Section 6-HOW EMPLOYERS WITHHOLD AND DEPOSIT FEDERAL TAXES

Recommended: Do not penalize students who omit the one-business-day rule.

1. Don is paid $10,000 a month$5,000 on the 15^th, and $5,000 on the last day of the month. As of October 31, 2021, Dons year-to-date FICA wages are $100,000. How much FICA must Dons employer withhold from his pay dated December 15, 2021?
2. As of Friday, July 16, 2021, Rays year-to-date wages, including bonuses, are $142,600. How much FICA must Rays employer withhold from his pay for the next pay day on Friday, July 23, 2021 assuming his salary is $2,000?
3. Use the 2021 Payroll Tax Withholding Tables from IRS Pub. 15-T, (see Mastering Payroll, Section 6, pages 89-90), to compute FITW for the following:

1. On Sandys 2021 Form W-4, she claims married filing jointly with no other adjustments and is paid $645 a week.
2. On Zhangs 2019 Form W-4, he claimed married and 1 allowance and was paid $745 per week.
3. On Sofias 2021 Form W-4, if she claims single or married filing separately with no other adjustments and is paid $480 weekly.
4. On Carlos 2018 Form W-4, he claimed married with 2 allowances and was paid $525 a week.
5. On Genes 2021 Form W-4, he claims single and additional withholding of $5 in Step 4 and is paid $659 every week.

4. Which of the following employees is subject to FITW? to FICA? Answer yes or no in the spaces provided.

		FITW	FICA
a.	Dennis, a senior in high school, is 17 years old and works part-time after school and on weekends for his father, a CPA whose practice is a sole proprietorship.
b.	Evita, 15 years old, works part-time at her fathers bakery, which her father runs as a partnership with his cousin.
c.	Patty, age 19, a full-time college student, lives at home with her parents and her disabled 10-year-old brother. Pattys parents pay her to take care of her brother.
d.	Debbie and Dave work full-time and pay Daves mother, Tina, to come to their home and watch the grandchildren after school.

5. When is an employer not required to deposit federal employment taxes electronically?

6. What is the Form 941 lookback period? To which employer tax liabilities does it apply? How is it used to determine an employers deposit frequency in 2021?

7. For each of the following scenarios, determine whether the employer is a monthly, semiweekly or annual depositor for 2021 and check the appropriate box.

		Monthly	Semi-weekly	With Form 941
a.	AAA begins operation on March 1, 2021, and anticipates a 2021 Form 941 tax liability of $5,000.	X
b.	BBB was started in 1992. For the lookback period ending June 30, 2020, BBBs cumulative tax liabilities were $45,000.	X
c.	CCC started up in 2005. For the lookback period ending June 30, 2020, CCCs cumulative tax liabilities were $75,000.		X
d.	DDD began doing business in 2006. For the lookback period ending June 30, 2020, DDDs cumulative tax liabilities were $45,000. DDDs 941 tax liability for one payroll period in March 2021 was $103,550.		X
e.	EEE began hiring in 2000. For the look-back period ending June 30, 2020, EEEs cumulative tax liabilities were $29,000. EEEs tax liability for one payroll period in January 2021 is $100,050.		X
f.	FFF starts up in October 2021 and expects a 941-tax liability of $2,000 through the end of 2021.			X

8. Determine when each of the following must deposit its Form 941 tax liabilities.

1. Quikstep, a monthly depositor, pays employees on Friday. The total 941 deposit obligation for wages paid on April 16, 2021, is $2,400.
2. Slowque, a monthly depositor, pays employees on Friday. Its total 941 deposit obligation for wages paid on September 3, 2021, is $2,000.
3. BigTime, a semiweekly depositor, pays employees on Friday. BigTimes 941 deposit obligation for wages paid on Friday, July 2, 2021, is $12,400.
4. Lopez & Sons, a monthly depositor, pays employees on the 15^th and last day of the month. Its 941 deposit obligation for wages paid on June 25, 2021, is $112,400.

9. Determine when each company must pay its 941 deposit shortfall to avoid penalties.

1. Dallas DCS, a monthly depositor, discovers a 1.0% shortfall in its deposit of 941 liabilities for April 2021.

b. Chic Shop, a monthly depositor, discovers a 1.95% shortfall in its deposit of 941 liabilities for October 2021.