cat. No. 11234O Form 940 (2015) 850212 Employer identification number (EIN) Name (not your trade name) Part 5: Report your FUTA tax liability by quarter only if line 12 is more than $500. If not, go to Part 6. 16 Report the amount of your FUTA tax liability for each quarter; do NOT enter the amount you deposited. If you had no liability for a quarter, leave the line blank. 17 16a 1st quarter (January 1 - March 31) . . . . . . . . . 16a 16b 2nd quarter (April 1 - June 30) . . . . . . . . . . 16b 16c 3rd quarter (July 1 - September 30) . . . . . . . . 16c 16d 4th quarter (October 1 - December 31) . . . . . . . 16d . . . . . Total tax liability for the year (lines 16a + 16b + 16c + 16d = line 17) 17 Part 6: Total must equal line 12. May we speak with your third-party designee? Do you want to allow an employee, a paid tax preparer, or another person to discuss this return with the IRS? See the instructions for details. Yes. Designee's name and phone number Select a 5-digit Personal Identification Number (PIN) to use when talking to IRS No. Part 7: Sign here. You MUST complete both pages of this form and SIGN it. Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct, and complete, and that no part of any payment made to a state unemployment fund claimed as a credit was, or is to be, deducted from the payments made to employees. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge. Print your name here Sign your name here Date Print your title here / Best daytime phone / Paid Preparer Use Only Check if you are self-employed Preparer's name PTIN Preparer's signature Date Firm's name (or yours if self-employed) EIN Address Phone City Page 2 State / . / ZIP code Form 940 (2015) Form 940-V, Payment Voucher Specific Instructions Complete Form 940-V if you are making a payment with Form 940. We will use the completed voucher to credit your payment more promptly and accurately, and to improve our service to you. Making Payments With Form 940 To avoid a penalty, make your payment with your 2015 Form 940 only if your FUTA tax for the fourth quarter (plus any undeposited amounts from earlier quarters) is $500 or less. If your total FUTA tax after adjustments (Form 940, line 12) is more than $500, you must make deposits by electronic funds transfer. See When Must You Deposit Your FUTA Tax? in the Instructions for Form 940. Also see sections 11 and 14 of Pub. 15 for more information about deposits. Use Form 940-V when making any payment with Form 940. However, if you pay an amount with Form 940 that should have been deposited, you CAUTION may be subject to a penalty. See Deposit Penalties in section 11 of Pub. 15. ! Form Box 1Employer Identification Number (EIN). If you don't have an EIN, you may apply for one online. Go to IRS.gov and type \"EIN\" in the search box. You may also apply for an EIN by faxing or mailing Form SS-4 to the IRS. If you haven't received your EIN by the due date of Form 940, write \"Applied For\" and the date you applied in this entry space. Box 2Amount paid. Enter the amount paid with Form 940. Box 3Name and address. Enter your name and address as shown on Form 940. Enclose your check or money order made payable to \"United States Treasury.\" Be sure to enter your EIN, \"Form 940,\" and \"2015\" on your check or money order. Don't send cash. Don't staple Form 940-V or your payment to Form 940 (or to each other). Detach Form 940-V and send it with your payment and Form 940 to the address provided in the Instructions for Form 940. Note: You must also complete the entity information above Part 1 on Form 940. Detach Here and Mail With Your Payment and Form 940. 940-V Department of the Treasury Internal Revenue Service 1 Enter your employer identification number (EIN). Payment Voucher Don't 2 OMB No. 1545-0028 2015 staple or attach this voucher to your payment. Enter the amount of your payment. Purpose of Form Dollars Cents Make your check or money order payable to \"United States Treasury\" 3 Enter your business name (individual name if sole proprietor). Enter your address. Enter your city, state, and ZIP code or your city, foreign country name, foreign province/county, and foreign postal code. Form 940 (2015) Privacy Act and Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue laws of the United States. We need it to figure and collect the right amount of tax. Chapter 23, Federal Unemployment Tax Act, of Subtitle C, Employment Taxes, of the Internal Revenue Code imposes a tax on employers with respect to employees. This form is used to determine the amount of the tax that you owe. Section 6011 requires you to provide the requested information if you are liable for FUTA tax under section 3301. Section 6109 requires you to provide your identification number. If you fail to provide this information in a timely manner or provide a false or fraudulent form, you may be subject to penalties. You aren't required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form