ACT 3070 Lecture Notes - Lecture 6: Roadside Assistance, Term Life Insurance, Federal Insurance Contributions Act Tax

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yellowcattle191

21 Jul 2017

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Document Summary

A fixed period of time that most states use in an unemployment insurance formula to determine weekly benefits. benefits. Additional compensation from an employer; benefits can include health and dental insurance, child care, retirement, and travel expenses. biweekly. An employee benefit that allows employees paid time off to care for sick children or newborns. commission. A method of payment where an employee receives a percentage of the amount of sales produced by that employee. direct deposit. Payroll or other types of checks that are directly and electronically deposited into a bank account. discount. The amount that a charge, cost, or fee is lowered. double-time pay. An overtime rate that is two times the hourly rate. employee benefits. Value-added options that an employer may choose to offer employees; typically, benefits are in the forms of insurance (health, life, and disability), paid vacation time, paid holiday time, retirement plans, stock ownership plans, and childcare leave. employment agency.

Related Questions

Based on following text in your own words, list anddefine the four categories of employment income,providing an example (other than regular pay) foreach category.

Employment Income

An individual working for an employer receives compensation orpay, known as remuneration, for the services they perform. Where anemployee-employer relationship exists, remuneration is referred toas employment income. Employment income can be categorized intoearnings, allowances, benefits and taxable expensereimbursements.

Earnings

Earnings are dollar amounts the employer pays an employee forthe work they perform. Earnings can be paid as:
Â· a salary
Â· a rate for each hour worked
Â· a rate per piece of goods produced or picked
Â· a disability payment for time off work due to illness
Â· a payment for vacation time
Â· a premium payment for overtime hours worked
Â· a premium payment for hours worked on shift

Deciding which types of earnings are paid and how they arecalculated is primarily a decision made by the employer. Earningsare pensionable, insurable and taxable, and therefore subject toall statutory deductions.

Allowances

Allowances are additional dollar amounts paid to employees forthe use, or anticipated use, of their personal property forbusiness purposes. Allowances can also be provided to employees tocover the cost of personal living expenses associated withemployment. The most common types of allowances cover the costsincurred by the employee for car, meals, uniforms, safety shoes orother particular types of clothing for business reasons. Undercertain conditions, allowances are not considered employment incomeand therefore are not subject to statutory withholdings.

Benefits

Benefits are dollar values attributed to something the employerhas either provided to an employee or paid for on an employeeâsbehalf. Usually, when an employer provides an employee withsomething (for example, a company-leased automobile is given to theemployee for both business and personal use) or pays for somethingon an employeeâs behalf (for example, group term life insurancepremiums), it results in a benefit to the employee. There arecertain situations where benefits are not included in employmentincome and therefore are not subject to statutory withholdings.

Expense Reimbursements

Similar to allowances, expense reimbursements are also dollaramounts paid to employees to cover expenses that they incur whileperforming their job. For the most part, expense reimbursementsgenerally fall outside of payroll because they are business-relatedand therefore not employment income to employees. These expensesare claimed on an expense report, supported by receipts, andusually submitted directly to the accounting department forreimbursement. As such, they are not considered in the calculationof an employeeâs pay. Some organizations choose to reimburseexpenses through payroll in which case they are not subject to anystatutory deductions; they will, however, affect the net pay. Anyreimbursements made to an employee for personal living expenses areconsidered taxable to the employee, included in income and subjectto statutory withholdings.

Please build the answer in your own words based on flowing textfrom studding book (provide the example):

text from book:

Group Term Life Insurance Plans.

Many employers offer group term life insurance as part of theiremployee benefit package. Life insurance coverage is normallycalculated as a multiple of the employeeâs annual salary, roundedup to the nearest thousand ($1,000.00). The premiums paid by theemployer for coverage under a group term life insurance policy areconsidered a taxable benefit to the employee. If the employershares the premium cost with the employee, for example, theemployer pays half and the employee pays half, then the taxablebenefit would only be the portion of the premiums the employerpays, or 50%. Group term life insurance taxable benefitcalculations are based on the premium rates and sales taxes theemployer pays and the amount of coverage provided. Premium ratesare expressed per $1,000.00 of coverage on a monthly basis. Thetaxable benefit must be calculated on a pay period basis forinclusion in the employeeâs taxable income.

