ACNT 1329_Chapter 5 - ACCT 1329 PAYROLL ACCOUNTING CHAPTER...

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ACCT 1329PAYROLL ACCOUNTINGCHAPTER 5Unemployment CompensationTaxes1
Learning Objective #1Describe the basic requirementsfor an individual to be classified asan employer or an employeeunder Federal Unemployment TaxAct (FUTA)2
FUTA and SUTAFederal Unemployment Tax Act (FUTA)Passed as part of Social Security Act of1935Federal law that imposes an employertaxPays for administrationof federal andstate unemployment insuranceprogramsState Unemployment Tax Act (SUTA)Different law in each statePays for unemployment benefitsand3
Who is Covered Under FUTAEmployers are liable for this tax if:Pay $1,500 or more of wages in anyquarter in the current or prior yearEmploy 1+ persons in 20 weeks in thecurrent or prior yearSpecial rules for agricultural and householdERsLiable for ENTIRE calendar yearEmployees include:Part-time, temps and regular workersWorkers on vacation/sick leaveAgricultural and household employees(special rules)4
Employees Covered UnderFUTAGeneral rule is everyone is consideredan EE if common-law relationshipexistsAlso specificallyincludes:Drivers who distribute food/beverage orlaundryTraveling salespeople (certainsituations)Specificexcemptionsare:Partners and directorsIndependent contractors5
Employees Covered UnderSUTAEmployeesgenerallycovered underSUTA if covered under FUTAMany states apply “ABC” test for SUTAexclusion (meaning all of following testsmust be met):Is the worker free from control/directionIs work performed outside usual courseof businessIs person customarily engaged in anindependent trade or business6

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Term
Summer
Professor
NoProfessor
Tags
Payroll Accounting, Taxes, Unemployment, Unemployment benefits, SUTA, Federal Unemployment Tax Act

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