displays a valid OMB control number. Books and records relating to a form or instructions must be retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax returns and return information are confidential, as required by section 6103. However, section 6103 allows or requires the IRS to disclose or give the information shown on your tax return to others as described in the Code. For example, we may disclose your tax information to the Department of Justice for civil and criminal litigation, and to cities, states, the District of Columbia, and U.S. commonwealths and possessions to administer their tax laws. We may also disclose this information to other countries under a tax treaty, to federal and state agencies to enforce federal non-tax criminal laws, or to federal law enforcement and intelligence agencies to combat terrorism. The time needed to complete and file this form will vary depending on individual circumstances. The estimated average time is: Recordkeeping . . . . . . . . . . 9 hr., 40 min. Learning about the law or the form . . 1 hr., 23 min. Preparing, copying, assembling, and sending the form to the IRS . . . . . . . 40 min. If you have comments concerning the accuracy of these time estimates or suggestions for making Form 940 simpler, we would be happy to hear from you. You can send us comments from www.irs.gov/formspubs. Click on More Information and then click on Give us feedback. Or you can send your comments to Internal Revenue Service, Tax Forms and Publications Division, 1111 Constitution Avenue, NW, IR-6526, Washington, DC 20224. Don't send Form 940 to this address. Instead, see Where Do You File? in the Instructions for Form 940. 941 for 2015: Form (Rev. January 2015) Employer's QUARTERLY Federal Tax Return 950114 OMB No. 1545-0029 Department of the Treasury Internal Revenue Service Report for this Quarter of 2015 Employer identification number (EIN) (Check one.) 1: January, February, March Name (not your trade name) 2: April, May, June Trade name (if any) 3: July, August, September 4: October, November, December Address Number Street Suite or room number City State Foreign country name Instructions and prior year forms are available at www.irs.gov/form941. ZIP code Foreign postal code Foreign province/county Read the separate instructions before you complete Form 941. Type or print within the boxes. Part 1: 1 Answer these questions for this quarter. Number of employees who received wages, tips, or other compensation for the pay period including: Mar. 12 (Quarter 1), June 12 (Quarter 2), Sept. 12 (Quarter 3), or Dec. 12 (Quarter 4) 1 2 Wages, tips, and other compensation . . . . . . 2 3 Federal income tax withheld from wages, tips, and other compensation . . . . . . 3 4 If no wages, tips, and other compensation are subject to social security or Medicare tax . . . . . Column 1 . . . . . . Column 2 . . . . 5a Taxable social security wages . . 5b Taxable social security tips . . . 5c Taxable Medicare wages & tips . . 5d Taxable wages & tips subject to Additional Medicare Tax withholding 5e Add Column 2 from lines 5a, 5b, 5c, and 5d 5f Section 3121(q) Notice and DemandTax due on unreported tips (see instructions) 6 Total taxes before adjustments. Add lines 3, 5e, and 5f . . . . . . . . . 7 Current quarter's adjustment for fractions of cents . . . . . . . . . 8 Current quarter's adjustment for sick pay . . . . . . . . 9 Current quarter's adjustments for tips and group-term life insurance . . . . . . . . .124 = .124 = .029 = .009 = . . . . . . . . Check and go to line 6. . . . . . . . . 5f . . . 6 . . . . 7 . . . . . 8 . . . . . . 9 . . . . . . . . . . . . 5e . . . . 10 Total taxes after adjustments. Combine lines 6 through 9 . 10 11 Total deposits for this quarter, including overpayment applied from a prior quarter and overpayments applied from Form 941-X, 941-X (PR), 944-X, 944-X (PR), or 944-X (SP) filed in the current quarter . . . . . . . . . . . . . . . . . . . . . . . 11 12 Balance due. If line 10 is more than line 11, enter the difference and see instructions 12 13 Overpayment. If line 11 is more than line 10, enter the difference . . . . . . . . Check one: . . Apply to next return. Next You MUST complete both pages of Form 941 and SIGN it. For Privacy Act and Paperwork Reduction Act Notice, see the back of the Payment Voucher. Send a refund. Cat. No. 17001Z Form 941 (Rev. 1-2015) 950214 Name (not your trade name) Part 2: Employer identification number (EIN) Tell us about your deposit schedule and tax liability for this quarter. If you are unsure about whether you are a monthly schedule depositor or a semiweekly schedule depositor, see Pub. 15 (Circular E), section 11. 