problem 1 needs to be filled out with tax table provided. please make sure all calculations are shown. I need this done by 11:30 PM tonight.

thanks.

Final Exam - Problem 1 50 Points Name: 1. Complete the Weekly Payroll Register Below. Including totals for each column. Assume all wages are taxable for FIT, OASDI, HI, Ohio Inc. Tax, CIT, FUTA andSUTA Use the Ohio Withholding Tables in the Chapter 4 lecture notes for the Ohio Inc. Tax. 2. Record the journal entries below. Use 3% as the SUTA Rate. Rounding: When calculating items in a cell be sure to round to TWO decimals. Do not just limit how many decimals are displayed. Rounding can be accomplished by entering the formula as illustrated below or by using the Round formula function. =(Round(+1st number or cell reference then the function you want * for times or / for divide then number or cell reference,2 for 2 decimal places) Examples: =round(+c5*.062,2) or =round(+800/40,2) Failure to use the ROUND function will cause certain totals and possibly net pay to be off. Show all work for partial credit. You can attach another document or add it below the problem. Label your Work. FARLEY COMPANY, INC. PAYROLL REGISTER FOR PERIOD ENDING January 8, 20 - OVERTIME EARNINGS RATE PER HOUR AMOUNT HOURS WORKED HOURS WORKED EMPLOYEE 11 Williams, R. 12 Carey, I. 13 Jackson, C. 21 Walters, R. 22 Kramm, C. 31 Ruffert, C. 32 Dott, W. 33 Willman, S. 51 Baker L. 99 Colewater, M. Totals MARITAL STATUS NO. OF W/H ALLOW. REGULAR EARNINGS RATE PER HOUR DEDUCTIONS TOTAL AMOUNT EARNINGS Ohio FICA OASDI NET PAY HI FIT 2.10% CHECK Inc. Tax CIT NO. S 1 40 $ 18.50 313 S 0 40 $ 19.25 M 2 38.5 $ 17.80 M 3 40 $ 20.70 S 2 40 $ 23.80 M 3 40 800.00 M 4 40 780.00 319 S 1 40 807.69 320 M 5 40 1,038.46 M 7 40 1,500.00 10 314 315 7 316 317 1 1/4 318 5 321 322 Record the following entries: Entry to Journalize the payment of the wages: Taxable Earnings JOURNAL DESCRIPTION DEBIT CREDIT Net FUTA SUTA OASDI HI Entry to Record the employer payroll taxes: Entry to Record the 941 deposit: Rate 0.03 Tax AMOUNT Lecture Notes Chapter 4 Income Tax Withholding In chapter 3 the federal income tax withholding amount was already calculated for us. In chapter 4 we will learn how to calculate the federal, state, and local income tax withholdings. We will also prepare form 941 again and learn Forms W-2 and W-3. Employer/Employee Relationship and Statutory Employees/Nonemployoees- Page 4-2 This has been in every chapter so far. I think you get the hang of it. If not, read this section ad refer back to previous chapters. Taxable Wages-Page 4-2 See pages 4-2 and 4-3 for examples of employee compensation that are considered wages. Notice that travel and business expenses (unaccountable plans) is listed in Figure 4.1. If the employer has an accountable plan (employee received travel amounts and then submits receipts to account for travel money spent for business purpose), then the amounts are not taxable. See page 4-5 for more information. Fringe Benefits-Pages 4-3 and 4-4 See the examples on page 4-3 of fringe benefits. Fringe benefits are subject to federal income tax unless the fringe benefit is specifically excluded under the law. See the list on page 4-4 that is considered nontaxable. Tips- Page 4-4 and 4-5 We've also covered tips in previous chapters. Remember, tips must be reported and are considered taxable wages. Payments Exempt from Withholding & Pretax Salary Reductions-Page 4-5 The following payments are taken off gross pay before calculating federal income tax: Cafeteria Plans - If used for health insurance (including medical, dental, vision), accident insurance, life insurance, dependent care assistance (daycare, preschool, babysitter, etc) and health savings accounts. If the cafeteria pan pay is more than what is spent on these nontaxable benefits then the difference received in cash is taxable. Flexible-Spending Accounts (FSA)-Page 4-7 Flexible spending accounts are money deducted (pre-tax) to cover out-of-pocket medical expenses. These are known as use-it or lose-it accounts. Employers are currently allowed to extend the time period to spend the amounts until March 15 of the following year which should reduce the amount the employee would forfeit if not used. Note: Over-the-counter items used to be eligible expenses, but they are no longer unless a prescribed by a doctor. Health Savings Accounts (HSA)-Page 4-8 HSAs are similar to the flexible-spending account, but for employees with a high-deductible insurance plan. The employer can contribute nontaxable amounts to the employees' accounts. Employees' contributions are included in wages and are taxable for federal income tax purposes unless they are part of a cafeteria