...Payroll and Business Tax Accounting Chapter 1 – The Need for Payroll and Personnel Records Fair Labor Standards Act (FLSA) or Federal Wage and Hour Law – A federal statute of the United States that was established in 1932 by Senator Hugo Black. This statute “contains provisions and standards concerning minimum wage.” It also covers equal opportunity requirements so that everyone is paid a fair wage regardless of race or sex. It covers overtime and holiday pay, record keeping, and child labor. (Textbook) These standards affect “employees in the private sector and in federal, state, and local governments. Covered nonexempt workers are entitled to a minimum wage.” (www.dol.gov/whd/flsa) It also started “the forty-hour work week, established a national minimum wage, guaranteed ‘time-and-a-half’ for overtime in certain jobs, and prohibited most employment of minors in ‘oppressive child labor.’” (Wikipedia) Provides enterprise and individual employee coverage. Federal Insurance Contributions Act (FICA) – an employment tax that “imposes two taxes on employees and two taxes on employers.” These taxes fund old-age, survivors, and disability insurance program (OASDI) and hospital insurance (HI). (Textbook) The FICA “tax is a United States federal payroll (or employment) tax imposed on both employees and employers to fund Social Security and Medicare —federal programs that provide benefits for retirees, the disabled, and children of deceased workers.” (Wikipedia) This act requires...
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...NewCorp Scenarios Legal Brief Many organizations in the United States of America do not have the budget for staff counsel within their company. NewCorp is a business that has found themselves in legal matters and is seeking an assessment on ways to handle these circumstances from a consultant in the organization before refering matters to an attorney and incur costs. This assignment reviews three scenarios involving NewCorp. We will examine liabilities the organization and complainant are subject to as well as any statutory or case laws relevant to support the findings. Legal Scenario One Legal scenario one explains that NewCorp relocated an employee named Pat to manage the real property division of the business. After 90 days of employment NewCorp determined that Pat was not an appropriate fit for the position and terminated him with 30 days of severance pay. Pat feels as though he was wronged because he was not given the opportunity to improve through a corrective action plan as promised upon hire. Because of this, Pat believes that NewCorp should not be able to discharge him at will and believed that this action was taking place because of statements made outside the workplace. NewCorp and Pat both have rights in this scenario. Fortunately for NewCorp they are located in Vermont that is considered an “at will” state. This means that an employer can terminate an employee for any reason at any time as long as it does not relate to a Title VII protected class that includes...
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...Exercises & Problems Week 4 Exercise E10-6 Payroll Tax Expense 352.16 FICA Payable 198.40 Federal Unemployment Taxes Payable 19.84 State Unemployment Taxes Payable 133.92 (To record Payable Taxes for the week) Exercise E 10-8 1. True 2. True 3. False 4. True 5. False 6. False 7. True 8. True 9. True 10. True Exercise E10-18 A. Jan.1, 2011 Cash 562,613 Discount on Bonds Payable 37,387 Bonds Payable 600,000 (To record sale of bonds at discount) B. Jul.1, 2011 Bond Interest Expense 28,131 Discount on Bonds Payable 1,131 Cash 27,000 (To record payment of bond interest and amortization of bond discount) C. Dec.31, 2011 Bond Interest Expense 28,187 Discount on Bonds Payable 1,187 Bonds Interest Payable 27,000 (To record account bond interest and amortization on bond discount) Problem 10-3A A...
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...Complete Exercises E10-6, E10-8, & E10-18. Complete Problems 10-3A &10-6A E10-6 Payroll tax expense 352.16 FICA taxes payable 198.40 Federal unemployment taxes payable 19.84 State unemployment taxes payable 133.92 E10-8 1. True 2. True 3. False 4. True 5. False 6. False 7. True 8. True 9. True 10. True E10-18 A. Jan.1 cash 562,613 Discount on the bonds payable 37,387 Bonds payable 600,000 B. Jul. 1 Bond interest expense 28131 Discount on bonds payable 1131 Cash 27,000 C. Dec.31 Bond interest expense 28187 Discount on bonds payable 1,187 Bonds interest payable 27,000 10-3A A. Cash 600,000 Bonds payable 600,000 B. Dec.31 bond interest Exp. 27,000 Bond interest payable 27,000 C. Balance Sheet Long term liabilities, bonds payable and less: discount on bonds payable 600,000 D. May.1 Bond interest Exp. 27,000 Cash 27,000 E. Nov.1 Bond interest Exp. Bond interest payable 27,000 F. Nov.1 bonds payable 600,000 Premium bonds payable 0 Loss on the bonds redemption 12,000 Cash 612,000 10-6A A. July.1 Cash 2,000,000 Bonds payable 2,000,000 B. Bond carrying value Issue date 2,271,813.00 2,262,686.00 ...