14 Check one: Line 10 on this return is less than $2,500 or line 10 on the return for the prior quarter was less than $2,500, and you did not incur a $100,000 next-day deposit obligation during the current quarter. If line 10 for the prior quarter was less than $2,500 but line 10 on this return is $100,000 or more, you must provide a record of your federal tax liability. If you are a monthly schedule depositor, complete the deposit schedule below; if you are a semiweekly schedule depositor, attach Schedule B (Form 941). Go to Part 3. You were a monthly schedule depositor for the entire quarter. Enter your tax liability for each month and total liability for the quarter, then go to Part 3. Tax liability: . . . . Month 1 Month 2 Month 3 Total liability for quarter Total must equal line 10. You were a semiweekly schedule depositor for any part of this quarter. Complete Schedule B (Form 941), Report of Tax Liability for Semiweekly Schedule Depositors, and attach it to Form 941. Part 3: Tell us about your business. If a question does NOT apply to your business, leave it blank. 15 If your business has closed or you stopped paying wages . . . . Check here, and 16 If you are a seasonal employer and you do not have to file a return for every quarter of the year . . Check here. enter the final date you paid wages Part 4: / / . . . . . . . . . . . . May we speak with your third-party designee? Do you want to allow an employee, a paid tax preparer, or another person to discuss this return with the IRS? See the instructions for details. Yes. Designee's name and phone number Select a 5-digit Personal Identification Number (PIN) to use when talking to the IRS. No. Part 5: Sign here. You MUST complete both pages of Form 941 and SIGN it. Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge. Print your name here Sign your name here Date Print your title here / / Best daytime phone Paid Preparer Use Only Check if you are self-employed Preparer's name Date Firm's name (or yours if self-employed) . EIN Address . PTIN Preparer's signature . Phone City Page 2 State / / ZIP code Form 941 (Rev. 1-2015) Form 941-V, Payment Voucher Purpose of Form Specific Instructions Complete Form 941-V, Payment Voucher, if you are making a payment with Form 941, Employer's QUARTERLY Federal Tax Return. We will use the completed voucher to credit your payment more promptly and accurately, and to improve our service to you. Box 1Employer identification number (EIN). If you do not have an EIN, you may apply for one online. Go to IRS.gov and type \"EIN\" in the search box. You may also apply for an EIN by faxing or mailing Form SS-4, Application for Employer Identification Number, to the IRS. If you have not received your EIN by the due date of Form 941, write \"Applied For\" and the date you applied in this entry space. Box 2Amount paid. Enter the amount paid with Form 941. Box 3Tax period. Darken the circle identifying the quarter for which the payment is made. Darken only one circle. Box 4Name and address. Enter your name and address as shown on Form 941. Enclose your check or money order made payable to the "United States Treasury." Be sure to enter your EIN, "Form 941," and the tax period on your check or money order. Do not send cash. Do not staple Form 941-V or your payment to Form 941 (or to each other). Detach Form 941-V and send it with your payment and Form 941 to the address in the Instructions for Form 941. Note. You must also complete the entity information above Part 1 on Form 941. To avoid a penalty, make your payment with Form 941 only if: Your total taxes after adjustments for either the current quarter or the preceding quarter (Form 941, line 10) are less than $2,500, you did not incur a $100,000 next-day deposit obligation during the current quarter, and you are paying in full with a timely filed return, or You are a monthly schedule depositor making a payment in accordance with the Accuracy of Deposits Rule. See section 11 of Pub. 15 (Circular E), Employer's Tax Guide, for details. In this case, the amount of your payment may be $2,500 or more. Otherwise, you must make deposits by electronic funds transfer. See section 11 of Pub. 15 (Circular E) for deposit instructions. Do not use Form 941-V to make federal tax deposits. Caution. Use Form 941-V when making any payment with Form 941. However, if you pay an amount with Form 941 that should have been deposited, you may be subject to a penalty. See Deposit Penalties in section 11 of Pub. 15 (Circular E). Form Detach Here and Mail With Your Payment and Form 941. 941-V Payment Voucher Department of the Treasury Internal Revenue Service 1 Do OMB No. 1545-0029 2015 not staple this voucher or your payment to Form 941. 2 Enter your employer identification number (EIN). Making Payments With Form 941 Dollars Cents Enter the amount of your payment. Make your check or money order payable to \"United States Treasury\" 4 Enter your business name (individual name if sole proprietor). 