Social security and Medicare taxes are collected under the SECA and the FICA. Here, we will explore which earnings are taxed under both systems and how to figure earnings from self-employment. We will also, if you have a household employee, you may need to pay state and federal employment taxes. The tax consultant needs to know whether the taxpayer has a household employees and whether the taxpayer needs to pay federal employment taxes. In addition, one must know how to figure, pay and report these taxes and records one must keep.
Tax School Homepage
Student Instructions:
Read the reading material and answer the questions on this page.
Submit the answers to: Assignment Online (the questions on this page).
Complete a short quiz: Short Quiz online. You have 25 minutes to complete 15 questions for this quiz. You must study the reading material. You won't have time to look up questions in the reading material. If you don't pass, you can retry - Every time you try the questions will be different.
So just to recap: for every topic you will submit an assignment (step 2) and a short quiz (step 3). Once these two items are submitted, a certificate will be issued to you.
You will need IRS Publication 517 and IRS Publication 926 to complete this topic.
1. Your earnings that are not from the exercise of your ministry may be subject to social security tax under FICA or SECA according to the rules that apply to taxpayers in general.
True False
2. Church employees, members of religious orders, and duly ordained, commissioned, or licensed ministers working as ministers or chaplains cannot participate in tax-sheltered annuity 403(b) Plans.
3. Social security and Medicare taxes are collected under the
A. Self-Employment Contributions Act (SECA). B. Federal Insurance Contributions Act (FICA). C. Medicare Contributions Act (MECA). D. Either A or B above.
4. The services you perform in the exercise of your ministry are covered by social security and Medicare under SECA. Your earnings for these services are subject to self-employment (SE) tax unless
A. You are a member of a religious order that has taken a vow of poverty. B. You ask the Internal Revenue Service (IRS) for an exemption from SE tax for your services and the IRS approves your request. C. You are subject only to the social security laws of a foreign country under the provisions of a social security agreement between he United States and that country. D. Any of the above.
5. Anyone licensed or commissioned as a minister must be able to perform substantially all the religious functions of an ordained minister to be treated as a minister for social security purposes.
6. Churches and qualified church-controlled organizations (church organizations) that are opposed to religious reasons to the payment of social security and Medicare taxes
A. Must still pay social security and Medicare tax (SECA). B. Can elect to exclude their employees from FICA coverage. C. Can take an election to exclude their employees from paying SE tax on those wages. D. Both B and C above.
7. You can request an exemption from SE tax if you
A. Are a minister or a Christian Science practitioner. B. Are a member of a religious order who has taken a vow of poverty. C. Elected to be covered under social security by filing Form 2031. D. Any of the above.
8. To claim the exemption form SE tax, the following is one of the conditions you must meet.
A. You file Form 4361. B. You are conscientiously opposed to public insurance because of your general conscience. C. You file for economic reasons. D. All of the above.
9. To request exemption from SE tax, file Form 4361 in triplicate with the IRS. File Form 4361 by the date your income tax return is due, including extensions, for the second tax year in which you have net earnings from self-employment of
A. At least $100. B. At least $600. C. At least $400. D. More than $5,000.
10. If you are member of a recognized religious sect, or a division of a recognized religious sect you can apply for an exemption from payment of social security benefits or payments based on your wages or self-employment income.
11. You have a household employee if you hired someone to do household work and that worker is your employee. The worker is your employee if
A. You can control the work that is done. B. You can control how the work is done. C. The work is full time, you pay the worker on an hourly, daily, or weekly basis, or by the job. D. Both A and B above.
12. You pay Helen Ayers to babysit your child and do light housework three days per week in your home. Helen follows your specific instructions in doing the house chores and babysitting duties. You provide all that is needed for her to perform her duties. Helen is
A. Not your household employee because her job is not really considered a job. B. Not your employee because you are not there at home to supervise her while she babysits. C. Your household employee because you control what work to do and how to do the work. D. Not your household worker because you don't control her work.
13. A worker who performs child care services for you in his or her home is your household employee.
14. If only the worker can control how the work is done, the worker is not your employee but is self-employed.
15. It is unlawful for you knowingly to hire or continue to employ an alien who cannot legally work in the United States. When you hire a household employee to work for you on a regular basis, you and the employee must complete the U.S. Citizenship and Immigration Services (USCIS) Form I-9, Employment Verification, no later than
A. The first day of work. B. The first week of work. C. The first pay check. D. The first month.
16. If you have a household employee, you may need to withhold and pay
A. Social Security taxes. B. Medicare taxes. C. Federal unemployment taxes. D. All of the above.
17. You figure Social Security and Medicare taxes on the Social Security and Medicare wages you pay your employee. Count wages you pay to ___________ as Social Security and Medicare wages.
A. Your spouse. B. Your child who is under the age of 21. C. Your parent who cares for your child and your child is under the age of 18 or has a physical or mental condition and you are divorced, a widow or your spouse is physically or mentally incapable of taking care of your children. D. None of the above.
18. When you hire a household employee you may need to
A. Find out if the person can legally work in the United States. B. Find out if you have to pay state taxes. C. Give your employee copies B, C, and 2 of Form W-2. D. Both A and B above.
19. When you pay your household employee you may need to
A. Withhold Social Security, Medicare and federal income taxes. B. Decide how you will make tax payments and keep records. C. Make advance payments of the earned income credit. D. Do all of the above.
20. A transit pass includes any pass, token, fare card, voucher, or similar item entitling a person to ride on a mass transit, such as a bus or train. If you provide your employee transit passes to commute to your home
A. Count the value of the transit passes as wages. B. Do not count the value of the transit passes as wages. C. Only count as wages up to $230 per month for 2009. D. None of the above.