plan. These plans roll over from year to year and are owned by the employee. Archer Medical Savings Accounts (MSA)-Pages 4-7 and 4-8 MSAs are similar to a HAS, but for small businesses. The employee's contributions are included in wages, but the employee can deduct the contributions on their individual tax returns. Tax-Deferred Retirement Accounts-Page 4-8 See limits on tax-free contributions by type of plan (401(k)-standard, 403(b)-tax-exempt organizations, 457(b)-state and local government and certain tax-exempt organizations on page 4-8. Individual Retirement Accounts (IRA) & Roth IRAs-Page 4-9 We will not cover. Withholding Allowances-Pages 4-9 through 4-15 If you've ever had a job, you should have completed a W-4 Form to claim allowances. An allowance is an employee-claimed exemption on Form W-4 (See partial form on page 4-11). Allowances are used by employers to determine how much income tax (federal and state*) to withhold from an employee's pay. The idea is to claim the appropriate amount of allowances so that the taxpayer does not owe taxes when they file their individual tax return. The more allowances an employee claims, the less income tax will be withheld from their paycheck. The fewer allowances an employee claims, the more income tax will be withheld from their paycheck. The number of allowances claimed on Form W4 do not have match the number claimed on their individual tax return. However, claiming more allowances than eligible can be considered perjury and would not be in the employee's best interest. They would receive a higher paycheck because less tax would be withheld, but they would owe taxes when they file their return. *City taxes are usually a flax percentage and the number of allowances would not be relevant. Federal Income Tax Withholding (Percentage Method and Wage-Bracket Methods)-Pages 4-15 through 4-17 The amount of federal income tax depends of the employees' marital status, the number of allowances claimed and how often the employer pays. See the percentage method example on the bottom of page 4-15. We will only use this method when the taxable pay is more than the table allows. See page T-3 and T-4 in the back of your book for the percentage method tables. When we have to use this method, be sure to reference the correct table based on the payroll frequency (weekly, biweekly, etc.) and the filing status (married or single). Notice in Figure 4.6 the wage bracket table shown is for married person paid weekly. Across the top is the number of allowances claimed. To find the amount of tax to withhold you down the first two columns to find the line where the employee's gross wages fall. Move across that line to the column showing the number of allowance being claimed. Notice column 1 of Figure 4.6 says \"At least\" and the 2nd column says \"But less than\". If the wages equals the number in the second column then you have to go down to the next row because the number would not be less than the 2 nd column. See the example on page 4-17. Additional federal wage bracket tables are in the back of your text. Be sure to use the appropriate table in order to find the correct withholding amount! Single persons-Weekly,Page T-5 Married persons-Weekly, Page T-6 Single persons-Biweekly, Page T-7 Married persons-Biweekly, Page T-8 Single persons-Semimonthly,Page T-9 Married persons- Semimonthly, Page T-10 Single persons-Monthly,Page T-11 Married persons- Monthly, Page T-12 Wage and Tax Statements-Pages 4-21 through 4-27 See the example Form W-2 in Figure 4.7 on page 4-22. If you've ever had a job you received a W-2 in order to file your taxes. The W-2 reports the taxable wages and certain amounts withheld from those wages for the calendar year for each employee. The employer must give their employees Form W-2 on or before January 31 of the following year. Copy A of the Forms W-2 (for all employees) along with Form W-3 (which totals the amounts on all the Forms W-2) must be sent to the Social Security Administration (SSA) by the end of February of the following year. Remember we send the Form 941 and 941 deposits to the IRS, but these forms go to the SSA. (They talk.) Copy 1 of Form W-2 goes to the state or local tax departments (city or county in some areas). More on state and local tax forms later. All the other copies go to the employee for their records and filing their federal, state and local taxes. See Figure 4.8 on page 4-23 and 4-24 that list by box what goes in each box on Form W-2 and what the reference guide for abbreviations for box 12. All the numbers for this form would come from the Employee's Earning Record as of December 31. (See Figure 1.10 on Page 1-22). Form W-3-Pages 4-24 and 4-26 As