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...Wal-Marts outlook wary Wal-Mart reported that a lower tax rate boosted its net income by 8.6 percent during the fourth quarter, but the company offered a tempered forecast going forward as its lower-income shoppers struggle with rising gas prices, delayed income tax refunds and higher payroll taxes. Wal-Mart said that February started "slower than planned" but noted that it was largely due to the Internal Revenue Service's decision to delay accepting tax returns by eight days until Jan. 30 because of late Congressional action to tackle the budget crisis last year. Which resulted in Wal-Mart customers cashing about $1.7 billion in income tax refunds year to date, compared with $4 billion for the same time period a year ago, Wal-Mart said. Shoppers last year had used refund money to buy TVs ahead of the Super Bowl, the company said, but this year, the retailer said it's not sure how customers will use the refunds. Going forward, Wal-Mart said it's unclear how the payroll tax, implemented last month when the U.S. government allowed a temporary 2 percentage point cut in Social Security taxes to expire last month, will affect spending. Nearly all working Americans are taking home less pay and that payroll tax increase will equate to $70 per month less in take home pay for Wal-Mart shoppers, assuming an average annual income of $42,500. Also, Wal-Mart said it still is grappling with allegations that surfaced last April that it failed to notify law enforcement that company officials...
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...today’s middle aged and younger workers. Those who retired in the 196’s and 1970’s received real benefits of three or four times the amount that they paid into the system, which is way better than if they had invested the funds privately. Future retirees can expect to earn a real rate of return of about 2 percent more on their Social Security tax dollars, which is way less than what they would earn from personal investments. I believe today, we should be permitted to invest our Social Security tax dollars. Because of the shorter life expectancy of blacks, the Social Security system adversely affects their economic welfare. Compared with Whites and Hispanics, blacks are far more likely to pay a lifetime of payroll taxes and then die without receiving much in the way of benefits. On the other hand, Social Security is favorable to Hispanics because of their above average life expectancy and the progressive nature of the benefit formula. As a result, Hispanics derive a higher return than whites and substantially higher than blacks. I do not believe that the Social Security system promotes income equality because Social Security is a payroll tax and it is taxed on wages over $400 per month. If you are self-employed you have to pay both shares, yours plus...
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...Understand what you want to get from running your own business Identify what you want to get out of running your own business. You should consider what you expect to achieve in the short term and the medium term. I hope that running my own business will be an ongoing challenge that will give me a sense of satisfaction, achievement and fulfillment. I want utilise all my talents and abilities. I desire to work with food, something I am passionate about and use my creativity to make my business stand out. I would like to gain independence and control of my own future and more power over the way that work fits into my lifestyle. In the next six months I aim to be making enough money through my business to reduce my hours at my other job to part time hopefully. I hope to achieve this level of income through supplying hampers to a number of large groups of self-catering holiday lets in North Cornwall. In the next five years I hope to find premise for café/deli and large-scale hamper production to expand the supply and distribution of hampers. I would also like to expand business to other holiday destinations. Through these developments I would like to be able to support myself solely through the income of my business. Understanding the risk factors involved in self employment Identify and briefly describe the main risks involved in self-employment. In entering in to self-employment I will be giving up steady and guaranteed employment and thus guaranteed income and...
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...Current J. Current K. Current L. Current M. Current N. Current O. Foot note disclosure P. Current or Long-term 13-2 a. Sept. 1 Purchase 50,000 Account Payable 50,000 Oct. 1 Account Payable 50,000 Notes Payable 50,000 Oct. 1 Cash 75,000 Discount Notes Pay. 6,000 Notes Payable 81,000 b. Dec. 31 Interest Expense 1,000 Interest Payable 1,000 Dec. 31 Interest Expense 1,500 Discount on Notes Payable 1,500 c. Notes Payable 50,000 Interest Payable 1,000 51,000 Notes Payable 81,000 Less Discount 4,500 76,500 13-8 Salaries and Wages Expense 480,000 Withholding Taxes Payable 80,000 FICA Taxes Payable 28,040 Union Dues Payable 9,000 Cash 362,960 Payroll Tax Expense 29,440 FICA Taxes Payable 28,040 FUTA Taxes Payable 560 SUTA Taxes Payable 840 13-13 1. Maverick Inc. reports a liability of 800,000 at 12/31/12 2. The insurance recovery is a gain contingency that is not recorded until received. The loss should be accrued for 6,000,000. 3. It is a gain contingency. 13-19 a. 1. 318,000/87,000=3.66 2.820,000/200,000 + 170,000/2=4.43 3.1,400,00/95,000=14.74 4.210,000/52,000=4.04 5.210,000/1,400,000=15% 6.210,000/488,000=43% b. 1. No effect 2. Reduce current assets by weakening ratio 3. Improve current ratio by reducing assets and liabilities 4. No effect 5. Increasing current liabilities will weaken current ratio 6. No...
