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60 Cards in this Set
- Front
- Back
- 3rd side (hint)
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What are the 6 categories of workers? |
1. Common-law employees 2. Statutory employees 3. Statutory non-employees 4. Independent contractors 5. Individuals referred by a temporary agency 6. Leased employees |
Cecil goes to work |
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What is the "common-law" test? |
It determines whether the employer exercises control over the employee and comprises 4 questions: 1. Who performs the work? 2. What will be done? 3. How will it be done? 4. When will it be done? |
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What is the old enterprise test? |
Prior to April 1990 must comply with FLSA if gross annual sales are: All $0 or more Except: Retail ($362,500 or more) Non-retail ($250,000 or more) |
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What is the new enterprise test? |
On or after April 1, 1990 must comply with FLSA if gross annual sales are: All $500,000 or more Except: Schools, hospitals, or nursing homes $0 or more |
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Who enforces the FLSA? |
U.S. Dept of Labor - Wage & Hour Division |
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Employers do not have to pay what 3 groups/types of employees minimum wage? |
1. Tipped employees 2. Computer professionals 3. Recipients of the Opportunity Wage |
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When an employer is subject to both federal and state laws they must observe the law that is: |
Most favorable to the employee |
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Employers covered by the FLSA are required to: |
1. Pay a minimum hourly wage and overtime rate to all covered employees 2. Pay employees for the hours they worked as defined by the FLSA 3. Observe federal overtime and child labor laws |
3 things |
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What does FLSA stand for and in what year was it enacted? |
Fair Labor Standards Act of 1938 |
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What 4 categories of employees are exempt from overtime pay? |
1. Executive 2. Administrative 3. Professional 4. Outside Salespersons |
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What is the definition of the work week under federal law? |
Any consecutive 7 days or 168 hours and: 1. Must be consistent 2. Employees must be made aware of it 3. Employers may not continually change it |
Length of time plus 3 conditions |
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What is premium pay? |
The additional 1/2-times regular pay |
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What is overtime pay? |
The total 1 1/2-times regular pay |
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What is an example of a document that establishes BOTH identity and employment authorization? |
1. U.S. passport 2. Foreign passport with I-551 stamp 3. Permanent Resident card or Alien Registration Receipt card (Form I-551) 4. Employee Authorization document that contains a photograph (Form I-776) |
List A |
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What is IRCA and in what year was it enacted? |
Immigration Reform and Control Act of 1986 |
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What was the purpose of enacting the IRCA? |
To reduce the number of undocumented workers in the U.S. |
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Under the IRCA, what are employers responsible for in regards to their employees? |
Employers are responsible for substantiating each employee's sworn statement and must request documents that prove both the employee's identity and authorization to work in the U.S. |
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What is the recommended time period that payroll records be kept and why? |
At least 15 years because an audit assessment requires that many years of records |
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What is an ITIN and what form is used to request it? |
Individual Taxpayer Identification Number - Form W-7 |
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What is an EIN, who needs it, and how would they get one? |
Employer Identification Number Employers Submit Form SS-4 (Application for Employer Identification Number) |
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What is the "lookback period" and what form is it associated with? |
The "lookback period" is July 1 to June 30 prior to the calendar year for which the deposit status is determined Form 941 |
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If an employer's estimated annual tax liability is less than $1,000, they are eligible to file what form? |
Form 944 (Employer's Annual Federal Employment Tax Return) |
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What is the EFTPS and when did it become effective? |
The Electronic Federal Tax Payment System is an IRS program and became effective January 1, 2011 |
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What is the principle of constructive receipt? |
Wages are taxable when actually made available to employees, regardless of when earned. |
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If an employee is on vacation during payday (and unable to pick up their check), have they constructively received their wages? Why? |
Yes, because constructive receipt is when the paycheck is available to employees without substantial limitation |
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Why is constructive receipt important in regards to an employee's income tax liability? |
The higher the wage amount reported on an employee's W-2, the more federal and state income tax the employee likely owes |
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If an employee earned wages in 2013, but is not paid until 2014, in what year should the wages be included in taxable income? |
2014 |
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Why might an employee request a check be post-dated? |
In order to (fraudulently) pay less taxes in the current year |
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Which 2 types of journal entries are made on payday? |
1. Journal entries to record employees' salary and deductions ("payroll distribution") 2. Journal entries to record the employer's payroll tax expenses (such as FICA and FUTA) |
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What is generally included in an employer's salary expense? |
1. Taxes (FICA, FUTA, and other payroll taxes) 2. Employer contributions |
2 categories |
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When is it necessary to accrue payroll expenses? |
When paydays do not coincide with an employer's accounting period |
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What are the basic elements that are recorded in a payroll register? |
1. Date of payroll 2. Check# 3. Employee's name 4. Employee's SSN 5. Gross wages or salary 6. Social Security wages (OASDI) 7. Medicare wages (HI) 8. Federal taxes withheld 9. State and local taxes withheld 10. Other deductions 11. Net pay |
11 |
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What is the basic entry for payroll? |
1. Debit Salary Expense (gross wages) 2.a. Credit each liability account for which deductions from pay were made 2.b. Credit Cash for net pay |
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WidgeCo is a manufacturer. When the factory air conditioner breaks down, WidgeCo pays Gene to repair it. Gene sends his assistant to complete the job. How should WidgeCo classify Gene? |
