2018 Payroll Source: Sections 1 - 15 REVIEW QUESTION

What penalties can be assessed for violations of the FLSA's child labor restrictions?

$12,529 for each violation, and up to $55,947 for each violation that causes the death or serious injury of a minor.

EE Bill receives a $2,000 bonus in addition to his regular wages and has received $50,000 in wages so far during the year. Using the optional flat rate withholding method for supplemental wages, calculate Bill's federal income tax withholding on the bonus.

$2,000 x 22% = $440

What is the maximum amount of group-term life insurance an ER can provide an EE's dependents without its value being taxable to the EE?

$2,000. If the ER provides more than $2,000 in group-term life insurance to an EE's dependent, the value of the total amount including the first $2,000 becomes taxable to the EE. However, if the difference between the Table I value of the insurance and the amount paid by the EE in after-tax dollars is considered de minimus, then there is no income for the EE.

During 2018, Sam Flashner, who is single and 33 years old, earned $27,500. Calculate the maximum IRA contribution that Sam is allowed.

$5,500 -- the lesser of $27,500 x 100% or $5,500 annual applicable dollar limit for 2018

Under the Family and Medical Leave Act, eligible EEs are entitled to how many weeks of unpaid leave in a year to be with a newborn or newly adopted child, to take care of a seriously ill child, spouse, or parent, or to care for themselves if they are seriously ill?

12 weeks (26 weeks if the child, spouse, or parent is a covered military servicemember suffering a serious injury or illness).

If the DOL requests Form I-9 for inspection, how long does the ER have to produce it?

3 days

An ER is required to file information returns electronically, but instead mailed 380 paper Forms W-2 on time with the correct information. How many returns are subject to the failure-to-file penalty?

380 - 249 = 131 returns subject to penalty. (ERs filing 250 or more returns are required to file electronically)

For ERs to exclude the value of a length of service award from an EE's income, what is the minimum length of service for which the award can be given?

5 years

You state sets 50% of "disposable earnings" as the maximum for child support withholding. Your EE is not supporting another spouse and/or children, so the CCPA's maximum is 60%. What percentage do you use?

50%, because it is more beneficial to the EE.

Toni's Lumber paid the following wages during the first quarter of 2018: James Harker $15,200 Joe Kortsen 17,500 Betty Rice 8,450 Elliot Peterson 6,000 Sally Hanson 11,200 Pamela Barnhart 14,450 Allan Gunnel 3,150 Margaret Headley 4,600 Bill Jordan 7,000 Nellie Baxter 5,400 Calculate Toni's Q1 FUTA tax liability

6 EEs earned $7,000 or more during the first quarter $42,000 ($7,000 x 6) + 6,000 + 3,150 + 4,600 + 5,400 = $61,150 Q1 FUTA liability = $366.90 ($61,150 x 0.006)

What is the employer social security tax rate for wages paid in 2018?

6.2%

David has a child and dependent care expenses of $6,500 during 2018, and his ER reimburses him in full during the same year. How much of the reimbursement is taxable to David for 2018? A. $1,500 B. $5,000 C. $6,500 D. None of it is taxable

A. $1,500

The business standard mileage rate for 2018 is: A. 54.5 cents per mile B. 56 cents per mile C. 53.5 cents per mile D. 54 cents per mile

A. 54.5 cents per mile

An EE who regularly earns $400 per week is called to jury duty and is given $150 per week in jury duty pay. The ER makes up the difference between the jury duty pay and the EE's regular pay. What amount is subject to federal income tax withholding and social security, Medicare, and FUTA taxes? A. $150 B. $250 C. $400 D. None of the above

B. $250

What are the rules regarding the timeliness of mailed payroll tax deposits?

Beginning with payroll tax deposits based on wages paid after December 31, 2010, they may not be mailed because they must be made by EFT through the EFTPS. Federal tax deposit coupons and paper checks are no longer acceptable as a method of deposit.

All of the following benefits are nontaxable fringe benefits except: A. No-additional-cost services B. Qualified employee discounts C. ER-paid membership fees to an athletic club D. De minimis fringes

C. ER-paid membership fees to an athletic club

Explain the principle of constructive payment.

Constructive payment indicates the point in time when an EE has the ability to control the payments for services from an ER.

Under the "fixed-date" method for substantiating business travel expenses, an advance can be provided no more than how many days before an expense is incurred? A. 10 days B. 15 days C. 20 days D. 30 days

D. 30 days

All of the following items incurred while on business travel are travel expenses except: A. The cost of meals B. The cost of lodging C. Transportation costs D. Cost of entertaining clients

D. Cost of entertaining clients

All of the following benefits are working condition fringe benefits except: A. Business use of a company car or airplane B. Dues and membership fees to professional organizations C. Goods used for product testing by EEs D. Dependent care assistance

D. Dependent care assistance

All of the following data elements are recordkeeping requirements for the business use of company-provided vehicles except: A. Date of the trip B. Business purpose of the trip C. Mileage for the trip D. Lodging expenses incurred during the trip

D. Lodging expenses incurred during the trip

What is a Form W-4?