3 Tax Period 1st Quarter 3rd Quarter 2nd Quarter 4th Quarter Enter your address. Enter your city, state, and ZIP code or your city, foreign country name, foreign province/county, and foreign postal code. Form 941 (Rev. 1-2015) Privacy Act and Paperwork Reduction Act Notice. We ask for the information on Form 941 to carry out the Internal Revenue laws of the United States. We need it to figure and collect the right amount of tax. Subtitle C, Employment Taxes, of the Internal Revenue Code imposes employment taxes on wages and provides for income tax withholding. Form 941 is used to determine the amount of taxes that you owe. Section 6011 requires you to provide the requested information if the tax is applicable to you. Section 6109 requires you to provide your identification number. If you fail to provide this information in a timely manner, or provide false or fraudulent information, you may be subject to penalties. You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form displays a valid OMB control number. Books and records relating to a form or its instructions must be retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax returns and return information are confidential, as required by section 6103. However, section 6103 allows or requires the IRS to disclose or give the information shown on your tax return to others as described in the Code. For example, we may disclose your tax information to the Department of Justice for civil and criminal litigation, and to cities, states, the District of Columbia, and U.S. commonwealths and possessions for use in administering their tax laws. We may also disclose this information to other countries under a tax treaty, to federal and state agencies to enforce federal nontax criminal laws, or to federal law enforcement and intelligence agencies to combat terrorism. The time needed to complete and file Form 941 will vary depending on individual circumstances. The estimated average time is: Recordkeeping . . . . . . . . . . . . . 11 hr. Learning about the law or the form . . . . 47 min. Preparing, copying, assembling, and sending the form to the IRS . . . . . . . . 1 hr. If you have comments concerning the accuracy of these time estimates or suggestions for making Form 941 simpler, we would be happy to hear from you. You can send us comments from www.irs.gov/formspubs. Click on More Information and then click on Give us feedback. Or you can send your comments to Internal Revenue Service, Tax Forms and Publications Division, 1111 Constitution Ave. NW, IR-6526, Washington, DC 20224. Do not send Form 941 to this address. Instead, see Where Should You File? in the Instructions for Form 941. Employer Account Number Employer Name 19. Total Wages Paid . 20. Taxable Wages (first $9,000 paid to each employee) 21. Contribution Due (#20 x Rate) Quarter Year Contribution Rate 3.30% 22. Forfeiture Due 23. Interest Due 25. Total Amount Due (#21+22+23) - #24 Amount Enclosed Employer Account Number Employer Name 19. Total Wages Paid . 20. Taxable Wages (first $9,000 paid to each employee) 21. Contribution Due (#20 x Rate) Quarter Year Contribution Rate 3.30% 22. Forfeiture Due 23. Interest Due 25. Total Amount Due (#21+22+23) - #24 Amount Enclosed Lecture Notes Chapter 4 Income Tax Withholding In chapter 3 the federal income tax withholding amount was already calculated for us. In chapter 4 we will learn how to calculate the federal, state, and local income tax withholdings. We will also prepare form 941 again and learn Forms W-2 and W-3. Employer/Employee Relationship and Statutory Employees/Nonemployoees- Page 4-2 This has been in every chapter so far. I think you get the hang of it. If not, read this section ad refer back to previous chapters. Taxable Wages-Page 4-2 See pages 4-2 and 4-3 for examples of employee compensation that are considered wages. Notice that travel and business expenses (unaccountable plans) is listed in Figure 4.1. If the employer has an accountable plan (employee received travel amounts and then submits receipts to account for travel money spent for business purpose), then the amounts are not taxable. See page 4-5 for more information. Fringe Benefits-Pages 4-3 and 4-4 See the examples on page 4-3 of fringe benefits. Fringe benefits are subject to federal income tax unless the fringe benefit is specifically excluded under the law. See the list on page 4-4 that is considered nontaxable. Tips- Page 4-4 and 4-5 We've also covered tips in previous chapters. Remember, tips must be reported and are considered taxable wages. Payments Exempt from Withholding & Pretax Salary Reductions-Page 4-5 The following payments are taken off gross pay before calculating federal income tax: Cafeteria Plans - If used for health insurance (including medical, dental, vision), accident insurance, life insurance, dependent care assistance (daycare, preschool, babysitter, etc) and health savings accounts. If the cafeteria pan pay is more than what is spent on these nontaxable benefits then the difference received in cash is taxable. Flexible-Spending Accounts (FSA)-Page 4-7 Flexible spending accounts are money deducted (pre-tax) to