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American Payroll Association FPC Test


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How is the Regular Rate of Pay determined
Regular Rate of Pay = Total Pay / Hours Worked
What is included in the Regular Rate of Pay?
Base Pay, Nondiscretionary Bonuses, Fair Market Value of Noncash Compensation, Shift Premiums, Production bonuses, Cost-of-Living Adjustments, Retroactive Pay, All Payments Not Excluded by Law.
What is Exclued from the Regular Rate of Pay?
Reimbursed Business Expenses, Overtime in Excess of FLSA Requirement, Employer Benefit Plan Contributions, Vacation, Holiday, Sick Pay, Gifts on Special Occasions, Discretionary Bonuses, Stock Options.
What is a Discretionary Bonus?
Bonuses paid for services/achievements that are not mesurable to the employee. Determined by owners/management of business outside measurable metrics.
What is a Nondiscretionary Bonus?
A contractual or agreed-upon bonus related to production, efficiency, attendence, quality, etc.

Part of the regular rate of pay.

How Do You Calculate Overtime?
Regular Rate of Pay X .5 = Overtime Premium Rate
How Can You Avoid Paying Overtime Differentials when an Annual Bonus is Given?
Base the Bonus on a Percentage of Annual Earnings
What is a Weighted Average (Related to Overtime Pay)?
When the Regular Rate of Pay is Calculated Based on the Average of Hours Worked on Multiple Rates During a Pay Period.
How Do You Calculate Overtime For Piecework, Weighted Average, and Nonexempt Hourly Employees?
Determine Regular Rate of Pay by Dividing Earnings at Regular Rate by Hours. Take this Rate Multiplied by .5 and then Multiply by Hours Worked Over 40 Hours in the Week.

This is the Overtime Premium to be Multiplied by Hours Worked Over 40 During the Workweek and Added to the Regular Rate of Pay.

When does a Workday Begin and End?
The Portal-to Portal Act of 1947 Defines the Beginning of the Workday as when the Principal Activities Begin and the End of the Workday as when the Principal Activities End.
How are Waiting to Work Practices Compensated?
If an Employee is Engaged to be Waiting (is Required to be at a Location or Restricted in some way,) then they must be compensated.

If an Employee is Waiting to be Engaged (Not Required to be doing anything) then they will not be compensated.

How is Travel Time Compensated?
Home To Work Travel is not Compensated.

Home to Work on a Special One Day Assignement in Another City is Compensible Beyond a Normal Trip.

Travel from Worksite to Worksite is Compensable, but May be Paid at Different Rates.

Travel Away from the Home Community is Work when it Cuts Across the Employee's Scheduled Workday During any Day Travel Occurs.

How is Remedial Education Compensated.
An employer may pay regular hours for 10 hours of remedial education (not training for job-specific work) beyond the standard 40 hour workweek.
What are Retention Requirements for OSHA, IRS, SSA, FLSA, IRCA, FMLA, States, and other Supplemental Records.
OSHA (5 Years)
IRS/SSA (4 Years)
FLSA (3 Years)
IRCA (3 Years)
FMLA (3 Years)
Supplemental Records (2 Years)

State Requirements Vary

What does the W-4 and W-4P (for retired employees) tell employers?
* Whether to withhold taxes at the single or married rate.

* How many withholding allowances are claimed.

* Whether the employee wants any additional amount withheld

* Whether the employee is claiming to be exempt from withholding.

What is the Default Rate at which an employer must withhold if an employee fails to turn in a W4 or W4-P
Single and 0 Allowances
If an employee's marital status or allowances have changed, when does the employer have to notify employee's that they'll need to file an Amended W-4?
By December 1st of the Current Year.
What is the extra requirement on the W4 for exempt employees?
Employees must resubmit a new W4 by February 15th if they have claimed exempt on their current W4.
What do forms W4-P and W4-S cover?
Form W4-P Covers Retired Employees.

Form W4-S Covers Disabled Employees Receiving sick pay by a third-party.

What are the age ranges where child labor is permissible under the FLSA?
Minors under 14 are generally forbidden from working.

14 - 15 = 3 Hours Per Day or 18 Hours Per Week. During the School year, the minor can only work between the hours of 7AM and 7PM. When school is not in session, they may only work 8 hours a day, 40 hours a week.

16-17 = Only limited from working hazardous jobs.

Many states have also enacted child labor laws that are more restrictive than the FLSA.

What does the Family and Medical Leave Act (FMLA) provide employees?
Guarentees employees unpaid leave (12 weeks within a 12 month period) for the birth or adoption of children, serious health conditions for themselves or child, spouse, or parent (or injured military service person of the same designation. This applies to all employers with 50 or more employees and the employee was emloyed for at least 12 months and have worked at least 1250 hours withing the previous 12 month period.