The following formula calculates the employeeâs monthly taxablebenefit:

Coverage amount = Annual salary x coverage multiplier Roundcoverage amount up to nearest $1,000.00 Monthly taxable benefit =Coverage amount x premium rate $1,000.00 To ensure that the benefitis included in the employeeâs income as it is earned or enjoyed,the monthly benefit must be annualized and then prorated on a payperiod basis, as follows: Pay period taxable benefit = Monthlytaxable benefit x 12 Pay period frequency

"Example: Rhonda Goldâs life insurance coverage, through heremployerâs group plan is two times her annual salary of $30,300.00.Her employer pays the insurer 100% of the cost of her lifeinsurance coverage at a premium rate of $1.00 per $1,000.00 ofcoverage per month. Rhonda is paid on a weekly basis; her taxablebenefit is calculated as follows: Coverage amount = Annual salary xcoverage multiplier Round coverage amount up to nearest $1,000.00 =($30,300 x 2) = $60,600.00 = $61,000.00 (rounded) Monthly taxablebenefit = coverage amount x premium rate $1,000.00 = $61,000 x$1.00 $1,000.00 = $61.00"

Group Sickness and Accident Insurance Plans.

These are group plans that provide employees with income for aperiod of time, should the employee be away from work for reasonsof sickness or accident. A group plan is generally one thatprovides coverage to a class or association of employees. There canalso be multiple plans for a group of employees, for example, oneplan for clerical staff and one for management staff. The types ofsickness and accident insurance plans considered in this categoryinclude:

? short term disability plans (wage loss replacement, weeklyindemnity)

? long term disability plans

? accident insurance plans (accidental death anddismemberment)

If an employer pays the premiums for group short-term orlong-term disability plans there is no taxable benefit implicationfor the employee, however employer-paid accidental death anddismemberment (AD&D) premiums are considered a non-cash taxablebenefit. As a result, employer-paid AD&D premiums, plus the 8%RST (Manitoba and Ontario), the 9% tax on insurance premiums(QuÃ©bec) and the 6% PST (Saskatchewan) as applicable, areconsidered pensionable for C/QPP contributions and taxable forfederal and provincial income taxes. Employer-paid premiums for anon-group plan are considered a non-cash taxable benefit in alljurisdictions. A non-group plan is one that generally does notcover a group or association of employees. For example, if theorganization pays the premiums for a long-term disability plan foronly the president of the organization, this would be considered anon-cash taxable benefit to the president. When the benefit istaxable it is also pensionable for C/QPP contributions; however, asit is a non-cash benefit, it is not insurable, and no EI or QPIPpremiums are deducted. GST and HST are not included in the value ofthis type of benefit, but the provinces of Manitoba, Ontario,QuÃ©bec and Saskatchewan assess sales tax on AD&D insurancepremiums.

Question : Your organization, located in Manitoba,will be enhancing the group benefits plan offered to employees intwo months by adding accidental death and dismemberment (AD&D)coverage and vision care coverage. The organization will pay 50% ofthe cost of the AD&D premiums and 50% of the cost of the visioncare premiums, with the employees paying the other 50% of eachpremium. The Manager of Finance, Laura Bruce, has requested thatyou, as the Payroll Supervisor, prepare a communication for theemployees, explaining how these new benefits will impact their netpay.

(200 â 350 words)

21. Employer taxes include all the followingexcept:
Federal Unemployment Tax
Social Security and MedicareTax
State Unemployment Tax
Federal Income TaxWithholdings

Question 22. 22. Time tickets are usedto:

Record weekly or monthlyinformation
Record payroll
Record time-basedactivities
Track sales invoices

Question 23. 23. Which of the following havedebit balances?

Revenues, Liabilities, Owners'Equity
Owners' Equity, Assets
Liability, Expenses
Assets, Expenses

Question 24. 24. After you copy Peachtree datato Microsoft Word, you need to:

Format the data
Click on the Excel icon
Use the Word macro
Click on Open the file

Question 25. 25. Employer premiums paid forhealth insurance are called:

Retirement plan expense
Health insurance expense
State unemployment taxexpense
Worker's compensation taxexpense

Question 26. 26. The account type for accruedwages account is:

Other CurrentLiabilities
Other Current Assets
Income
Expenses

Question 27. 27. The amount of time spent byan employee on a job is usually recorded on:

Labor Distribution to Jobswindow
Customer Invoice window
Purchases window
Statement of ownersâequity