cover out-of-pocket medical expenses. These are known as use-it or lose-it accounts. Employers are currently allowed to extend the time period to spend the amounts until March 15 of the following year which should reduce the amount the employee would forfeit if not used. Note: Over-the-counter items used to be eligible expenses, but they are no longer unless a prescribed by a doctor. Health Savings Accounts (HSA)-Page 4-8 HSAs are similar to the flexible-spending account, but for employees with a high-deductible insurance plan. The employer can contribute nontaxable amounts to the employees' accounts. Employees' contributions are included in wages and are taxable for federal income tax purposes unless they are part of a cafeteria plan. These plans roll over from year to year and are owned by the employee. Archer Medical Savings Accounts (MSA)-Pages 4-7 and 4-8 MSAs are similar to a HAS, but for small businesses. The employee's contributions are included in wages, but the employee can deduct the contributions on their individual tax returns. Tax-Deferred Retirement Accounts-Page 4-8 See limits on tax-free contributions by type of plan (401(k)-standard, 403(b)-tax-exempt organizations, 457(b)-state and local government and certain tax-exempt organizations on page 4-8. Individual Retirement Accounts (IRA) & Roth IRAs-Page 4-9 We will not cover. Withholding Allowances-Pages 4-9 through 4-15 If you've ever had a job, you should have completed a W-4 Form to claim allowances. An allowance is an employee-claimed exemption on Form W-4 (See partial form on page 4-11). Allowances are used by employers to determine how much income tax (federal and state*) to withhold from an employee's pay. The idea is to claim the appropriate amount of allowances so that the taxpayer does not owe taxes when they file their individual tax return. The more allowances an employee claims, the less income tax will be withheld from their paycheck. The fewer allowances an employee claims, the more income tax will be withheld from their paycheck. The number of allowances claimed on Form W4 do not have match the number claimed on their individual tax return. However, claiming more allowances than eligible can be considered perjury and would not be in the employee's best interest. They would receive a higher paycheck because less tax would be withheld, but they would owe taxes when they file their return. *City taxes are usually a flax percentage and the number of allowances would not be relevant. Federal Income Tax Withholding (Percentage Method and Wage-Bracket Methods)-Pages 4-15 through 4-17 The amount of federal income tax depends of the employees' marital status, the number of allowances claimed and how often the employer pays. See the percentage method example on the bottom of page 4-15. We will only use this method when the taxable pay is more than the table allows. See page T-3 and T-4 in the back of your book for the percentage method tables. When we have to use this method, be sure to reference the correct table based on the payroll frequency (weekly, biweekly, etc.) and the filing status (married or single). Notice in Figure 4.6 the wage bracket table shown is for married person paid weekly. Across the top is the number of allowances claimed. To find the amount of tax to withhold you down the first two columns to find the line where the employee's gross wages fall. Move across that line to the column showing the number of allowance being claimed. Notice column 1 of Figure 4.6 says \"At least\" and the 2nd column says \"But less than\". If the wages equals the number in the second column then you have to go down to the next row because the number would not be less than the 2 nd column. See the example on page 4-17. Additional federal wage bracket tables are in the back of your text. Be sure to use the appropriate table in order to find the correct withholding amount! Single persons-Weekly,Page T-5 Married persons-Weekly, Page T-6 Single persons-Biweekly, Page T-7 Married persons-Biweekly, Page T-8 Single persons-Semimonthly,Page T-9 Married persons- Semimonthly, Page T-10 Single persons-Monthly,Page T-11 Married persons- Monthly, Page T-12 Wage and Tax Statements-Pages 4-21 through 4-27 See the example Form W-2 in Figure 4.7 on page 4-22. If you've ever had a job you received a W-2 in order to file your taxes. The W-2 reports the taxable wages and certain amounts withheld from those wages for the calendar year for each employee. The employer must give their employees Form W-2 on or before January 31 of the following year. Copy A of the Forms W-2 (for all employees) along with Form W-3 (which totals the amounts on all the Forms W-2) must be sent to the Social Security Administration (SSA) by the end of February of the following year. Remember we send the Form 941 and 941 deposits to the IRS, but these forms go to the SSA. (They talk.) Copy 1 of Form W-2 goes to the state or local