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Ch5_2012 - BernardJ.BiegandJudithA.Toland CHAPTER5 CHAPTER5...

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CHAPTER 5 CHAPTER 5 UNEMPLOYMENT UNEMPLOYMENT       COMPENSATION TAXES COMPENSATION TAXES Payroll Accounting 2012 Payroll Accounting 2012 Bernard J. Bieg and Judith A. Toland Bernard J. Bieg and Judith A. Toland
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Learning Objectives Describe basic requirements for classification under Federal Unemployment Tax Act (FUTA) Define taxable wages under FUTA Compute FUTA and credit against it Describe how experience-rating system is used in determining state unemployment compensation (SUTA) funds Complete reports required by FUTA Describe types of information reports required under SUTA
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FUTA and SUTA FUTA Federal Unemployment Tax Act Passed as part of Social Security Act of 1935 Federal law that imposes an employer tax Required for administration of federal and state unemployment insurance programs SUTA State Unemployment Tax Act Different law in each state Funds used to pay benefits and administer program at individual state’s level In current economic situation, unemployment insurance programs are being stretched very thin! LO-1
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Who is Covered Under FUTA Employers are liable for this tax if Pay $1,500 or more of wages in any quarter in current or prior year Employ one or more persons, on one day in each of 20 weeks in current or prior year Special rules for agricultural and household employers If employer owes FUTA – liable for entire year!! Employees include Part-time, temps and regular workers Workers on vacation/sick leave Agricultural employees (special rules) Household employees LO-1
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Employees Covered Under FUTA General rule is everyone is considered an EE if common-law relationship exists Also specifically includes Drivers who distribute food/beverage or deliver laundry Traveling salespeople (certain situations) Specific exceptions include Partners Directors Independent contractors Home workers Full-time life insurance salespeople Children under 21 working for parents RRTA or governmental employees Complete list on page 5-4 LO-1
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Who is Covered Under SUTA
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