The employer also guarentee's the continuation of employee health benefits while that employee is on leave.

What is Batch Processing?
Coding or collecting items to be processed into similar groups. This processing is not generally an interactive process.
What is Real-Time Processing?
A system which updates data as it is entered into the computer making the results, and whatever is affected available immediately.
What is the difference between interfaced systems and an integrated system?
Interfaced systems operate without relying on any other system. They recieve their data from each other through manual entry or a process decoding the information between seperate systems.

Integrated Systems operate with each other, and use information entered in different areas within the same system. Eliminates dual entry, timing, and other issues seen with interfaced systems.

What are three ways to ensure increased security within the payroll department?
1. Segregate Job Duties: No task should be handled exclusively by one person.

2. Rotate Personnel: Periodically switch tasks and reassign duties amongst staff.

3. Restrict Access to the System: Severly limit the number of employees who have access to your payroll system.

How often should all accounts related to the payroll system be reconciled?
What is the most effective way to guard against 'phantom employees'
Conduct a suprise physical payoff at least once a year where employee's must pick up their paychecks or check stubs.
Within how many days of issuing a direct deposit are you able to reverse the deposit amount?
5 Days
What are the forms of taxable compensation?
Back Pay Awards, Bonuses, Commissions, Company Vehicle (personal use,) Severence Pay, Employer Paid Commuter/Parking Fees in excess of $230 a month, Non-Cafe 125 Fringe Benefits, Gifts, Prizes, Gift Cards, Group Legal Services, GTL over $50,000, Nonaccountable reimbursed business expenses, Sic Pay, Disability benefits, Overtime pay, regular wages, tips, and Nonqualified Moving expenses.
When are wages taxed?
Wages become taxable when they are paid, not when they are earned.
What types of compensation is not taxable?
Dependent care assistance (up to $5,000,) Company Vehicle (business use only,) De minimis fringes, Disability benefits (employee contribution,) Eduction assistance for job-related courses, GTL less than $50,000, Medical/Dental/Health plans (employer contributions,) No-additional-cost fringe benefits, employee discounts, qualified moving expenses, reimubursed business expenses, Non-job-related eduction assistance (up to $5,250,) Long-term care insurance, worker's comp benefits, and health savings accounts.
What Factors Affect Withholding?
* Marital Status
* Number of Withholding
* Allownaces
* Pay Frequency
* Whether Wages
* Regular or Supplemental
* Any pre-tax deducitons.

What are the two ways to withhold Federal Taxes?
Wage-Bracket Method: Using Wage-Bracket's available in the IRS Circular E, Appendix A-144 to A-163.

Percentage Method: Used by most computerized systems. Tables are found in Circular E, Appendix A-142 to A-143.

What are the Steps to the Percentage Method of Taxation?
Step 1: Refer to table of withholding allowances for percentage method and MULTIPLY that number by the number of allowances elected.

Step 2: Gross wages - Amount Generated by Step 1 = Adjusted Wages

Step 3: Refer to appropriate percentage table.

Step 4: Adjusted Wages - Threshold Amount = Excess Amount

Step 5: Amount of Tax + (Excess amount X Percentage indicated by percentage table) = Total Withholding

What are the four areas that the Fair Labor Standards Act covers?
* Minimum Wage
* Overtime
* Equal Pay
* Child Labor

What are the four eligible classes of exempt workers.
* Professional
* Executive
* Administrative
* Outside Salespersons

How long is a workweek?
168 Consecutive Hours / 7 Consecutive Days
When must overtime be paid?
Overtime must be paid whenever an individual works more than 40 hours in one work week.
What are some attributes of an Independent Contractor as determined by the Common Law Test?
* Sets Own Hours
* Can work for Multiple employers
* Is self-employed
* A contract governs the relationship.
* Works by the 'job'
* Permitted to employ help
* Performs services under independent business name
* Opportunity for profit or loss
* Furnishes own tools/equipment
* Controls the sales process and terms

How does the Common Law Test Define an Employee?
* Required to comply with employer instructions
* Works exclusively for employer
* Hired by the employer
* Subject to dismissal or self-termination
* Maintains continuing relationship with employer
* Performs services under business' name
* Paid a salary, recieves beneifits
* Provided tools to complete work
* Assigned a territory, leads, sets terms and conditions of sales process

What is the I-9 Form, and how long must it be retained?
I-9 form determines if a worker is eligible to work in the United States and their Identity.

The form must be retained for the longer of three years from hire, or one year from termination.