tax departments (city or county in some areas). More on state and local tax forms later. All the other copies go to the employee for their records and filing their federal, state and local taxes. See Figure 4.8 on page 4-23 and 4-24 that list by box what goes in each box on Form W-2 and what the reference guide for abbreviations for box 12. All the numbers for this form would come from the Employee's Earning Record as of December 31. (See Figure 1.10 on Page 1-22). Form W-3-Pages 4-24 and 4-26 As mentioned earlier Form W-3 must accompany Forms W-2 that go to the SSA. The SSA and the IRS will compare the totals for the wages, income tax withholdings, and Social security and Medicare withholdings to Forms 941 filed for the year and the deposits made. For example, box 2 on Forms W2 for all employees added together must match Form W-3 box 2 and line 3 of Forms 941 for the year added together. Any discrepancies and the IRS will send a friendly notice. See page 4-26 for penalty information. Information Returns & Independent Contractor Payments-Pages 4-28 and 4-29 Payments made to independent contractors of at least $600 must be reported on Form 1099Miscellaneous Income. See the example Form 1099-MISC in Figure 4.13 on page 4-29. The amount they paid would go in the appropriate box. The one most relevant to this course is probably BOX 7Nonemployee Compensation. This is where we would report work done by someone who was not considered an employee. (Again, this has been discussed in every chapter so far.) Withholding State Income Tax-Pages 4-30 and 4-31 The text uses California as their state example. In general, state income taxes should be withheld based on where the services are performed unless there is a reciprocal agreement between states. Info relating to Ohio-Not in Text Withholding Ohio Income Tax Ohio has reciprocity agreements with Indiana, Kentucky, West Virginia, Michigan and Pennsylvania. Employees who reside in one of these states who receive compensation paid in Ohio and may file form IT 4NR to claim exemption from withholding of Ohio income tax. The employer would withhold the statement income tax for the state they reside in instead. Ohio's tax rates are below. We will not use the percentage method to calculate the tax, but I wanted to show you this so you can see the range of the percentages that are the foundation for the tax tables we will use to find the amount to withhold. Info relating to Ohio-Not in Text (Continued) We will use the following Ohio withholding tax tables for the Comprehensive Exam. See next four pages. They work like the federal income tax withholding tables. I am only providing the weekly and biweekly tables, but there are tables for daily, semi-monthly and monthly pays as well. One difference from the federal income tax withholding tables is there are not separate tables for filing status (single versus married). Info relating to Ohio-Not in Text (Continued) Ohio Tax Returns Below is the Ohio withholding Form. It is pretty simple. As you can see it has a place for the employer's info (name, address, identifying numbers (federal ID and state account number). Box 1 is the amount of tax withheld and Box 2 is the amount due. In a perfect world these two boxes would match. They would not if you were making some sort of adjustment for a previous error. This form is due monthly or quarterly depending on the size of the company's withholding. Quarterly payments must be remitted with Ohio form IT 501 on the Ohio Business Gateway (OBG) at business.ohio.gov by the last day of the month following the end of each calendar quarter, if the combined amount of taxes that were withheld or required to be withheld was $2,000 or less during the look-back period. Monthly payments must be remitted with Ohio form IT 501 on OBG within 15 days following the end of each month, if the combined amount of taxes that were withheld or required to be withheld was greater than $2,000 but less than $84,000 during the look-back period. Note: If the tax withheld by an employer during a pay period reaches $100,000 or more, payment of the accumulated taxes (excluding payment of school district income taxes) is due by the fi rst banking day after the pay date on which the accumulated taxes equal or exceed $100,000. If the employer is a partial-weekly fi ler, payment must be made by EFT. Sources: Ohio Employer Withholding Tax General Guidelines Info relating to Ohio-Not in Text (Continued) Ohio Tax Returns In addition to filing Form IT 501 monthly or quarterly, employers also file an annual reconciliation form called Ohio form IT 941. This form is due on or before Jan. 31 of the succeeding calendar year. Page 1 and page 2 (back) of the IT 941 is below for your review. Box 1 is the Ohio income tax withheld and should match Box 17 - State income tax withheld on Form W-3 (which remember summarizes all the employees' Form W-2s). Hopefully Box 2 (the previous payments) also