mentioned earlier Form W-3 must accompany Forms W-2 that go to the SSA. The SSA and the IRS will compare the totals for the wages, income tax withholdings, and Social security and Medicare withholdings to Forms 941 filed for the year and the deposits made. For example, box 2 on Forms W2 for all employees added together must match Form W-3 box 2 and line 3 of Forms 941 for the year added together. Any discrepancies and the IRS will send a friendly notice. See page 4-26 for penalty information. Information Returns & Independent Contractor Payments-Pages 4-28 and 4-29 Payments made to independent contractors of at least $600 must be reported on Form 1099Miscellaneous Income. See the example Form 1099-MISC in Figure 4.13 on page 4-29. The amount they paid would go in the appropriate box. The one most relevant to this course is probably BOX 7Nonemployee Compensation. This is where we would report work done by someone who was not considered an employee. (Again, this has been discussed in every chapter so far.) Withholding State Income Tax-Pages 4-30 and 4-31 The text uses California as their state example. In general, state income taxes should be withheld based on where the services are performed unless there is a reciprocal agreement between states. Info relating to Ohio-Not in Text Withholding Ohio Income Tax Ohio has reciprocity agreements with Indiana, Kentucky, West Virginia, Michigan and Pennsylvania. Employees who reside in one of these states who receive compensation paid in Ohio and may file form IT 4NR to claim exemption from withholding of Ohio income tax. The employer would withhold the statement income tax for the state they reside in instead. Ohio's tax rates are below. We will not use the percentage method to calculate the tax, but I wanted to show you this so you can see the range of the percentages that are the foundation for the tax tables we will use to find the amount to withhold. Info relating to Ohio-Not in Text (Continued) We will use the following Ohio withholding tax tables for the Comprehensive Exam. See next four pages. They work like the federal income tax withholding tables. I am only providing the weekly and biweekly tables, but there are tables for daily, semi-monthly and monthly pays as well. One difference from the federal income tax withholding tables is there are not separate tables for filing status (single versus married). Info relating to Ohio-Not in Text (Continued) Ohio Tax Returns Below is the Ohio withholding Form. It is pretty simple. As you can see it has a place for the employer's info (name, address, identifying numbers (federal ID and state account number). Box 1 is the amount of tax withheld and Box 2 is the amount due. In a perfect world these two boxes would match. They would not if you were making some sort of adjustment for a previous error. This form is due monthly or quarterly depending on the size of the company's withholding. Quarterly payments must be remitted with Ohio form IT 501 on the Ohio Business Gateway (OBG) at business.ohio.gov by the last day of the month following the end of each calendar quarter, if the combined amount of taxes that were withheld or required to be withheld was $2,000 or less during the look-back period. Monthly payments must be remitted with Ohio form IT 501 on OBG within 15 days following the end of each month, if the combined amount of taxes that were withheld or required to be withheld was greater than $2,000 but less than $84,000 during the look-back period. Note: If the tax withheld by an employer during a pay period reaches $100,000 or more, payment of the accumulated taxes (excluding payment of school district income taxes) is due by the fi rst banking day after the pay date on which the accumulated taxes equal or exceed $100,000. If the employer is a partial-weekly fi ler, payment must be made by EFT. Sources: Ohio Employer Withholding Tax General Guidelines Info relating to Ohio-Not in Text (Continued) Ohio Tax Returns In addition to filing Form IT 501 monthly or quarterly, employers also file an annual reconciliation form called Ohio form IT 941. This form is due on or before Jan. 31 of the succeeding calendar year. Page 1 and page 2 (back) of the IT 941 is below for your review. Box 1 is the Ohio income tax withheld and should match Box 17 - State income tax withheld on Form W-3 (which remember summarizes all the employees' Form W-2s). Hopefully Box 2 (the previous payments) also matches Box 1 and the Balance Due would be zero. This page just breaks down the wages and withholding by month and totals the tax withheld. Withholding Local Income Tax-Page 4-33 Employers must also withhold city, county and school district taxes for areas