Bookkeeping & Write-up

You may use the Employer's Annual Federal Unemployment short Form 940-EZ if you did the following: paid unemployment contributions to only one state, all state unemployment contributions were paid by January 31st of the following year, and all the wages that are taxable for Federal Unemployment tax are also taxable for your state's unemployment tax. You cannot use 940-EZ if you owe FUTA tax only for household work in a private home or if you are a successor employer claiming a credit for state unemployment contributions paid by a prior employer.

Depending on how much you paid in wages, how many employees you employed, and the "Type" of employee you employed, will determine if you have to pay Federal Unemployment taxes(FUTA)or not. The three different "types" of employees are Household employees, Farmworkers and everybody else. For non-Household of Farmworkers, the general test is that you are subject to FUTA tax on wages if you paid employee wages of $1,500 or you had one or more employees for at least some part of a day in any 20 or more different weeks. A Household worker is an employee who performs household work in a private home, local college club or local sorority or fraternity chapter. The Farmworkers test is that you are subject to FUTA tax on wages if you pay employees cash wages of $20,000 or more in any calendar quarter or you employed 10 or more farmworkers during at least some part of a day (whether or not at the same time) during any 20 or more different weeks.

If your FUTA tax is more than $500 for the calendar year you must deposit at least one quarterly payment. Taxpayers are liable for penalties if a deposit is not made in the required manner. To enroll in the EFTPS speak to your local CPA or call 1-800-945-8400 1-800-945-8400 or 1-800-829-1040 1-800-829-1040.

Generally, your church or any other non-profit religious or educational, charitable organization is not subject to the Federal Unemployment tax (FUTA) and is not required to file Form 941. Speak to your local CPA if you are not subject to the FUTA tax.

Wages paid to state or local government employees are not subject to FUTA, the Federal Unemployment tax.

Restaurants employing at least 10 people must make a special report to the IRS of income and allocated tips. In 2010 the IRS assumed tip income of 8%. The allocated amount is shown on an individuals’ W-2 as tip income.

For 2012, the maximum taxable earnings amount for Social Security (OASDI) taxes is $110,100. There is no limitation on taxable earnings for Medicare's Hospital Insurance (HI) taxes.
The Social Security tax rate for employees is 4.2 percent through the end of the year.
The Social Security tax rate for employers is 6.2 percent.
The Medicare tax rate is 1.45 percent for employees and employers.
For Self-Employed individuals, the Social Security tax rate for self-employed is 10.4 percent through the end of the year. The Medicare tax rate is 2.9 percent for self-employed.

If your son is under 18 years old, then he is considered a worker not covered by Social Security. Other workers not covered by Social Security include most federal employees hired before 1984, Railroad employees with more than 10 years of service, and employees of some state and local governments that chose not to participate in Social Security. Speak to your local CPA if there is a question of whether a worker is covered by Social Security.

COLA's were first paid in 1975 as a result of a 1972 law. Prior to that, benefits were increased irregularly by special acts of Congress. Monthly Social Security and Supplemental Security Income (SSI) benefits for more than 60 million Americans will increase 3.6 percent in 2012. The 3.6 percent cost-of-living adjustment (COLA) will begin with benefits that nearly 55 million Social Security beneficiaries receive in January 2012. Increased payments to more than 8 million SSI beneficiaries will begin on December 30, 2011.