What are some mitigating factors that require the Reasonable Basis Test be used in place of the Common Law Test in determining whether an individual is an Employee or Independent Contractor?
-The employer has consistently treated worker/similar worker's as an independant contractor through filed tax returns.

-There is a longstanding recognized practice within the employer's industry treating these workers as independent contractors.

-A judicial precendent exists treating workers in similar circumstances as independent contractors.

-The IRS has ruled in a "published ruling" that the workers are independent contractors.

-The Company has recieved a specific ruling from IRS stating worker is independent contractor.

-A past IRS tax audit did not disallow the worker's treatment as an independent contractor.

When must the Mandatory Flat Rate (35%) be used?
* When year-to-date SUPPLEMENTAL (not regular) wages exceed $1 Million Dollars.

* May apply the mandatory rate for payments that corss the $1 Million Dollar threshold.

When should you use the Aggregate Method?
When an employee receives wages earned in the same period that are paid in such a way that their taxes would be under- or over-withheld if the amounts had been combined (see: aggregated) together into one payment.
What is the Optional Flat Rate, and when is it usually used?

Used when taxing bonus payments to avoid any potential increases in federal taxes from the annualization of regular earnings.

What is the purpose of the form SS-8?
To determine the eligibility of an individual to work in the United States.
What is the purpose of Form SS-5?
(For the employee) to request a Social Security Card.
What is the Tip Credit as determined by the FLSA?
The FLSA allows restaraunts to pay wait staff below minimum wage whereupon the tips earned by the employee increase their wages above the federal minimum wage rate.

The employee must recieve more than $30.00 per month in tips for an establishment to take a tip credit.

What are the 2011 Social Security and Medicare Employee Tax Rates?
Social Security: 4.2%
Medicare: 1.45%
What are the 2011 Employer Rates for Social Security and Medicare?
Social Security: 6.2%
Medicare: 1.45%
What is the Maximum Salary that Social Security must be withheld from?
What is the age limit for Social Security and Medicare?
There is no age limit.
What are the types of Involuntary Deductions?
* Child Support Orders
* Chapter XIII Bankruptcy Orders
* Other Federal Agency Garnishments
* Federal Tax Levies
* State Tax Levies
* Local Tax Levies
* Creditor Garnishments
* Student Loan Garnishments

What are the types of Voluntary Deductions?
* Contributions to United Way or other Charities.
* Contributions to Retirement Programs.
* Credit Union Payments
* Direct Mortgage payments to the Employee's Bank
* Health Insurance Premiums
* Purchase of U.S. Savings Bonds through Payroll Deduction
* Purchase of Stock in the Employer's Company
* Repayment of loans/advances fromt he employer
* Union dues/fees

What is Take-Home Pay concerning a Federal Tax Levy?
Whatever deductions are currently being taken out at the time the levy becomes active are excluded from the take home pay.

This functions as a 'snap shot' with the exception of when the employee has no control over the change of the deduction (health care deduction as an example.)

How do you determine the amount exempt from a federal tax levy?
Determined by employee's filing status and the number of personal exemptions claimed on Part 3 of Form 668-W divided by thte nubmer of payroll periods in the year.

Publication 1494 provided with each Form 668-W gives the exempt amounts.

What is the default exempt amount for a Federal Tax Levy?

Filing a seperate return

One exemption

What are Disposable Earnings?
Gross minus deductions required by law (generally federal, state, and local taxes.)
What are the amounts eligible to be deducted from Child Support pay concerning arrears and supporting another family?
If the employee supports another family and is not in arrears: 50%

If the employee supports another family and is in arrears: 55%

If the employee does not support another family and is not in arrears: 60%

If the employee does not support another family and is not in arrears: 65%

What does UIFSA stand for and provide for what a Child Support Order will contain?
The Uniform Interstate Family Support Act clarifies rules for processing wage withholding orders recieved by out of state courts by specifying that the child support order will tell the processor:

* The duration and amount of payments
* The person or agency to recieve payments
* Medical support, stated as specific amount or provided coverage
* Amount of periodic payments of arrears and interest on arrears

What does UIFSA stand for and provide with rules of multi-state child support orders?
The Uniform Interstate Family Support Act clarifies rules for processing wage withholding orders recieved by out of state courts by specifying that the child support order from multiple states will be handled by the rules of the state the employee works in as follows:

* Withholding the employer's fee for processing an income withholding order.

* Determining the maximum amount permitted to be withheld from the obligor's income.

* Determining the time periods within which the employer must implement the withholding order and forward the child support.

*There are orders for more than one obligee.

What happens when an employee passes away?
* Accrued wages, vacation pay, and other compensation paid after death are taxable, but not by the Federal Income Tax.