that have passed legislation (levies) for employees who work in taxable districts. Employers generally do not have to withhold local taxes for employees accessed where the employee lives. Some may withhold taxes where the employee lives as a favor to the employee, but they do not have to do unless mandated by a particular local entity. As the text says many Kentucky counties have a payroll tax. That is not true for Ohio. Info relating to Ohio Locals-Not in Text The City of Cincinnati requires employers to withhold Cincinnati Taxes for compensation paid to nonresidents for services performed within the City of Cincinnati, and also compensation paid to Cincinnati residents regardless of where performed. (Cincinnati Municipal Code Sec. 311-3-Q). I will focus on the City of Cincinnati and show their forms on the next page, but below is a sample of local income tax rates. NAME RATE CINCINNATI 2.10% DEER PARK 1.50% FAIRFIELD 1.50% GOLF MANOR 1.70% MADEIRA 1.00% MILFORD 1.00% NORWOOD 2.00% SHARONVILLE 1.50% SYCAMORE 1.00% WOODLAWN 2.00% Source: Municipal Income Tax Rate Database Table. https://thefinder.tax.ohio.gov/streamlinesalestaxweb/Download/MuniRateTableInstructions.aspx Below are some local school district tax rates: NAME Wyoming (Hamilton County) New Miami (Butler) Goshen (Clermont/Warren) Ross (Butler) Southwest (Butler/Hamilton) RATE 1.25% 1.00% 1.00% .75% .75% Source: School District Income Tax Rate Database Table. https://thefinder.tax.ohio.gov/streamlinesalestaxweb/Download/SDRateTableInstructions.aspx Info relating to Ohio Locals-Not in Text (Continued) Below are example forms for Monthly Filers for the City of Cincinnati for Jan. and Feb. 2015. You can see it is pretty simple. It includes the name and address of the employer along with account numbers. The filing period and due date is preprinted. Then the employer fills in the amount due (which is the amount that should have been withheld from the employees at 2.1% of their wages. Larger companies can be semi-monthly filers and smaller companies can be quarterly filers. See the chart below for the withholding cut-off for the various filing requirements and the due dates of their filing and payment. City of Cincinnati Withholding Remittance Quarterly 0-$2,399 - 15th day of the next month after the quarter ends Monthly $2,400-$11,999 - 15th day of the next month Semi- Monthly > $12,000 - Three business days after the period ends. (18th & 3rd) In addition to filing monthly, quarterly or semimonthly with the City of Cincinnati, employers also file an annual reconciliation form called Form W-3. This form is due on or before the last day in February of the succeeding calendar year. Form W-3 is on the next page. Below are instructions for the individual lines: LINES 1-12: Enter the withholding payments remitted (Note: Employers remitting quarterly payments should complete only the lines for the first, second, third and fourth quarters.) LINE 13: Enter the total withholding payments remitted to this office. Add Lines 1-12. LINE 14: Enter the number of W-2s submitted or the number of employees listed. * LINE 15: Enter the total Cincinnati Qualifying Wages (the year-end total of all taxable compensation paid to employees who live or work in Cincinnati). Generally, the amount reported in Box 5 of the W-2 is the qualifying wage for Ohio residents. Qualifying Wages include compensation paid to nonresidents for services performed within the City of Cincinnati, and also include compensation paid to Cincinnati residents regardless of where performed. LINE 16: Multiply the Qualifying Wages amount by 2.1% (.021). LINE 17: Enter the amount of tax withheld for other cities on behalf of Cincinnati residents (up to 2.1% of taxable compensation for each employee). Credit is limited to the local tax rate used multiplied by Qualifying Wages. We require supplemental data on the W-2 or listing showing the municipality names and amounts credited for each employee. LINE 18: Subtract Line 17 from Line 16 to get the amount of withholding tax after credits and enter on Line 18. LINE 19: Enter the total amount of withholdings paid to Cincinnati (from Line 13). LINE 20: If Line 18 is greater than Line 19, enter the balance of tax due on Line 20. LINE 21: If Line 19 is greater than Line 18, enter the overpayment amount. A full written explanation for the overpayment must be attached in order to process your request for a refund or a credit transfer. LINE 22: Enter the amount to be credited to next year. LINE 23: Enter the amount to be refunded. *Copies of all Forms W-2 must be submitted (electronic or employee listing with W-2 info can be submitted in certain circumstances). Final Exam - Problem 1 50 