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...Court of the United States UNITED STATES, Petitioner, v. FIOR D'ITALIA, INC. No. 01-463. Argued April 22, 2002. Decided June 17, 2002. Restaurant challenged use by the Internal Revenue Services (IRS) of aggregate method to determine, assess, and collect its share of Federal Insurance Contribution Act (FICA) taxes on tips received by its employees. The United States District Court for the Northern District of California, 21 F.Supp.2d 1097, granted summary judgment for restaurant, and IRS appealed. The Court of Appeals for the Ninth Circuit, 242 F.3d 844, affirmed, and certiorari was granted. The Supreme Court, Justice Breyer, held that: (1) the law authorized the IRS to base its assessment upon its aggregate estimate of all the tips that the restaurant's customers paid its employees; (2) such a method is not precluded by negative implication from statutes which authorize the IRS to use methods of estimation for determining income tax liability and which authorize the Secretary of the Treasury to adopt regulations that prescribe mechanisms for employers to adjust FICA tax liability; (3) fact that an aggregate estimate will sometimes include tips that should not count in calculating the FICA tax the employer owes did not render use of...
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...period in which title to the merchandise was transferred from the seller to the buyer. Secured creditor A lender such as a bank who has placed a lien on a borrower's assets. As a result, the lender has collateral until the loan amount is repaid. Subsidiary ledger A record of the details to support a general ledger account. The general ledger account is often referred to as the control account. For example, the accounts receivable subsidiary ledger provides the details to support the balance in the general ledger control account Accounts Receivable. Simple regression Regression analysis with only one independent variable. Social Security taxes One component of the payroll tax referred to as FICA. (The other component of the FICA tax is the Medicare tax.) The Social Security tax is levied by the U.S. government on both the employee and the employer. In 2012 the Social Security portion of FICA (excluding Medicare) to be withheld from the first $110,100 of each employee's annual salary or wages is 4.2%. In addition, the employer incurs Social Security expense of 6.2% and as a result must remit 10.4% of the first $110,100 of each employee's salary or wages. (Medicare taxes are an additional 1.45% for both the employee and the employer on every dollar of salary and wages.) Surrender value The amount of cash that could...
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...Writing Methodology To: Pastor and his wife Date: February 10, 2013 Facts: TICKET TO HEAVEN Your client a pastor has not filed tax returns for 2010, 2009, 2008, 2007, 2006, 2005, and 2004. He is married. Their combined income is follows: | |Wife |Pastor |Parsonage Allowance | |2004 |15500 |22000 |8500 | |2005 |16000 |24000 |8700 | |2006 |16500 |26000 |9500 | |2007 |16500 |30000 |12000 | |2008 |20100 |35000 |18000 | |2009 |25000 |38500 |24000 | |2010 |26500 |42000 |30000 | Pastor built his own home in 2008 and there was no mortgage on the house. He has promised you that if make him clean with the IRS, he will guarantee you a place in heaven. Law and Analysis: Publication 517 Social Security and Other Information for Members of the Clergy and Religious Workers Ministerial Services Ministerial service, in general, is the...
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...Disabled * Children with special health care needs What does 100 percent or 150 percent of poverty mean? The federal poverty level represents the level at which poverty or subsistence begins. Each year, the federal government determines this number based on inflation and other relevant factors. The federal poverty level guidelines are used as an eligibility criterion for federal, states and local government programs. 100 percent of poverty mean- an individual or household’s annual income is equal 100 percent of the federal poverty level. 150 percent poverty mean- an individual or a household earns 50 percent more than the federal poverty level. In 2012 for instance, the federal poverty level for an individual was $11,170, so an individual at 150 percent of federal poverty level earned $16,755. How are Medicare and Medicaid funded? Medicare is partially funded from payroll taxes, through the provisions of the Federal Insurance Contributions Act. The Medicare tax rate is currently 2.9 percent-half withheld from employees’ pay and half provided by employers. High-income social security beneficiaries are required to pay taxes on their benefits, some of which goes towards Medicare. All the money goes into a trust fund and are used to pay for beneficiaries’ health services. About one-fourth of Medicare part B is paid for by premiums and co-pays. Medicaid is a federal and state...