*The amount not reported as Federal Income Taxable on a W2, is instead reported on the 1099-MISC (Box 3), using the name and Taxpayer Identification number of the employee's estate or beneficiary.

*If wages are paid after the year of death, no social secuirty or Medicare tax is withheld or paid, no reporting is done on Form W-2. The amount is reported on Form 1099-MISC (Box 3), using the name and Taxpayer Identification number of the employee's estate or beneficiary.

How do States handle multiple child support orders that exceed the maximum amount allowed to be garnished for Child Support?
Two ways:

1. Require allocating the available wages to each order depending on its percentatge in relation to the total amount to be withheld. (Total Requested: 500|| Garnishments :300 & 300|| Amounts Remitted: 250 & 250)

2. They give orders priority depending on when the orders are recieved by the employer (Only Montana.)

What is the Percentage that the Consumer Credit Protection Act limits the amount of disposable earnings that can be garnished by creditors in a week?
Withholding requirement can not exceed the lesser of:

* 25% of the employee's disposable pay, or

* The amount by which the employee's disposable pay for the week exceeds 30 time the federal minimum wage.

How do you calculate a desired net payment?
Desired Net Payment / 100% - Total Tax Percentages (Federal, State, Local, Social Security, Medicare, 401k, Child Support, & Garnishments)
How do you gross-up a net check if the Social Security wage base will be crossed resulting from the check?
100%- Tax (Etc.)% w/o Social Security = Net %

(Payment + (Social Security Wage Base - Prior YTD payment)*6.2%) / Net % = Gross Amount of Earnings

What is Imputed Income?
Imputed Income represents the value of the benefits employees receive from the employer and must be included inthe employees' income. Usually, the employee do not receive cash as the benefit.
How often should you recognize noncash fringe benefits?
* As frequently as possible

* At least once a year, by December 31

* May use different frequencies for different benefits and groups

What is a De Minimmis Fringe Benefit?
Fringe Benefit that is of a small amount and may be unreasonable to account for.

Generally, if the use of a fringe benefit is accounted for by person, it should be taxed.

What are No-Additional-Cost Services?
Employees can take advantage of employer services with no tax consequences when the services are sold to customers as part of the employers regular line of business in which the employee works, AS LONG AS the employer does not incur any substantial cost in providing this service.
What are Qualified Employee Discounts?
Employers do not include in their employees' taxable income the value of qualified employer property and services purchased at a discount from the employer if:

* The discount on property is not greater than the gross profit earned on the property at the price normally sold to the customers.

* The discount on services is not greater than 20% of the retail price.

What are Working Condition Fringes?
Work-related items, when paid for by the employee, may be deducted from the employee's individual tax return as a busineess expense. These items, when provided by the employer, represent non-taxable compensation:

- Business use of a company car or plane
- Subscriptions to business periodicals
- Fees to join professional organizations
- Attendance at a job-related seminar
- Goods used by employees for product testing

Are Athletic Facilities a taxable or nontaxable fringe benefit?
Nontaxable as long as employer provided athletic facilities are on employer's premises and provided primarily to employees and their families.
What are the Four Qualified Transportation Fringes?
1. Vanpooling ($230 excludable per month)

-Must sit at least six adults
-80% of mileage used transporting employees.
-50% of adult seating capacity is occupied

2. Transit Passes ($230 excludable per month)

-On Mass Transit Facilities
-Provided by a business transporting persons in a commuter highway vehicle (as above)

3. Qualified Parking ($230 excludable per month)

-Amount that an employee would have to pay for comparable parking
-May discriminate towards highly compensated employees

4. Bicycle Commuters ($20 reimburseable - on expenses related to bicycle, including purchasing - and excludable per month)

-Employee must not recieve any other transportation benefit.
-Employee must use REGULARLY use a bicycle for a SUBSTANTIAL PORTION of travel between home and work.

What are Qualified Moving Expenses?
-Expenses that are deductible if the employee directly paid for them, and

-THe employee did not deduct the expenses in a prior year

What rules must be met for moving expenses to become Qualified Moving Expenses?
Two rules:

Distance Test: The distance from the employee's new workplace to their old residence must be at least 50 miles farther than the distance from the employee's old workplace to their old residence.

Time Test: Must work full-time in the general location of their new principal place of work for at least 39 weeks during the 12 months immediately following the move.

What guidelines must an employee award plan for length-of-service and safety meet to be excluded from income?
For Non-Qualified Plans:
- An award costing the employer $400.00 in a Calendar Year.

For Qualified Plans (Written plan that does not favor highly compensated employees):

- All awards made to a single employee cannot cost the employer more than $1,600 in a calendar year, with the average cost of each individual award not exceeding $400.