Points Name: 1. Complete the Weekly Payroll Register Below. Including totals for each column. Assume all wages are taxable for FIT, OASDI, HI, Ohio Inc. Tax, CIT, FUTA andSUTA Use the Ohio Withholding Tables in the Chapter 4 lecture notes for the Ohio Inc. Tax. 2. Record the journal entries below. Use 3% as the SUTA Rate. Rounding: When calculating items in a cell be sure to round to TWO decimals. Do not just limit how many decimals are displayed. Rounding can be accomplished by entering the formula as illustrated below or by using the Round formula function. =(Round(+1st number or cell reference then the function you want * for times or / for divide then number or cell reference,2 for 2 decimal places) Examples: =round(+c5*.062,2) or =round(+800/40,2) Failure to use the ROUND function will cause certain totals and possibly net pay to be off. Show all work for partial credit. You can attach another document or add it below the problem. Label your Work. FARLEY COMPANY, INC. PAYROLL REGISTER FOR PERIOD ENDING January 8, 20 - OVERTIME EARNINGS RATE PER HOUR AMOUNT S 1 40 0 40 $ 19.25 $ 770.00 M 2 38.5 $ 17.80 M 3 40 $ 20.70 $ 828.00 S 2 40 $ 23.80 $ 3 40 800.00 M 4 40 S 1 M M DEDUCTIONS TOTAL AMOUNT 952.00 M RATE PER HOUR $ 18.50 $ 740.00 S HOURS WORKED HOURS WORKED EMPLOYEE 11 Williams, R. 12 Carey, I. 13 Jackson, C. 21 Walters, R. 22 Kramm, C. 31 Ruffert, C. 32 Dott, W. 33 Willman, S. 51 Baker L. 99 Colewater, M. Totals MARITAL STATUS NO. OF W/H ALLOW. REGULAR EARNINGS EARNINGS Ohio FICA OASDI NET PAY HI FIT 2.10% CHECK Inc. Tax CIT NO. 740.00 313 10 $28.88 288.80 1,058.80 314 685.30 315 7 $31.05 217.35 1,045.35 316 952.00 317 837.50 318 780.00 780.00 319 40 807.69 807.69 320 5 40 1,038.46 1,233.16 321 7 40 1,500.00 1,500.00 322 $ 685.30 1 1/4 $30.00 5 8,901.45 $38.94 37.50 194.70 738.35 9,639.80 Record the following entries: Entry to Journalize the payment of the wages: Taxable Earnings JOURNAL DESCRIPTION DEBIT CREDIT Net FUTA SUTA OASDI HI Entry to Record the employer payroll taxes: Entry to Record the 941 deposit: Rate 0.03 Tax AMOUNT Lecture Notes Chapter 4 Income Tax Withholding In chapter 3 the federal income tax withholding amount was already calculated for us. In chapter 4 we will learn how to calculate the federal, state, and local income tax withholdings. We will also prepare form 941 again and learn Forms W-2 and W-3. Employer/Employee Relationship and Statutory Employees/Nonemployoees- Page 4-2 This has been in every chapter so far. I think you get the hang of it. If not, read this section ad refer back to previous chapters. Taxable Wages-Page 4-2 See pages 4-2 and 4-3 for examples of employee compensation that are considered wages. Notice that travel and business expenses (unaccountable plans) is listed in Figure 4.1. If the employer has an accountable plan (employee received travel amounts and then submits receipts to account for travel money spent for business purpose), then the amounts are not taxable. See page 4-5 for more information. Fringe Benefits-Pages 4-3 and 4-4 See the examples on page 4-3 of fringe benefits. Fringe benefits are subject to federal income tax unless the fringe benefit is specifically excluded under the law. See the list on page 4-4 that is considered nontaxable. Tips- Page 4-4 and 4-5 We've also covered tips in previous chapters. Remember, tips must be reported and are considered taxable wages. Payments Exempt from Withholding & Pretax Salary Reductions-Page 4-5 The following payments are taken off gross pay before calculating federal income tax: Cafeteria Plans - If used for health insurance (including medical, dental, vision), accident insurance, life insurance, dependent care assistance (daycare, preschool, babysitter, etc) and health savings accounts. If the cafeteria pan pay is more than what is spent on these nontaxable benefits then the difference received in cash is taxable. Flexible-Spending Accounts (FSA)-Page 4-7 Flexible spending accounts are money deducted (pre-tax) to cover out-of-pocket medical expenses. These are known as use-it or lose-it accounts. Employers are currently allowed to extend the time period to spend the amounts until March 15 of the following year which should reduce the amount the employee would forfeit if not used. Note: Over-the-counter items used to be eligible expenses, but they are no longer unless a prescribed by a doctor. Health Savings Accounts (HSA)-Page 4-8 HSAs are similar to the flexible-spending account, but for employees with a high-deductible insurance plan. The employer can contribute nontaxable amounts to the employees' accounts. Employees' contributions are included in wages and are taxable for federal income tax purposes unless