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The Payroll Source T-6 6.7-7 What Types of Employment Are Exempt From Social Security and Medicare Taxes....... 6-49 6.7-8 Railroad Retirement Tax Act.............................................................................................. 6-49 6.8 State and Local Government Employees. .......................................................................................... 6-51 6.9 Penalties for Failure to Withhold. ...................................................................................................... 6-54 6.10 State and Local Income Tax Withholding. ........................................................................................ 6-54 6.11 Review Questions and Exercises. ....................................................................................................... 6-58 SECTION 7: UNEMPLOYMENT INSURANCE 7.1 Federal Unemployment Insurance........................................................................................................ 7-2 7.1-1 Who Must Pay FUTA Tax. ................................................................................................. 7-2 7.1-2 What Wages Are Exempt From FUTA Tax. ....................................................................... 7-2 7.1-3 What Types of Employment Are Exempt From FUTA Tax. .............................................. 7-3 7.1-4 FUTA Tax Rate and Wage Base. ......................................................................................... 7-3 7.1-5 Depositing and Paying FUTA Tax....................................................................................... 7-4 7.1-6 Calculating the State Credits Against FUTA Tax Liability. ................................................ 7-5 7.1-7 Reporting FUTA Tax on Form 940. .................................................................................... 7-8 7.1-8 Form 940 Line-by-Line Instructions. ................................................................................ 7-11 7.1-9 Penalties for FUTA Noncompliance.................................................................................. 7-21 7.2 State Unemployment Insurance. ........................................................................................................ 7-22 7.2-1 The Employment Relationship. ......................................................................................... 7-22 7.2-2 SUI Taxable Wages............................................................................................................. 7-23 7.2-3 Contribution Rates and Experience Rating.......................................................................7-25 7.2-4 Voluntary Contributions....................................................................................................7-29 7.2-5 Joint or Combined Accounts.............................................................................................. 7-31 7.2-6 The Unemployment Benefits Process................................................................................. 7-31 7.2-7 Reporting Requirements. ................................................................................................... 7-34 7.3 State Disability Insurance................................................................................................................... 7-43 7.4 Directory of State Employment Security Agencies............................................................................ 7-44 7.5 Review Questions and Exercises. ....................................................................................................... 7-49 SECTION 8: DEPOSITING AND REPORTING WITHHELD TAXES 8.1 Employer Identification Numbers........................................................................................................ 8-3 8.2 Depositing Withheld Income and Employment Taxes. ....................................................................... 8-5 8.2-1 Payroll Tax Deposit Rules . .................................................................................................. 8-5 8.2-2 How to Deposit Payroll Taxes. ........................................................................................... 8-12 8.2-3 Penalties for Failure to Deposit on Time............................................................................ 8-18 8.3 The Employer’s Employment Tax Return—Form 941. ..................................................................... 8-26 8.3-1 Who Must File Form 941.................................................................................................. 8-26 8.3-2 When and Where to File Form 941................................................................................... 8-30 8.3-3 Form 941—Line-by-Line Instructions. ............................................................................. 8-32 The Payroll Source®