- Awards must be tangible property and must be presented in a meaningful ceremony.

What qualifications exist for length-of-service and safety award plans?

-Awards must not be given during the first five years of employment with the employer.
-Awards can be made only at five-year intervals.


-No more than 10% of all employees may receive safety awards.
-No management, professional, administrative, or clerical employees may recieve safety awards.
-The employee must work full time with at least one year of service.

What are the factors involved in accounting for company vehicle use?
Documentation: Employee must keep records of the business use of the vehicle. Records should include business miles driven, date of trip, purpose of trip, and expenses.

Income Tax Withholding Optional: An employer chooses to not withhold the tax for personal use of a company vehicle, the company must inform the employee by January 31st.

Social Security and Medicare Taxes must be withheld.

Reporting Car Value: Employer must add the value of personal use to the compensation reported on teh employee's form W-2.

Nov. - Dec. Reporting: May be reported as being paid in teh following year.

How do you Value the Personal Use of a Company Vehicle?
General Valuation Model: Fair Market Value an individual would haave to pay to lease the same vehicle under the same terms in the same geographic area.

Safe Harbor Methods:

* Annual Lease - Use Fair Market Value to determine Annual Lease Value. When company provides fuel for personal use, you must add $0.055 center per mile or actual expense.

* Cents-per-Mile (Requires 10,000 miles per year, a reasonable expectation that the vehicle is used for business, AND valued under $15,300) - Business Mileage Rate provided by Federal Government (50 Cents per mile)

* Commuting Value Method (Car transportation to and from work, can't be a control/executive employee, restricted to use by an employee who commutes in the company vehicle due to noncompensatory business reasons) - $1.50 per one-way trip, $3.00 for round trip.

When is excess Group Term Life Insurance witholdable?
Federal Income Tax: Not required, but is reportable.

Social Security Tax and Medicare: Required to withhold.

FUTA: Exempt, but is reportable.

How do you Determine Group Term Life Excess Taxable Coverage?
Step 1: Determine the amount of Coverage.

Step 2: Amount of Coverage - $50,000 = Excess Coverage

Step 3: Excess Coverage/1,000 X Value from IRS Table I - Taxable Value (per month)

Step 4: Taxable Value - Employee's contributions (after-tax only) = Taxable Value of group-term life (per month)

What is the amount of coverage beyond which Dependent Term Life Coverage that is taxable?
What are the the stipulations a qualified retirement plan (401k, 403b, & 457b) must meet?
* Be in writing and be communicated to employees.

* Be established for the exclusive benefit of the employees or their beneficiaries.

*Be nontransferable and nonforfeitable (able to be vested.)

*Satisfy the rules related to eligibility and minimum vesting of employees' interest in the plan.

*Not discriminate in favor of officers, shareholders, or highly compensated employees. However, benefits can vary with length of service.

What is the maximum contribution and catch-up contribution amount for 401k, 403b, & 457b?
Maximum Contribution: $16,500
Catch-up Contribution: $5,500
What is the maximum contribution to deferred compensation plans (pre-tax, post-tax, and non-qualified)?
Either $49,000, or 100% of eligible compensation, whichever is less.
What is the difference between a Roth 401k plan and a regular 401k plan?
Contributions to a Roth 401k plan are taxable.
What are some options that employers have regarding 401k?
* Employer Matching Funds
* Ceilings on the amount of contribution that are lower than the maximum set by law
* Automatic enrollment into 401k plan with mandatory contributions.

What is the primary difference between a 401k and a 403b?
401k = For Profit Organizations

403b = Non Profit Organizations

What organizations are 457b plans designed for?
State and Local Governments
What do Section 125/Cafeteria plans provide to employees?
Allows employees to select the types of tax-free benefits they need. Once selected , benefits may be changeded during the plan year only when there is a change in status (marriage, divorce, death of spouse, or dependent, birth or adoption, or change of employment), when coverages/premiums change significantly, or when the employee leaves the company.
What are the benefits and provisions of the Flexible Spending Account (FSA)?
Using pre-tax dollars to pay for eligible medical expenses.

Use it or lose it: Any amount not spent on by the end of the year is no longer available to the employee.

Risk Shifting: Employer is liable to the immediate costs of the annual amount even if the employee leaves the company.

Employer Options: Funds recieved that are not spent may be used to defray administrative costs of the plan.