they are part of a cafeteria plan. These plans roll over from year to year and are owned by the employee. Archer Medical Savings Accounts (MSA)-Pages 4-7 and 4-8 MSAs are similar to a HAS, but for small businesses. The employee's contributions are included in wages, but the employee can deduct the contributions on their individual tax returns. Tax-Deferred Retirement Accounts-Page 4-8 See limits on tax-free contributions by type of plan (401(k)-standard, 403(b)-tax-exempt organizations, 457(b)-state and local government and certain tax-exempt organizations on page 4-8. Individual Retirement Accounts (IRA) & Roth IRAs-Page 4-9 We will not cover. Withholding Allowances-Pages 4-9 through 4-15 If you've ever had a job, you should have completed a W-4 Form to claim allowances. An allowance is an employee-claimed exemption on Form W-4 (See partial form on page 4-11). Allowances are used by employers to determine how much income tax (federal and state*) to withhold from an employee's pay. The idea is to claim the appropriate amount of allowances so that the taxpayer does not owe taxes when they file their individual tax return. The more allowances an employee claims, the less income tax will be withheld from their paycheck. The fewer allowances an employee claims, the more income tax will be withheld from their paycheck. The number of allowances claimed on Form W4 do not have match the number claimed on their individual tax return. However, claiming more allowances than eligible can be considered perjury and would not be in the employee's best interest. They would receive a higher paycheck because less tax would be withheld, but they would owe taxes when they file their return. *City taxes are usually a flax percentage and the number of allowances would not be relevant. Federal Income Tax Withholding (Percentage Method and Wage-Bracket Methods)-Pages 4-15 through 4-17 The amount of federal income tax depends of the employees' marital status, the number of allowances claimed and how often the employer pays. See the percentage method example on the bottom of page 4-15. We will only use this method when the taxable pay is more than the table allows. See page T-3 and T-4 in the back of your book for the percentage method tables. When we have to use this method, be sure to reference the correct table based on the payroll frequency (weekly, biweekly, etc.) and the filing status (married or single). Notice in Figure 4.6 the wage bracket table shown is for married person paid weekly. Across the top is the number of allowances claimed. To find the amount of tax to withhold you down the first two columns to find the line where the employee's gross wages fall. Move across that line to the column showing the number of allowance being claimed. Notice column 1 of Figure 4.6 says \"At least\" and the 2nd column says \"But less than\". If the wages equals the number in the second column then you have to go down to the next row because the number would not be less than the 2 nd column. See the example on page 4-17. Additional federal wage bracket tables are in the back of your text. Be sure to use the appropriate table in order to find the correct withholding amount! Single persons-Weekly,Page T-5 Married persons-Weekly, Page T-6 Single persons-Biweekly, Page T-7 Married persons-Biweekly, Page T-8 Single persons-Semimonthly,Page T-9 Married persons- Semimonthly, Page T-10 Single persons-Monthly,Page T-11 Married persons- Monthly, Page T-12 Wage and Tax Statements-Pages 4-21 through 4-27 See the example Form W-2 in Figure 4.7 on page 4-22. If you've ever had a job you received a W-2 in order to file your taxes. The W-2 reports the taxable wages and certain amounts withheld from those wages for the calendar year for each employee. The employer must give their employees Form W-2 on or before January 31 of the following year. Copy A of the Forms W-2 (for all employees) along with Form W-3 (which totals the amounts on all the Forms W-2) must be sent to the Social Security Administration (SSA) by the end of February of the following year. Remember we send the Form 941 and 941 deposits to the IRS, but these forms go to the SSA. (They talk.) Copy 1 of Form W-2 goes to the state or local tax departments (city or county in some areas). More on state and local tax forms later. All the other copies go to the employee for their records and filing their federal, state and local taxes. See Figure 4.8 on page 4-23 and 4-24 that list by box what goes in each box on Form W-2 and what the reference guide for abbreviations for box 12. All the numbers for this form would come from the Employee's Earning Record as of December 31. (See Figure 1.10 on Page 1-22). Form