Note: In this chapter and in all succeeding work throughout the course, unless instructed otherwise, use the following rates, ceiling, and maximum taxes.
| Employee and Employer OASDI: | 6.20% | $118,500 | $7,347 |
| Employee* and Employer HI: | 1.45% | No limit | No maximum |
| Self-employed OASDI: | 12.4% | $118,500 | $14,694 |
| Self-employed HI: | 2.9% | No limit | No maximum |
| 1. | Carry the hourly rate and the overtime rate to 3 decimal places and then round off to 2 decimal places (round the hourly rate to 2 decimal places before multiplying by one and one-half to determine the over-time 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, simply drop the third decimal place. |
| | Examples: | Monthly rate $1,827 Weekly rate ($1,827 12)/52 = $421.615 rounded to $421.62 Hourly rate $421.62/40 = $10.540 rounded to $10.54 O.T. rate $10.54 1.5 = $15.81 |
| Also, use the minimum hourly wage of $7.25 in solving these problems and all that follow. |
| *Employee HI: Plus an additional 0.9% on wages over $200,000. Also applicable to self-employed. |
Figure 3.8
Karen Kluster opened Lube and Wash on January 3, 2017. The business is subject to FICA taxes. At the end of the first quarter of 2017, Kluster, as president of the company, must file Form 941, Employer's Quarterly Federal Tax Return.
| Employer's address: | 234 Oak, Austin, TX 78711-0234 |
| Employer's ID number: | 00-0005874 |
| Phone number: | (512) 5551111 |
Each employee is paid semimonthly on the 15th and last day of each month. Shown below is the payroll information for the first quarter of 2017. All pay periods were the same.
| PAYROLL INFORMATION FOR JANUARYMARCH |
| Employee | | SSN | | Quarterly Wage | | OASDI Tax | | HI Tax | | Federal Income Tax | | Total Deductions | | Net Pay |
| Paul Purson | | 000-00-7233 | | $12,000.00 | | $744.00 | | $174.00 | | $1,260.00 | | $2,178.00 | | $9,822.00 |
| Matt Dirkson | | 000-00-8451 | | 12,600.00 | | 781.20 | | 182.70 | | 1,200.00 | | 2,163.90 | | 10,436.10 |
| Joan Howard | | 000-00-3668 | | 12,500.00 | | 775.02 | | 181.26 | | 1,080.00 | | 2,036.28 | | 10,463.72 |
| Dorrie Smith | | 000-00-6527 | | 10,800.00 | | 669.60 | | 156.60 | | 1,140.00 | | 1,966.20 | | 8,833.80 |
| | Totals | | | | $47,900.00 | | $2,969.82 | | $694.56 | | $4,680.00 | | $8,344.38 | | $39,555.62 |
| Employer's FICA taxes | $2969.80 | | $694.55 | | for the quarter | OASDI | | HI | |
| The total taxes per payday are: |
| Employees' FICA TaxOASDI | | $494.97 | |
| Employer's FICA TaxOASDI | | 494.97 | |
| Employees' FICA TaxHI | | 115.76 | |
| Employer's FICA TaxHI | | 115.76 | |
| Employees' FIT | | 780.00 | |
| | Total | | $2,001.46 | 6 deposits = $12,008.76 for the quarter |
None of the employees reported tips during the quarter.
Using Form 941 below, prepare, sign, and date the return on the basis of the information shown above.
Note: Lines 5a and 5c of Form 941, tax on total taxable wages, are computed by multiplying by the combined tax rate for both employer and employee. Small differences due to rounding may occur between this total and the total taxes withheld from employees each pay period and the amount of the employer's taxes calculated each pay period. This difference is reported on line 7 as a deduction or an addition as "Fractions of Cents." Assume that company deposits taxes on monthly basis
| Form941 for 20--: (Rev. January 2016) | Employer's QUARTERLY Federal Tax Return Department of the Treasury Internal Revenue Service | | OMB No. 1545-0029 | | Employer identification number (EIN) | | | Name (not your trade name) | KAREN KLUSTER | | | Trade name (if any) | LUBE AND WASH | | | Address | | | | | Number | Street | Suite or room number | | | | | | | | | | | | | | Foreign country name | | Foreign province/county | | Foreign postal code | | | | | | | Report for this Quarter of 20-- (Select one.) | | Instructions and prior year forms are available at www.irs.gov/form941. | | | | Read the separate instructions before you complete Form 941. Type or print within the boxes. | | Part 1: | Answer these questions for this quarter. | | 1 | 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 | | Check and go to line 6. | | | | Column 1 | | Column 2 | | | 5a | Taxable social security wages . . . . . | | x .124 = | | | | 5b | Taxable social security tips . . . . . . . . | | x .124 = | | | | 5c | Taxable Medicare wages & tips . . . . . | | x .029 = | | | | 5d | Taxable wages & tips subject to Additional Medicare Tax withholding | | x .009 = | | | | | 5e | Add Column 2 from lines 5a, 5b, 5c, and 5d . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 5e | | | 5f | Section 3121(q) Notice and DemandTax due on unreported tips (see instructions) . . . . . . . . . . . . . . . | 5f | | | 6 | Total taxes before adjustments. Add lines 3, 5e, and 5f . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 6 | | | 7 | Current quarter's adjustment for fractions of cents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 7 | | | 8 | Current quarter's adjustment for sick pay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 8 | | | 9 | Current quarter's adjustments for tips and group-term life insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . | 9 | | | 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, 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. Send a refund. | | 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. | Cat. No. 17001Z | Form 941 (Rev. 1-2016) | |
| Name (not your trade name) | Employer identification number (EIN) | | KAREN KLUSTER | 00-0005874 | | Part 2: | 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 section 11 of Pub. 15. | | | 14 Check one: | | | a. | 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. | | b. | 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. | | | c. | 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 | | enter the final date you paid wages | / / | . | | | 16 | If you are a seasonal employer and you do not have to file a return for every quarter of the year . . . . . . . . . . . . . . . . . Check here. | | 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. | | | | Designee's name and phone number | | | | | Select a 5-digit Personal Identification Number (PIN) to use when talking to the IRS. | | | | | | | | | | | | 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. | | | | | | | | | Date | 5/2/17 | | Best daytime phone | 512-555-1111 | | | 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 | | | ZIP code | | | Page 2 | Form 941 (Rev. 1-2016) Source: Internal Revenue Service | |