What is the major difference between dependent FSA plans and regular FSA plans?
Dependent FSA's are only eligbile to have the current contributions eligible for refund whereas a normal FSA has the entire amount available as of day one of the plan year.
How does the accounting of an expense, liability, or asset flow through the accounting responsibilities?
Transaction -> Journal -> Ledger -> Financial Statements
What is the Chart of Accounts?
Lists all accounts by name and number. Descriptions are useful, but the numbered system is the most important.
What is the Accounting Journal?
A chronological record of the daily transactions of a business.
What is an Asset Account?
Assets are anythign of value that is owned by the company, and normally have debit balances. Ex: Computers, FUrniture, Money in a payroll checking account.

The asset most commonly affected by payroll is the cash account.

What are Expense Accounts?
Expenses are the cost of goods or services used in the process of obtaining revenue for the company and normally have debit balances.

EX: Salaries of Employees, Cost of employer-paid benefit programs, Employer portion of payroll taxes, etc.

What are Revenue Accounts?
Revenue is income received for goods sold and services rendered and normally has a credit balance.
What are Equity accounts?
Equity is the net worth of the compay and normally have a credit balance. The company's assets minus its liabilities equal its net worth, or shareholders' equity. These accounts are sometimes referred to as retained earnings accounts or capital accounts.
What is Double Entry Accounting?
With a Double Entry Accounting system, the check is recorded twice, in two different acounts. Debits are on the left-hand side of an account while a credit is on the right-hand side.

Often described as a T account.

Asset and Expense Accounts follow what structure?
Debit Increases

Credit Decreases

Liability, Revenue, and Capital Accounts follow what structure?
Debit Decreases

Credit Increases

How does accrual accounting solve the problem between the accounting period and a varied weekly pay period?
Not all transactions that are earned within a period, occur during that period. Accrual allows the Accounting Department to appropriately cost payroll liabilities.
What is Federal Form SS-4?
Application for Employer Identification Number
What is Federal Form W-2?
Wage and Tax Statement
What is Federal Form 1099-LTC?
Long-Term Care and Accelerated Death Benefits
What is Federal Form 1099-MISC?
Miscellaneous Income
What is Federal Form 1099-R?
Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.
What is Federal Form 2848?
Power of Attorney and Declaration of Representative
What is Federal Form 4419?
Application for Filing Information Returns Electronically (FIRE)
What is Federal Form W-3c?
Transmittal of Corrected Wage and Tax Statements
What is Federal Form W-2c?
Corrected Wage and Tax Statement
What is Federal Form W-4?
Employee's WIthholding Allowance Certificate
What is Federal Form W-4P?
Withholding Certificate for Pension or Annuity Payments
What is Federal Form W4-S?
Request for Federal Income Tax Withholding From Sick Pay
What is Federal Form 940?
Employer's Annual Federal Unemployment (FUTA) Tax Return
What is Federal Form 941?
Employer's Quarterly Federal Tax Return
What is Federal Form 941 Schd. B?
Report of Tax Liability for Semiweekly Schedule Depositors.
What is Federal Form 941 Schd.D?
Report of Discrepancies Caused by Acquisitions, Statutory Mergers or Consolidations
What is Federal Form 941 Schd. R?
Allocation Schedule for Aggregate Form 941 Filers.
What is Federal Form 4852?
Substitute for Form W-2, Wage and Tax Statement or Form 1099-R, Distribution from Pensions, Annuities, Retirement or Profit Sharing Plans, IRAs, Insurance Contracts, etc.
How is your Tax Deposit schedule determined?
By a Four-Quarter lookback period. Lookback period begins July 1 of the second preceding year and ends June 30 of the prior year.

Lookback calendar for year 2011: 2009 Jul-Sep, Oct-Dec, 2010 Jan-Mar, Apr-June.

If deposited $50,000 or less in Federal Taxes, you are a monthly depositor. $50,000 to 100,000 is Semiweekly. 100,000 or more is daily.

Also: 1,000 (Annual), 2,500 (Quarterly)

What is Federal Form 8027?
Employer's ANnual Information Return of Tip Income and Allocated Tips
What is Federal Form 8027-T?
Transmittal of Employer's Annual Information Return of Tip Income and Allocated Tips
What is Federal Form 8508?
Request for Waiver from Filing Information Returns Electronically
What is Federal Form 8655?
Reporting Agent Authorization
What is Federal Form 8809?
Application for Extension of Time to File Information Returns
What is Federal Form 9921?
Tax Information Authorization
What is Federal Form 941-X?
Adjusted Employer's Quarterly Federal Tax Return or Claim for Refund
What is Federal Form 943?
Employer's Annual Federal Tax Return for Agricultural Employees
What is Federal Form 943-A?
Agricultural Employer's Record of Federal Tax Liability
What is Federal Form 944?
Employer's Annual Federal Tax Return
What is Federal Form 945?
Annual Record of Federal Income Tax
What is Federal Form 945-X?
Adjusted Annual Return of Withheld Federal Income Tax or Claim for Refund
What is Federal Form 1042?
Annual WIthholding Tax Return for U.S. Source Income of Foreign Persons
What is Federal Form 1042-S?
Foreign Person's U.S. Source Income Subject to Withholding
What is Federal Form 1042-T?
Annual Summary and Transmittla of Forms 1042-S
What is Federal Form SSA-131?
Employer Report of Special Wage Payments
When is the Deposit due for Annual, Quarterly, Monthly, Semi-Weekly, and One Day Depositers?
Annual: January 31 (Form 944)

Quarterly: By End of Month after end of Quarter (Form 941)

Monthly: On Or before 15th day of following month.