W-3-Pages 4-24 and 4-26 As mentioned earlier Form W-3 must accompany Forms W-2 that go to the SSA. The SSA and the IRS will compare the totals for the wages, income tax withholdings, and Social security and Medicare withholdings to Forms 941 filed for the year and the deposits made. For example, box 2 on Forms W2 for all employees added together must match Form W-3 box 2 and line 3 of Forms 941 for the year added together. Any discrepancies and the IRS will send a friendly notice. See page 4-26 for penalty information. Information Returns & Independent Contractor Payments-Pages 4-28 and 4-29 Payments made to independent contractors of at least $600 must be reported on Form 1099Miscellaneous Income. See the example Form 1099-MISC in Figure 4.13 on page 4-29. The amount they paid would go in the appropriate box. The one most relevant to this course is probably BOX 7Nonemployee Compensation. This is where we would report work done by someone who was not considered an employee. (Again, this has been discussed in every chapter so far.) Withholding State Income Tax-Pages 4-30 and 4-31 The text uses California as their state example. In general, state income taxes should be withheld based on where the services are performed unless there is a reciprocal agreement between states. Info relating to Ohio-Not in Text Withholding Ohio Income Tax Ohio has reciprocity agreements with Indiana, Kentucky, West Virginia, Michigan and Pennsylvania. Employees who reside in one of these states who receive compensation paid in Ohio and may file form IT 4NR to claim exemption from withholding of Ohio income tax. The employer would withhold the statement income tax for the state they reside in instead. Ohio's tax rates are below. We will not use the percentage method to calculate the tax, but I wanted to show you this so you can see the range of the percentages that are the foundation for the tax tables we will use to find the amount to withhold. Info relating to Ohio-Not in Text (Continued) We will use the following Ohio withholding tax tables for the Comprehensive Exam. See next four pages. They work like the federal income tax withholding tables. I am only providing the weekly and biweekly tables, but there are tables for daily, semi-monthly and monthly pays as well. One difference from the federal income tax withholding tables is there are not separate tables for filing status (single versus married). Info relating to Ohio-Not in Text (Continued) Ohio Tax Returns Below is the Ohio withholding Form. It is pretty simple. As you can see it has a place for the employer's info (name, address, identifying numbers (federal ID and state account number). Box 1 is the amount of tax withheld and Box 2 is the amount due. In a perfect world these two boxes would match. They would not if you were making some sort of adjustment for a previous error. This form is due monthly or quarterly depending on the size of the company's withholding. Quarterly payments must be remitted with Ohio form IT 501 on the Ohio Business Gateway (OBG) at business.ohio.gov by the last day of the month following the end of each calendar quarter, if the combined amount of taxes that were withheld or required to be withheld was $2,000 or less during the look-back period. Monthly payments must be remitted with Ohio form IT 501 on OBG within 15 days following the end of each month, if the combined amount of taxes that were withheld or required to be withheld was greater than $2,000 but less than $84,000 during the look-back period. Note: If the tax withheld by an employer during a pay period reaches $100,000 or more, payment of the accumulated taxes (excluding payment of school district income taxes) is due by the fi rst banking day after the pay date on which the accumulated taxes equal or exceed $100,000. If the employer is a partial-weekly fi ler, payment must be made by EFT. Sources: Ohio Employer Withholding Tax General Guidelines Info relating to Ohio-Not in Text (Continued) Ohio Tax Returns In addition to filing Form IT 501 monthly or quarterly, employers also file an annual reconciliation form called Ohio form IT 941. This form is due on or before Jan. 31 of the succeeding calendar year. Page 1 and page 2 (back) of the IT 941 is below for your review. Box 1 is the Ohio income tax withheld and should match Box 17 - State income tax withheld on Form W-3 (which remember summarizes all the employees' Form W-2s). Hopefully Box 2 (the previous payments) also matches Box 1 and the Balance Due would be zero. This page just breaks down the wages and withholding by month and totals the tax withheld. Withholding Local Income Tax-Page 4-33 Employers must also withhold city, county and school