ACC330_Exam1_StudyGuide - 1. Proportional Tax- the tax rate...

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Unformatted text preview: 1. Proportional Tax- the tax rate is the same for any given income level. Example sales taxes, employment taxes (FICA, FUTA), and excise taxes. 2. Progressive Tax- the tax rate increases as the tax base increases. Example- Federal income tax, federal gift and estate taxes, and most state income taxes. 3. FICA- Federal Insurance Contributions Act AKA Social Security Tax. It has two components: Social Security Tax and Medicare Tax. Social Security base is $106,800 for 2009 and 2010. The employer must match the employees portion for both the Social Security tax and the Medicare tax. A spouse employed by another spouse is subject to FICA but children under 18 who are employed by their parents are exempt. Taxpayers that are NOT employees (sole proprietors, independent contractors) may be subject to FICA. 4. FUTA- Federal Unemployment Tax Act. The purpose is to provide funds for the state to administer unemployment benefits. It is an unusual thing that this tax is handled by both the state and federal government. States offer a reduction in unemployment taxes to employers who experience a low employee turnover, sometimes even to 0%. FUTA taxation falls entirely on the employer, not the employee. 5. Gene files his tax return 45 days after the due date. Along with the return, Gene remits a check for $40,000 which is the balance of the tax owed. Disregarding the interest element, Genes total failure to file and pay penalties are : $4,000....
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This note was uploaded on 04/10/2011 for the course ACC 330 taught by Professor Sign during the Spring '11 term at S. Alabama.

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ACC330_Exam1_StudyGuide - 1. Proportional Tax- the tax rate...

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