ACC 105 Final Exam || All Correct.
Social Security Act of 1935? correct answers required every state to establish an unemployment
compensation program to provide payments to workers who are temporarily unemployed. This
act is the basis for the unemployment programs currently in place. Both federal (FUTA) and state
(SUTA) payroll taxes fund this unemployment insurance program.
Federal Unemployment Tax Act (FUTA)? correct answers This act imposes a tax on employers
to pay for the cost of administering the federal and state programs.
This act is the basis for the unemployment programs currently in place? correct answers Social
Security Act of 1935
Purpose of FUTA taxes? correct answers to provide funds that the states can use to administer
unemployment benefits.
Under FUTA, Federal monies are not used to pay...? correct answers to pay the weekly benefits
for unemployed workers. Those weekly benefits are paid by the state in accordance with their
unemployment tax laws (which makes the payments based upon collections of state
unemployment tax withholdings). All states must comply with FUTA standards to help ensure
consistency in the unemployment provisions between states.
Under FUTA, and employer may be considered? correct answers an individual, corporation,
partnership, company, association, trust, or estate.
In general, the federal law considers a person or business to be an employer if either of the
following applies? correct answers Wages of $1,500 or more were paid during a calendar quarter
in the current or preceding calendar year, or
One or more persons were employed at least a portion of one day in each of the 20 (do not have
to be consecutive) or more calendar weeks during the preceding or current taxable year. As soon
as the employer meets either test, the employer becomes liable for the FUTA tax for the entire
year, even if they meet the test during the last week of the calendar year.
A worker is considered an employee if? correct answers a business tells, or has the right to tell, a
worker how, when, and where to work.
Employees that are included for FUTA purposes include the following? correct answers An
agent-driver or a commission-driver who distributes food or beverages (other than milk) or
laundry or dry-cleaning services
A traveling or a city salesperson engaged in full-time soliciting and transmitting to the principal
orders for merchandise for resale or supplies for use in business operations. Also, all work
performed by an employee is covered regardless of the citizenship or residence of the employee,
if the work is performed in the United States.
Employees excluded from FUTA taxes include? correct answers Home workers and full-time
insurance agents are exempt under FUTA. Some others that are exempt include casual workers,
, directors of corporations/members of partnerships, independent contractors, foreign
students/exchange visitors, student nurses/interns, and federal, state, or local governments.
Under FUTA, in helping to determine the correct state to cover the employee, the employer must
consider the following factors? correct answers Place where the work is localized (where most
work is performed - work in another state may be temporary)
Location of base of operations (generally, the state where the employee generally starts from and
returns to)
Location of place from which operations are directed or controlled (place where the person is
located who is providing directions/instructions to the employee)
Location of employee's residence (to be used if no determination can be made from the previous
three tests)
Interstate Reciprocal Coverage Agreement (FUTA)? correct answers In situations where an
employee's coverage cannot be determined using these factors, states may enter into reciprocal
agreements. Under which the employer may elect coverage on one state.
FUTA taxable Wages include? correct answers only the first $7,000 (hourly, commission, piece-
meal, etc.) paid by an employer to an employee during the calendar year.
The basis for the unemployment compensation tax? correct answers he wages that have actually
been paid by the employer to the employee.
FUTA Tax Rate? correct answers With the expiration of the .2% surtax in 2011, the gross FUTA
rate was reduced to 6.0%.For 2013, the employer's tax rate is 6.0% of the first $7,000 in wages
for each employee (thus, the employer is liable for these taxes for each employee until the
employee's wages reach $7,000). However, proposals are currently being made to reinstate this
surtax for 2013. At the time of this writing (April 2013), this issue is still ongoing.
State Unemployment Tax Authority (SUTA)? correct answers State unemployment taxes
collected to pay weekly benefits to unemployed workers. The monies collected are pooled into
one fund (rather than individual funds for each employer) for the entire state; therefore, the cost
of the benefits paid is spread among all employers.
Under SUTA, employers doing business in Arizona must complete what type of tax application
to register with the Department of Economic Security? correct answers an Arizona Joint Tax
Application.
To be considered an employee under SUTA an individual must meet the following
requirements? correct answers The employee must be free from control or direction.
Services performed must be outside the usual course of business.
The individual must be customarily engaged in an independent trade or business.
Credits Against FUTA Tax? correct answers Employers are entitled to a credit of up to 5.4% (of
the 6.0% total) against their FUTA tax liability for contributions made under state unemployment
compensation plan. This is for 2012. With the maximum credit being 5.4%, the actual FUTA tax