-If liability is on Wed, Thurs, Fri: Wednesday of next week.
-If liability is on Sat, Sun, Mon, Tues: Friday
-Or deposit on thrid business day after payday.

One Day Deposit: By the end of the next business day.

How is the deposit liability fixed?
Deposit liability is fixed at the end of the deposit period (Semiweekly, Tuesday and Friday; Monthly, Last day of the month)
What is the Safe Harbor Rule related to tax deposits?
The IRS will consider you to have satisfied the deposit requirements if you deposit in a timely manner at least 98% of your tax liability, or if any deposit shortfall does not exceed $100.00, whichever is larger. However, the IRS requires the 2% shortfall to be deposited at a later date.
What is the difference between the ACH Credit, ACH Debit, and ETA method of depositing taxes?
ACH Credit - Company initiates tax deposit

ACH Debit - Treasury initiates tax deposit

ETA - A fedwire, same day transfer of money completed by 2:00pm local time.

Federal Form 941 is used to report what?
* Wages, Tips, and other compensation.

* Amount of federal income tax withheld from wages and tips.

* Total wages and tips subject to social security tax and Mediare tax.

* Total Deposits for the quarter and the balance due or any overpayment.

* COBRA subsidy for certain involuntarily terminated employees.

Due last day of the month, following the end of the quarter.

Form 941: Line 1 - Number of Employees
Only Includes numbe rof employees who were paid during the pay period. Do not include household employees, employees not receiving pay, pensioners, or members of the armed forces.
Form 941: Line 2 - Total wages and tips subject to withholding plus other compensation
Enter total wages paid, tips reported to employer, taxable fringe benefits provided, and other comp paid to employees subjec to federal income tax.
Form 941: Line 3 - Total Income tax withheld from wages, tips, and sick pay
Enter the income tax withheld on wages, tips, taxable fringe benefits and supplemental unemployment compensation benefits.

Third-party sick pay not included.

Form 941: Line 4 Box
If no wages are subject to social security or Medicare tax, check the box.
Form 941: Line 5a, Column 1 - Taxable Social Security Wages
Enter the total wages subject to social securitytax that were paid to employees during the quarter. Include sick payments made by third parties.
Form 941: Line 5a Column 2 - Social Security Tax
Social Security Tax withheld from employer and employee.
Form 941: Line 5b, Column 1 - Taxable Social Security Tips
Enter all tips employees have reported during the quarter
Form 941: Line 5b Column 2 - Social security tax on tips
Multiply the tips in Line 5b, column 1 by 10.4% and pace this amount in the box.
Form 941: Line 11 - Total deposits for the Quarter
Deposits made for the quarter entered on this line, amounts accumulated from records of EFTPS deposits.
Form 941: Line 12a - COBRA preium assistance payments
65% of COBRA premiums for assistance eligible individuals.
Form 941: Line 13 Total Deposits and COBRA credit.
Addition of Lines 11 and 12a.
Form 941: Line 14 - Balance Due
Subract line 13 from line 10.

If above $1.00, amount must be deposited by the due date for the last shortfall deposit to avoid penalties

What is a Third Party Designee?
An employer may allow any employee to discuss the form 941 with the IRS. This option is indicated on Part 4 of Form 941.

Third Party Designees are authorized to:

*Exchange with the IRS any information that is missing from the return.

*Request and receive written tax return information relating to this return.

*The designation does not allow checks to be sent to designee or otherwise represent the organization to the IRS.

Who can sign Form 941?
* Individual owning the business, if the employer is a sole proprietorship.

* The president, vice president, or other principal corporate officer if employer is a corporation.

* An authorized member or partner of an unicorporated association.

* A fiduciary if the employer is a trust or estate.

* A Form 2848 (Power of Attorney and Declaration of Representative) must be filled out for any party beyond the above to sign Form 941.

What is FUTA?
Federal Unemployment Tax Act

Rate of 6.2% on first $7,000 of wages.

Credit of 5.4% given when an employer deposits state unemployment funds on time.