EE's Withholding Allowance Certificate

What is the purpose of Form 944?

ERs that have a payroll tax liability of up to $1,000 in a calendar year file Form 944, ER's Annual Federal Tax Return, rather than Form 941, ER's Quarterly Federal Tax Return.

On Form 941, how does the ER treat fractional cents that cause differences in calculating the ER's and the EEs' FICA taxes?

Enter on Line 7 the difference between the total FICA taxes on Line 5e and the amount actually withheld from EEs' wages and paid by the ER that is due to rounding to the nearest penny.

What is the basic difference between exempt and nonexempt EEs?

Exempt EEs do not have to be paid the required minimum wage or overtime pay, and the ER does not have to keep certain records detailing their work, while NE EEs must be paid the required minimum wage and OT pay and the ER must keep detailed records of their work hours and wage payments.

Form W-4 must be retained by the ER for three years.

False Form W-4 must be retained by the ER for at least 4 years after the date the last return was filed using the information on the form (i.e., the EE's personal income tax return for the last year during which the Form W-4 was in effect, which is due the following April 15).

Nonprofit and public sector ERs must choose the direct reimbursement method to satisfy their state UI liability.

False Nonprofit and public sector ERs may choose the direct reimbursement method or the experience-rated method to satisfy their state UI liability.

Nonprofit organizations engaged in a trade or business are exempt from the 1099 reporting requirements.

False Nonprofit organizations engaged in a trade or business are not exempt from Form 1099 reporting requirements.

Taxicab drivers are exempt from the minimum wage and OT requirements of the FLSA

False Taxicab drivers are only exempt from the OT pay requirements.

What major piece of social legislation guarantees EEs the right to unpaid leave to care for a newborn child or a seriously ill family member?

Family and Medical Leave Act (FMLA)

What types of income constitute "foreign earned income"?

Foreign earned income is income earned by an EE from sources within a foreign country while that EE has a foreign tax home and qualifies for the foreign earned income exclusion under the bona fide residence or physical presence test. Earned income includes all compensation, such as wages, salaries, commissions, bonuses, tax reimbursements, cost of living allowances, educational reimbursements, professional fees, etc., paid for personal services rendered, including noncash payments.

What conditions must be satisfied for an ER-provided group health insurance plan to be nondiscriminatory in terms of eligibility and benefits?

Must benefit: ~ At least 70% of all EEs ~ At least 80% of all EEs who are eligible to participate in the plan (if at least 70% of all EEs are eligible to participate) or ~ A classification of EEs that the Secretary of the Treasury finds not to be discriminatory In terms of benefits, an ER-provided group plan is nondiscriminatory if all the benefits provided to highly compensated EEs are provided to all other participating EEs. Plans may have limits on benefits, but they must be uniform for all participants when based on ER contributions and must not be proportionately based on EE compensation. Until the IRS issues guidance on applying the nondiscrimination rules to third-party insured plans, they apply only to ERs with self-insured plans.

What information must be reported by an ER for each new hire under the federal new hire reporting requirement?

New hire's: ~ name ~ address ~ social security number ~ first day of work for which compensation is paid ER's: ~ name ~ address, ~ FEIN

Can EEs receive advance payments of the Earned Income Credit for wages paid in 2018?

No. Advance payments of the Earned Income Credit were eliminated for wages paid after December 31, 2010.

How is achievement a motivator for some EEs?

Often the best performers are driven by a personal need to succeed and be the best rather than by money or other incentives.

Tom uses a company car 70% for business purposes each month of 2018. The car has a fair market value of $15,500. Tom drives the car 12,000 miles during 2018. Calculate the value of the personal use of the vehicle using the cents-per-mile method.

Personal use: 100% - 70% = 30% Personal mileage: 12,000 miles x .30 = 3,600 miles Taxable amount: (3,600 miles x $0.545) = $1,962.00

Explain the process of prenotification under the Automated Clearing House (ACH) system.

Prenotification involves sending zero dollar amounts through the ACH network as a test before the first actual direct deposit for an EE. If such a "prenote" is used (it is an optional procedure), it must be sent at least 3 business days before any actual pay is sent through the network. This is a test of the accuracy of the information in the authorization agreement.

What is the main disadvantage of storing payroll and employment records on micromedia?

Quality control--the camera may not photograph 100% of every document, the image may be partially unreadable, and verification of the image after it develops can be a time-consuming process.

What is the main disadvantage of using a service provider?

Slow response time to needed changes and emergency requirements.

What laws govern how often an ER must pay its EEs?

State laws

In situational leadership, the way managers handle their staff depends on the way they deal with what two factors?

Tasks and relationships.

What federal agency enforces the HIPAA restrictions on the release of personal health information?

The Department of Health and Human Services

How does the federal garnishment limit apply to multiple garnishments?

