Quiz 11: Payroll Taxes, Deposits, and Reports


1. The business organization cannot treat Mr. T J as he is the proprietor of the crafts shop and he owns the business. Mr.TJ is wholly responsible for running the business of crafts shop and the business has no control over Mr.TJ. The business has not retained the right to control the details of Mr. TJ's performance and therefore, Mr.TJ is not an employee of the business and there is no need to withhold social security, Medicare and Employee income taxes from Mr.TJ. 2. Mr. G is not considered as an employee of Court Reporting Center under the three categories i.e., the type of relationship, behavioral control, and financial control. He is considered as a Independent contractor for the center. First of all, the center does not have the right to control the work performance of the Mr. G, the timings he comes to office and he goes, the number of hours he spent in office etc. The Court reporting Center does not provide any type of instructions to Mr. G on how he should perform his duties. Mr. G has unreimbursed expenses from the Court Reporting Center and thus he becomes Individual Contractor of the Center. 3. Mr. K is considered as a part-time employee to Dr. G because he works on an hourly basis and takes hourly fees. The fee of Mr. K is fixed. The work performances of Mr. are totally dependent on the instruction Dr. G. The business has retained the right to control the details of a Mr. K's performance. Thus, Dr. G should treat Mr. K as an employee and should withhold social security tax, Medicare tax and employee income taxes from the payment made. 4. Ms. L is considered as an employee of the publishing company even though she does not have fixed office timings. The publishing company has retained the right to control the details of Ms. L's performance. Even though no instruction is given to her on the way she does her job, the publishing company has the right to control how the work results are achieved Thus, Ms. L becomes the employee of the publishing company and her social security tax, Medicare tax and employee income taxes are to be withheld from the payment made to her. 5. Though Mr. RC salary is fixed, he cannot be considered as an employee of Investor Corporation, because he is whole and sole responsible for the running of the business. He serves as president, secretary, and treasurer and manages all the affairs of the company. The business does not control the work performance of Mr. RC. Thus, the business cannot deduct any type of taxes from Mr. RC.

The employer withholds income tax, Medicare taxes, and social security taxes from the employees' earnings and pays them in the Federal Reserve Bank or other authorized financial institution. Thus, b, c, and d are correct options. Option a, FUTA stands for Federal Unemployment Tax Act, is a federal law that levies a federal employer tax, which is used to aiding in funding of state workforce agencies and is paid by the employer. Thus option a is incorrect. Option e, the acronym SUTA stands for State Unemployment Tax Act and is levied on employer. Thus, option e is also incorrect. Option f, workers' compensation is a type of insurance which provides wage replacement and medical welfares to employees injured during the employment in exchange for compulsory renouncing of the employee's right to litigate his or her employer for the act of negligence.

Employers should deposit taxes owed by them on monthly basis when tax liability is more than $2500 and amount reported in look back period is $50,000 or less. Look back period is the 4 quarter ending June 30 of the preceding year. 1. As given the employers are monthly depositors, the taxes owed by the employer must be deposited in an authorized financial institution or in a Federal reserve bank with in 15 th day of the following month. Hence due date for the taxes owed on July 31, 2013 is August 15, 2013 2. Due date for the tax owed on April 30, 2013 is May 15, 2013 3. Due date for the tax owed on March 31, 2013 is April 15, 2013 4. Due date for the tax owed on February 28, 2013 is March 15, 2013