Effective rate of 0.8%

What is a Credit Reduction State?
A state that owes the federal government money loaned to the state to cover State Unemployment Liabilities. For each year the State is incapable of paying back debt, the FUTA credit is reduced by .3%
What is the FUTA liability threshold for depositing funds?
$500. Can hold onto money each quarter as long as liability does not cross this amount.
What are the copies of the W-2 and who they are delivered to?
Copy A - Social Security Administration - Last day of February (March 31 for employers filing electronically)

Copy 1 - State/Local Tax Agencies - Varies according to state and local requirements

Copy B, C, 2 - Employees - January 31

Copy D - Employers - None

What goes into Box 1 of the W-2?
Reported Taxable Wages
What does Box 2 on the W-2 Indicate?
The amount of Federal Income Tax withheld or paid by employer on behalf of the employee.
What does Box 3 on the W-2 Indicate?
Total social security wages paid by the employee. Can not exceed 106,800.
What does Box 4 on the W-2 Indicate?
Social Security Tax Withheld. Box 3 multiplied by the EE Social Security Rate.
What does Box 5 on the W-2 Indicate?
Medicare Wages and Tips withheld. Does not exclude 401k.
What does Box 6 on the W-2 Indicate?
Medicare Tax withheld.
What does Box 7 on the W-2 Indicate?
Social Security Tips. Box 3 and 7 can't exceed $106,800
What does Box 8 on the W-2 Indicate?
Any Tips that don't equal 8% of gross sales, the employer will need to make up the difference.
What does Box 10 on the W-2 Indicate?
Dependent Care Benefits. If it exceeds $5,000, surplus will be added to boxes 1, 3, & 5.
What does Box 11 on the W-2 Indicate?
Distribution from Non Qualified Plans.
What do some major codes in Box 12 on the W-2 Indicate?
A - Uncollected Social Security Tax on Tips
B - Uncollected Medicare Tax on Tips
C - Cost of Group Term Life Insurance
D, E, F, G, H - 401k etc. Contributions

What are the second group of codes in Box 12 on W2?
J - Sick Pay not included in Income
K - Tax on excess golden parachute payments
L - Nontaxable part of employee business expense reimbursements
M, N - Uncollected Social Security and Medicare Tax for Group-Term-Life
P - Excludable moving expense reimbursements.

What are the third group of codes in Box 12 on W2?
R - Archer Medical savings account contributions
S - SIMPLE retirement account contributions
T - Adoption Benefits
V - Income from the exercise of nonstatutory stock options
W - Health Savings Account
Z - Income from 409A Nonqualified Deferred Compensation Plans
AA BB - Roth 401 and 403 deferals

What do the checkboxes in Box 13 of the W-2 stand for?
Statutory Employee - Employee who's earnings are subject to social security and medicare, but not Federal Income Tax.

Retirement Plan - If the employe or employer contributed money to a retirement plan.

Third Pary Sick Pay - Checked if employer is reporting sick payments made by a third-party.

What is Form W-3 Report?
Company Totals, that must reconcile with four quarterly forms 941. Used with paper returns.
What is the penalty for Failing to file Correct Information Returns?
Three Tiers:
1. $30/return if corrected by March 30th ($15 in 2010)
2. $60 return if corrected between March 31 to August 1 ($30 in 2010)
3. $100 return if corrected by after August 1 ($50 in 2010)

What is the penalty for Failing to furnish a payee statement?
Three Tiers:
1. $30/return if corrected by March 30th ($15 in 2010)
2. $60 return if corrected between March 31 to August 1 ($30 in 2010)
3. $100 return if corrected by after August 1 ($50 in 2010)

What is the penalty to Understate taxes?
20% of underpayment; 75% if due to fraud.
What is the penalty for depositing not using EFTPS?
10% of the deposit not made with EFTPS.
What is the penalty to withhold income tax, social security tax, and Medicare tax.


Failure to pay withholding to the IRS

100% of the withholding, in addition, officers or employees could be personallyliable for an equal amount.
What is Reliability?
The ability to provide what was promised, dependably and accurately.
What is Responsiveness?
Responsiveness is the willingness to help customers promptly.
What is Assurance?
Assurance is the knowledge and the courtesy you show your customers and your ability to convey turst, competence, and confidence.
What is Empathy?
Empathy it he degree of caring and individual attention shown to your customers.
What are tangibles?
Tangibles are the physical facilities and equipment and your own appearance.
What is Compliance (Penalties, notices, inquiries)?
The ability of a payroll department to respond to request for employee information within company policy as well as comply with penalty notices whereupon they exist.
What is Confidentiality?
The ability to respect an employee's privacy, and how their best interests should be protected.

Deck Info