Fringe benefits & benefits-in-kind ▸ Household expenses ▸ All contracts of household expenses e.g. utilities, domestic helpers are entered into by the employer (i.e. liabilities are borne by the employer) ▸ For the same amount of dispensable income of an individual, salaries tax is saved with a reduced income and elimination of expenses. 51 Fringe benefits & benefits-in-kind ▸ Illustration Before arrangement Income Household expenses Net dispensable income $ Tax treatment 500,000 Taxable (240,000) Non-deductible 260,000 After arrangement Income Household expenses Net dispensable income $ Tax treatment 260,000 Taxable 260,000 52
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- Question text Use the following tax rates, ceiling and maximum taxes: Employee and Employer OASDI: 6.20% $128,400 $7,960.80 Employee* and Employer HI: 1.45% No limit No maximum Self-employed OASDI: 12.4% $128,400 $15,921.60 Self-employed HI: 2.9% No limit No maximum *Employee HI: Plus an additional 0.9% on wages over $200,000. Also applicable to self-employed. Rounding Rules: Unless instructed otherwise compute hourly rate and overtime rates as follows: 1. Carry the hourly rate and the overtime rate to 3 decimal places and then round off to 2 decimals places (round the hourly rate to 2 decimal places before multiplying by one and one-half to determine the overtime rate). 2. If the third decimal place is 5 or more, round to the next higher cent. 3. If the third…Which of the following fringe benefits provided by an employer would result in taxable income to an employee? Group of answer choices A cell phone used by a salesperson to talk to clients while traveling. Reimbursements paid by the employer for qualified business travel expenses Occasional personal use of an office copy machine Use of a company car for daily commutingTake home pay or net pay means: a. gross pay less all deductions b. gross pay plus the amount paid for you by your employer for SSS premiums and Medicare Contributions c. amount earned per hour times number of hours worked d. gross pay less income tax withheld
- Old Age Security (OAS) differs from the CPP in many ways. Which of the following statements does NOT represent an accurate contrast? a OAS payments are reduced according to how high your other sources of retirement income are, whereas CPP is not affected by other income sources b OAS does not provide any financial allowance for a widowed partner of someone who received OAS, whereas CPP does c OAS is paid for with tax dollars, rather than like CPP through employer/employee contributions d OAS is not related to the amount of money you made while you were working, whereas CPP isEmployee's Rates Matching Rates Paid bythe Employer Self-Employed Rates 7.65% on first $118,500 of income 1.45% on income above $118,500 7.65% on first $118,500 paid in wages 1.45% on wages above $118,500 13.3% on first $118,500 of net earnings 2.9% on earnings above $118,500 1FICA taxes include Social Security and Medicare. The Social Security tax applies to the first $118,500 of income, while the Medicare tax applies to all income. Suppose Holly has $227,100 of income from work and is not self-employed. How much will Holly have to pay in FICA taxes?Employee's Rates Matching Rates Paid bythe Employer Self-Employed Rates 7.65% on first $118,500 of income 1.45% on income above $118,500 7.65% on first $118,500 paid in wages 1.45% on wages above $118,500 13.3% on first $118,500 of net earnings 2.9% on earnings above $118,500 1FICA taxes include Social Security and Medicare. The Social Security tax applies to the first $118,500 of income, while the Medicare tax applies to all income. Suppose Mondaire has $96,700 of income from work and is not self-employed. How much will Mondaire have to pay in FICA taxes?
- 1. Under individual employee coverage, the worker is covered by the FLSA if: a.the worker is a housekeeper in a private home for 16 hours a week. b.the domestic receives cash wages of at least $2,300 from the employer in the calendar year. c.the worker produces goods for interstate commerce. d.All of these choices are correct. e.None of these choices are correct. 2. The FICA tax rates for the self-employed are: a.6.2% (OASDI) and 2.9% (HI). b.6.2% (OASDI) and 1.45% (HI). c.12.4% (OASDI) and 1.45% (HI). d.10.0% (OASDI) and 1.0% (HI). e.None of these choices are correct. 3. The garnishment that takes priority over all others, except bankruptcy orders is : a.a government student loan b.an administrative wage garnishment c.a child support order d.a state tax levy e.a creditor garnishment 4. The FLSA requires that: a.employers use the continental time system to record all time worked by employees. b.employees sign each clock card. c.employers keep records that show…A positive-balance employer has: a. an employee development program that promotes work-life balance and leadership skills. b. a reserve account whereby the benefits paid out are less than the taxes paid in. c. a reserve account whereby the benefits paid by the state = the taxes paid in. d. a reserve account whereby the benefits paid out exceed the taxes paid in.The wage base for unemployment compensation taxes are: a. all wages paid but not including those that have been set aside for the employee to draw upon at his/her discretion. b. all wages actually paid or constructively paid. c. all wages paid or payable for the period. d. all wages that are considered to be constructively paid plus wages payable.
- . If a fringe benefit involves a deduction from employee pay, which of the following is true? A. Employers may only offer the benefit to certain classes of employees. B. The employee must enroll in direct deposit for their pay. C. The fringe benefit must be subject to income tax. D. The amount of the deduction must be listed on the employee's pay advice. 2. The ________ determines when benefit amounts should be withheld from employee pay. A. employee B. employer C. IRS D. State in which the business is conductedDiscuss the Fringe Benefits Tax (FBT)implications of the followingcases (a) –(e): (c)An employer giveseach of its15 staff a leg hameachvalued at $60 for Christmas.Single person (including head of household) If amount of wages (after subtracting withholding allowance) is: The amount of income tax withholding is: Not over $43 $0 Over– But not over– of excess over– $43 –$222.......$0.00 plus 10% –$43 $222 –$767.......$17.90 plus 15% –$222 $767 –$1,796....$99.65 plus 25% –$767 $1,796 –$3,700....$356.90 plus 28% –$1,796 $3,700 –$7,992....$890.02 plus 33% –$3,700 $7,992 –$8,025....$2,306.38 plus 35% –$7,992 $8,025 .................$2,317.93 plus 39.6% –$8,025 Using an $80 value for each exemption and the tax rate schedule above, what is Woods' federal income tax withholding? Round your answer to two decimal places.