district taxes for areas that have passed legislation (levies) for employees who work in taxable districts. Employers generally do not have to withhold local taxes for employees accessed where the employee lives. Some may withhold taxes where the employee lives as a favor to the employee, but they do not have to do unless mandated by a particular local entity. As the text says many Kentucky counties have a payroll tax. That is not true for Ohio. Info relating to Ohio Locals-Not in Text The City of Cincinnati requires employers to withhold Cincinnati Taxes for compensation paid to nonresidents for services performed within the City of Cincinnati, and also compensation paid to Cincinnati residents regardless of where performed. (Cincinnati Municipal Code Sec. 311-3-Q). I will focus on the City of Cincinnati and show their forms on the next page, but below is a sample of local income tax rates. NAME RATE CINCINNATI 2.10% DEER PARK 1.50% FAIRFIELD 1.50% GOLF MANOR 1.70% MADEIRA 1.00% MILFORD 1.00% NORWOOD 2.00% SHARONVILLE 1.50% SYCAMORE 1.00% WOODLAWN 2.00% Source: Municipal Income Tax Rate Database Table. https://thefinder.tax.ohio.gov/streamlinesalestaxweb/Download/MuniRateTableInstructions.aspx Below are some local school district tax rates: NAME Wyoming (Hamilton County) New Miami (Butler) Goshen (Clermont/Warren) Ross (Butler) Southwest (Butler/Hamilton) RATE 1.25% 1.00% 1.00% .75% .75% Source: School District Income Tax Rate Database Table. https://thefinder.tax.ohio.gov/streamlinesalestaxweb/Download/SDRateTableInstructions.aspx Info relating to Ohio Locals-Not in Text (Continued) Below are example forms for Monthly Filers for the City of Cincinnati for Jan. and Feb. 2015. You can see it is pretty simple. It includes the name and address of the employer along with account numbers. The filing period and due date is preprinted. Then the employer fills in the amount due (which is the amount that should have been withheld from the employees at 2.1% of their wages. Larger companies can be semi-monthly filers and smaller companies can be quarterly filers. See the chart below for the withholding cut-off for the various filing requirements and the due dates of their filing and payment. City of Cincinnati Withholding Remittance Quarterly 0-$2,399 - 15th day of the next month after the quarter ends Monthly $2,400-$11,999 - 15th day of the next month Semi- Monthly > $12,000 - Three business days after the period ends. (18th & 3rd) In addition to filing monthly, quarterly or semimonthly with the City of Cincinnati, employers also file an annual reconciliation form called Form W-3. This form is due on or before the last day in February of the succeeding calendar year. Form W-3 is on the next page. Below are instructions for the individual lines: LINES 1-12: Enter the withholding payments remitted (Note: Employers remitting quarterly payments should complete only the lines for the first, second, third and fourth quarters.) LINE 13: Enter the total withholding payments remitted to this office. Add Lines 1-12. LINE 14: Enter the number of W-2s submitted or the number of employees listed. * LINE 15: Enter the total Cincinnati Qualifying Wages (the year-end total of all taxable compensation paid to employees who live or work in Cincinnati). Generally, the amount reported in Box 5 of the W-2 is the qualifying wage for Ohio residents. Qualifying Wages include compensation paid to nonresidents for services performed within the City of Cincinnati, and also include compensation paid to Cincinnati residents regardless of where performed. LINE 16: Multiply the Qualifying Wages amount by 2.1% (.021). LINE 17: Enter the amount of tax withheld for other cities on behalf of Cincinnati residents (up to 2.1% of taxable compensation for each employee). Credit is limited to the local tax rate used multiplied by Qualifying Wages. We require supplemental data on the W-2 or listing showing the municipality names and amounts credited for each employee. LINE 18: Subtract Line 17 from Line 16 to get the amount of withholding tax after credits and enter on Line 18. LINE 19: Enter the total amount of withholdings paid to Cincinnati (from Line 13). LINE 20: If Line 18 is greater than Line 19, enter the balance of tax due on Line 20. LINE 21: If Line 19 is greater than Line 18, enter the overpayment amount. A full written explanation for the overpayment must be attached in order to process your request for a refund or a credit transfer. LINE 22: Enter the amount to be credited to next year. LINE 23: Enter the amount to be refunded. *Copies of all Forms W-2 must be submitted (electronic or employee listing with W-2 info can be submitted in certain circumstances)