Independent Contractor |
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Mary, WidgeCo's receptionist, will be out for two weeks on vacation. The company offers the temporary job to her daughter Ellen. How should WidgeCo classify Ellen? |
Employee (length of employment has no bearing on an individual's status) |
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WidgeCo is preparing to take annual physical inventory. To help with the extra work, it calls Hire-a-Temp. Hire-a-Temp sends Jack on the one-week assignment. How should WidgeCo classify Jack? |
Temporary Help Agency Referral |
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WidgeCo is offered a two-year government contact. To do the work, WidgeCo will require the skills of an engineer and three technicians for the two-year period. It signs a contract with Aerospace Executive Services, which sends prospects for WidgeCo to interview. WidgeCo decides to hire Jose, an engineer, and three qualified technicians. It negotiates salaries with all four and reserves the right to fire them if they do not work out. Aerospace will pay them and handle payroll administration. How should WidgeCo classify them? |
Leased Employees (the agency is the employer, but WidgeCo has the right to hire or fire these individuals as it wishes) |
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FoodCo pays Lisa to prepare flower baskets for each of its 20 stores across the city. FoodCo provides the materials for the baskets and pictures of what the flower baskets are to look like. Lisa makes the baskets in her home. How should FoodCo classify Lisa? |
Statutory Employee |
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Jack goes door-to-door selling vacuum cleaners for VacCo. He is paid a 2% commission for each vacuum cleaner that he sells. How should VacCo classify Jack? |
Statutory Non-employee |
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On which form are wages reported? *1099-MISC *W-2 *W-4 *SS-8 |
W-2 |
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If an employer wants a written determination from the IRS on a worker's status, what form should it submit? *SS-8 *W-2 *1099-MISC *W-4 |
SS-8 |
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If an employer unintentionally misclassifies an employee as an independent contractor and files Form 1099-MISC, the tax assessment for failure to withhold federal income tax is equal to: *20% of the wage amount *1.5% of the wage amount *3% of the wage amount *40% of the wage amount |
1.5% of the wage amount |
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Non-employee compensation is reported on Form: *W-2 *W-4 *SS-8 *1099-MISC |
1099-MISC |
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When the common-law test is met, an individual is considered: *an employee *an independent contractor *a leased employee *a temporary help agency referral |
An employee |
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Arnco is asked to repair a car requiring body work. It sends the car to body work specialist Jake down the street. How should Arnco classify Jake? *an employee *a statutory non-employee *temporary help agency referral *statutory employee *an independent contractor *a leased employee |
Independent contractor |
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Arnco repairs automobiles. When tune up expert Matthew is injured and must be out of work for 2 months, his brother John agrees to work in his place. How should Arnco classify John?
*an employee *a statutory non-employee *temporary help agency referral *statutory employee *an independent contractor *a leased employee |
Employee - length of employment had no bearing on an individual's status. |
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Jim sells china on a full-time basis to hotel and restaurant chains for Chinaco. Most sales are made at Chinaco's showrooms. How should Chinaco classify Jim?
*an employee *a statutory non-employee *temporary help agency referral *statutory employee *an independent contractor *a leased employee |
Statutory Employee |
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After a fire, Arnco asks Rent-a-Temp to send a crew for a week to repaint its burned-out shop. How should Arnco classify the work crew?
*an employee *a statutory non-employee *temporary help agency referral *statutory employee *an independent contractor *a leased employee |
Temporary Help Agency Referral |
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Arnco is asked to prep 5 cars for next year's Amazon Racing Classic. The job will require specialized mechanics for the next 12 months. Arnco calls Automotive Technicians Limited and interviews several candidates. It selects 4 technicians, working out different compensation packages with each one. They will remain employees of Automotive Technicians Limited, which will also pay them. How should Arnco classify the 4 technicians?
*an employee *a statutory non-employee *temporary help agency referral *statutory employee *an independent contractor *a leased employee |
Leased Employees |
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Sheila provides in-home care for an elderly woman that includes preparing meals, bathing, and daily walks. She is not an employee of the agency who referred her.
*an employee *a statutory non-employee *temporary help agency referral *statutory employee *an independent contractor *a leased employee |
Statutory non-employee |
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Employer payments to employees are called: |
Wages |
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Employer payments to independent contractors are made as ordinary: |
Disbursements |
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A taxpayer identification number supplied by an independent contractor may be either an individual's [] number or a company's [] number |
Social Security; Employer Identification |
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If an employer wishes to obtain a written determination from the IRS regarding an individual's status, it can submit Form: |
SS-8 |
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While an employer is waiting for a written determination of an individual's status from the IRS, it should treat the individual as a/an: |
Employee |
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Payments made to independent contractors are reported on which of the following forms? *W-2 *SS-8 *W-4 *1099-MISC |
1099-MISC |
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If an employer unintentionally misclassifies an employee as an independent contractor and also failed to file Form 1099-MISC, the tax assessment for failure to withhold FICA tax is equal to what percentage of the employee's portion of Social Security and Medicare tax?
*1.5% *20% *3% *40% |
40% |
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A 1099-MISC must be filed when nonemployee compensation equals or exceeds: *$50 *$150 *$600 *$1,000 |
$600 |
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The form filed with the IRS to determine if an individual is an employee or independent contractor is called the: *SS-4 *SS-5 *SS-8 *1099 |
SS-8 |
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For 2013, if a non-employee fails to provide a TIN and is paid $600 or more for the year, what is the required backup withholding tax rate that the employer must use?
*1.5% *28% *3% *25% |
28% |
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