matches Box 1 and the Balance Due would be zero. This page just breaks down the wages and withholding by month and totals the tax withheld. Withholding Local Income Tax-Page 4-33 Employers must also withhold city, county and school district taxes for areas that have passed legislation (levies) for employees who work in taxable districts. Employers generally do not have to withhold local taxes for employees accessed where the employee lives. Some may withhold taxes where the employee lives as a favor to the employee, but they do not have to do unless mandated by a particular local entity. As the text says many Kentucky counties have a payroll tax. That is not true for Ohio. Info relating to Ohio Locals-Not in Text The City of Cincinnati requires employers to withhold Cincinnati Taxes for compensation paid to nonresidents for services performed within the City of Cincinnati, and also compensation paid to Cincinnati residents regardless of where performed. (Cincinnati Municipal Code Sec. 311-3-Q). I will focus on the City of Cincinnati and show their forms on the next page, but below is a sample of local income tax rates. NAME RATE CINCINNATI 2.10% DEER PARK 1.50% FAIRFIELD 1.50% GOLF MANOR 1.70% MADEIRA 1.00% MILFORD 1.00% NORWOOD 2.00% SHARONVILLE 1.50% SYCAMORE 1.00% WOODLAWN 2.00% Source: Municipal Income Tax Rate Database Table. https://thefinder.tax.ohio.gov/streamlinesalestaxweb/Download/MuniRateTableInstructions.aspx Below are some local school district tax rates: NAME Wyoming (Hamilton County) New Miami (Butler) Goshen (Clermont/Warren) Ross (Butler) Southwest (Butler/Hamilton) RATE 1.25% 1.00% 1.00% .75% .75% Source: School District Income Tax Rate Database Table. https://thefinder.tax.ohio.gov/streamlinesalestaxweb/Download/SDRateTableInstructions.aspx Info relating to Ohio Locals-Not in Text (Continued) Below are example forms for Monthly Filers for the City of Cincinnati for Jan. and Feb. 2015. You can see it is pretty simple. It includes the name and address of the employer along with account numbers. The filing period and due date is preprinted. Then the employer fills in the amount due (which is the amount that should have been withheld from the employees at 2.1% of their wages. Larger companies can be semi-monthly filers and smaller companies can be quarterly filers. See the chart below for the withholding cut-off for the various filing requirements and the due dates of their filing and payment. City of Cincinnati Withholding Remittance Quarterly 0-$2,399 - 15th day of the next month after the quarter ends Monthly $2,400-$11,999 - 15th day of the next month Semi- Monthly > $12,000 - Three business days after the period ends. (18th & 3rd) In addition to filing monthly, quarterly or semimonthly with the City of Cincinnati, employers also file an annual reconciliation form called Form W-3. This form is due on or before the last day in February of the succeeding calendar year. Form W-3 is on the next page. Below are instructions for the individual lines: LINES 1-12: Enter the withholding payments remitted (Note: Employers remitting quarterly payments should complete only the lines for the first, second, third and fourth quarters.) LINE 13: Enter the total withholding payments remitted to this office. Add Lines 1-12. LINE 14: Enter the number of W-2s submitted or the number of employees listed. * LINE 15: Enter the total Cincinnati Qualifying Wages (the year-end total of all taxable compensation paid to employees who live or work in Cincinnati). Generally, the amount reported in Box 5 of the W-2 is the qualifying wage for Ohio residents. Qualifying Wages include compensation paid to nonresidents for services performed within the City of Cincinnati, and also include compensation paid to Cincinnati residents regardless of where performed. LINE 16: Multiply the Qualifying Wages amount by 2.1% (.021). LINE 17: Enter the amount of tax withheld for other cities on behalf of Cincinnati residents (up to 2.1% of taxable compensation for each employee). Credit is limited to the local tax rate used multiplied by Qualifying Wages. We require supplemental data on the W-2 or listing showing the municipality names and amounts credited for each employee. LINE 18: Subtract Line 17 from Line 16 to get the amount of withholding tax after credits and enter on Line 18. LINE 19: Enter the total amount of withholdings paid to Cincinnati (from Line 13). LINE 20: If Line 18 is greater than Line 19, enter the balance of tax due on Line 20. LINE 21: If Line 19 is greater than Line 18, enter the overpayment amount. A full written explanation for the overpayment must be attached in order to process your request for a refund or a credit transfer. LINE 22: Enter the amount to be credited to next year. LINE 23: Enter the amount to be refunded. *Copies of all Forms W-2 must be submitted (electronic or employee listing with W-2 info can be submitted in certain circumstances)