ACNT 1329_Chapter-3 - Learning Objective#1 ACCT 1329...

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1/24/2016 1 ACCT 1329 PAYROLL ACCOUNTING CHAPTER 3 Social Security Taxes 1 Learning Objective #1 Identify, for social security purposes, those persons covered under the law and those services that make up employment 2 Coverage under FICA Federal Insurance Contributions Act of 1935 Employee and Employer BOTH PAY: 6.2% OASDI 1.45% HI Employee ONLY pays additional Medicare tax of 0.9% if wages exceed $200,000 Self-Employment Contributions Act of 1951 Employee pays (both EE and ER portions): ( 6.2% + 6.2%) = 12.4% OASDI (1.45% + 1.45%) = 2.9% HI Additional Medicare if wages exceed $200,000 3 Coverage under FICA Consider: 1. An employee or an independent contractor? 2. Is service rendered considered employment? 3.Is compensation considered taxable wages? 1. Hire, supervise, and pay assistants. 2. Determine the sequence of their work. 3. Set their own hours of work. 4. Work for as many employers as they wish. 5. Are paid by the job. 6. Make their services available to the public. 7. Have an opportunity for profit or loss. 8. Furnish their own tools. 9. Have a substantial investment in their trade. 10. May be dismissed only under terms of contract.
1/24/2016 2 #2 Employment Employment applies to any service performed by employees for their employers Regardless of the citizenship or residence Employer if “person employs 1+ individuals for performance of services in U.S.” “Person” includes trusts, estates, individual,

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