Payroll accounting Chapter 5 true or false

True/False

1.The federal unemployment tax is imposed on employers, and thus, is not deducted from employees wages

2. Educational assistance payments to workers are considered nontaxable wages for unemployment purposes.

3. For the purpose of the FUTA tax, members of partnerships are considered employees.

4. FUTA coverage does not include service of any nature performed outside the United States by a citizen of the United States for an American employer.

5.The location of the employees residence is the primary factor to be considered in determining coverage of an employee who works in more than one state.

6. A bonus paid as remuneration for services is not considered taxable wages for unemployment tax purposes even if the employee has not exceeded the taxable wage base.

7. In the case of an employee who changes jobs during the year, only the first employer must pay FUTA tax on that employees earnings.

8. The maximum credit that can be applied to the FUTA tax because of SUTA contributions is 5.4%.

9. If an employer pays a SUTA tax of 2.0%, the total credit that can be claimed against the FUTA tax is 2.0%.

10. E-pay or a major debit or credit card can be used to pay the required FUTA deposits during the year.

11. Employer contributions made to employees 401(k) plans that are included in total payments on Form 940 are also then deducted as exempt payments.

12. The payments of FUTA taxes are included with the payments of FICA and FIT taxes and are paid as one lump sum.

13. If an employers FUTA tax liability for the 1st quarter is $935, no payment is required for the 1st quarter.

14. If a business has ceased operations during the year, as long as the payments of the FUTA taxes have been made, a Form 940 does not need to be completed for that year.

15. If all wages were excluded from SUTA taxes, but were subject to FUTA, the FUTA tax rate would be 6.0%.

16. In certain circumstances, a FUTA tax payment can be remitted with Form 940.

17. All of the states allow employers to make voluntary contributions into their state unemployment fund so that a lower tax contribution rate would be assigned.

18. Employers have to pay a FUTA tax on only the first $3,500 of each part-time employees earnings (1/2 of the full $7,000 limit).

19. Only employers who paid state unemployment taxes in more than one state or paid wages in a credit reduction state are required to complete Schedule A of Form 940.

20. Form 940 can also be used to file an amended return.