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...| Debit | Credit | Payroll tax | | 352.16 | FICA tax | 198.40 | | State Unemployment tax | 133.92 | | Federal unemployment tax | 19.84 | | | $352.16 | $352.16 | E10-6 E10-8 1. True 2. True 3. False 4. True 5. False 6. False 7. True 8. True 9. True 10. True E10-18 A. | Debit | Credit | Cash | | 562,613 | Discount on Bonds Payable | | 37,387 | Bonds Payable | 600,000 | | | $600,000 | $600,000 | B. | Debit | Credit | Cash | | 27,000 | Bond Interest | 28,131 | | Bonds Payable | | 1,131 | | $28,131 | $28,131 | C. | Debit | Credit | Bond Interest Expense | 28,187 | | Discount Bonds Payable | | 1,187 | Bonds Interest Payable | | 27,000 | | $28,187 | $28,187 | 10-3A A. | Debit | Credit | Cash | | 600,000 | Bonds | 600,000 | | | 600,000 | 600,000 | B. Bond Interest Expense 27,000 Bond Interest Payable 27,000 C. Bonds Payable 600,000 Discount on BP 600,000 D. Bond Interest Expense 27,000 Cash 27,000 E. Bond Interest Expense 27,000 Bond Interest Payable 27,000 F. Loss on Bonds 12,000 Bonds Payable 600,000 Cash 612,000 10-6A A. Cash 2,000,000 Bonds Payable 2,000,00 B. | Interest to be Paid | Interest expense to be recorded | Premium Amortization | Unamortized Premium | Bond Carrying Value | Issue Date | | | | $271,813 | $2,271,813 | 1 | $100,000 | $90,873 | $9,127 | $262,686 | $2,262,686 | 2 |...
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...FICA stands for Federal Insurance Contributions Act, which is a taxation on income earned where the funds are used for federal programs that provide benefits for U.S. citizens and permanent residents when they retire, are disabled, or are the children of deceased workers. The FICA tax includes two separate taxes. Funds withheld for FICA are reflected on paycheck stubs and on the W-2. One is social security tax and the other is the Medicare tax which different rates apply for each tax. The current tax rate for social security is 6.2% for the employer and 6.2% for the employee, matched at 12.4% total (IRS). The current rate for Medicare is 1.45% for the employer and 1.45% for the employee, or 2.9% total. The Employee Retirement Income Security Act of 1974 (ERISA) establishes minimum standards for retirement, health, and other welfare benefit plans including life insurance, disability insurance, and apprenticeship plans. It protects the assets of millions of Americans so that funds placed in retirement plans during their working lives will be there when they retire. ERISA regulates and sets standards and requirements for conduct, disclosures, reporting and accountability, procedural safeguards, and financial and best interest protection (DOL). I have heard a lot of people make the statement that “Social Security is not going to be around in the future.” My personal opinion is that Social Security is going to be around forever. That is not something that the government will...
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...receipts of the state insurance for unemployment. This led to the respondent withholding inter alia taxes that were supposed to be paid to the state as per the Federal Insurance Contribution Act (United States vs Quality stores Inc. et al, 2014). The disagreement occurred since Quality stores Inc. believed that severity payments were not taxable as per the Federal Insurance Contributions Act and was seeking a reimbursement on behalf of itself and its 1850 terminated former employees. Proceedings were initiated at the bankruptcy court since the internal revenue service never allowed or denied the refund and ultimately, the summary judgement made went in favor of Quality store Inc. The district court and the sixth circuit courts of the appeal concluded that severance payments never amounted to wages under the federal insurance contribution act. This ruling was made despite FICA’s definition of wages broadly incorporating any form of remuneration in employment. This ruling however was made in relation to the code on internal revenue that took a position that severance payments could not amount to wages if they were tied to receipts of state benefit (United States vs Quality stores Inc. et al, 2014). The ruling went in favor of quality stores Inc. even though severity charges fell were considerable as wages under the federal...
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