The federal garnishment maximum applies no matter how many garnishments are received for an EE.

EE Jane's disposable earning for the week are $320. Her ER receives a creditor garnishment order requiring that $250 be withheld on February 1, 2018. What is the amount of Jane's disposable earnings that can be garnished under federal law?

The lesser of: $320.00 x 25% = $80 or $320.00 - $217.50 (30 x fed min wage per week) = $102.50 Therefore, the maximum amount of Jane's disposable earnings that can be garnished is $80.00

"Mom and Pop" shops whose only EEs are immediate family members are excluded from coverage under the FLSA.

True

A cafeteria plan provides participants a choice among taxable (cash) and nontaxable (qualified) benefits.

True

A service provider is an independent company that processes its clients' payrolls for a fee.

True

At the end of each pay period, many businesses enter the hours worked, gross earnings, deductions, and net pay of their EEs in a payroll register.

True

Before implementing a plan, the payroll manager must know what it will cost to achieve the stated goals.

True

Each state requires ERs to contribute toward its UI program in the form of state unemployment taxes.

True

Form 940 is considered to be timely filed if it is sent on or before the due date via the US mail or a designated private deliver service.

True

Form W-3 is used only by ERs that file paper Copies A of Form W-2 with the SSA.

True

If an ER fails to withhold child support for the amount required by the notice to withhold, it is liable for the full amount not withheld, up to the state and federal maximums.

True

If an ER has incomplete records and an EE files a lawsuit for unpaid OT, the court will most likely accept the EE's evidence of hours worked and wages received.

True

If an ER receives more than one child support withholding order for an EE, state law governs how they must be handled.

True

If an ER sells or transfers its business, a separate Form 941 must be filed by both the previous and current owners for the quarter in which the sale took place.

True

If an independent contractor timely provides the ER with a correct TIN, there will be no backup withholding.

True

Technical services specialists are specifically excluded from the "reasonable basis" test.

True

Telling an EE how often he or she was late and what an adverse effect this had on the workloads of other EEs will achieve better results than accusing an EE of having a "lousy attitude."

True

The FLSA does not require ERs to keep records in any particular form.

True

The FLSA does not require that an EE's preliminary and postliminary activities be counted as time worked.

True

The goal of a voluntary contribution is to increase the ER's reserve ratio to the next higher bracket on the state's unemployment rate table which corresponds to the next lower tax bracket.

True

The minimum retention period for state UI records differs from state to state.

True

The purpose of a journal entry is to provide all the essential information about a business transaction.

True

Under a flexible spending arrangement, medical expenses are incurred when the medical care is provided, not when the EE is billed or pays for the care.

True

Under a totalization agreement, expatriate EEs working temporarily in a foreign country are subject only to US SS tax, not the SS taxes of the foreign country.

True

What procedures should be followed for the retrieval and destruction of records?

Whatever method an ER uses to create and preserve its employment and payroll records, it should have a policy governing record retention, retrieval, and destruction. The written policy should clearly state how long records are to be retained (and how the containers should be labeled), how they can be retrieved (especially important if records are stored off site), and when and how they should be disposed of.

If an EE receives a bonus of $2,000 when her year-to-date wages are $50,000, and the ER pays the taxes, are the taxes considered taxable income? What method is used to determine the amount of taxes the employer will pay?

Yes. The method allowed by the IRS is called "grossing-up."

What is a balance sheet?

a statement of the financial position of a business at a specific period in time; an itemized list showing the business's assets, liabilities, and owner's equity.

What is the FUTA wage base for 2018? a. $7,000 b. $10,000 c. $127,200 d. $128,400

a. $7,000

How long must an employer retain a Form I-9 for a terminated EE who worked for the ER for more than four years? a. 1 year after terminiation b. 3 years after termination c. 7 years after termination d. Does not have to keep terminated EEs' I-9 forms

a. 1 year after termination

For how many weeks can unemployment benefits generally be collected without an extension? a. 26 weeks b. 38 weeks c. 40 weeks d. 52 weeks

a. 26 weeks

If a pay period ends August 22, EEs are paid August 29, and the payroll tax deposit is due September 15, when should payroll expenses be recorded? a. August 22 b. August 23 c. August 29 d. September 15

a. August 22

Which department in a company generally administers defined benefit plans? a. Benefits department b. Human Resources department c. Payroll department d. Accounting department

a. Benefits department

On Form W-2, what box is used to report wages, tips, and other compensation? a. Box 1 b. Box 10 c. Box 12 d. Box 14

a. Box 1

For 2018, how much can EEs receive in advance EIC payments? a. EEs cannot receive advance EIC payments in 2018 b. $1,826 c. $1,750 d. $1,830

a. EEs cannot receive advance EIC payments in 2018.

On which form are household EEs' payroll taxes reported? (8.5-3/IIC) a. Form 1040, Schedule H b. Form 941 c. Form 941-X d. Form 945

a. Form 1040, Schedule H

What law requires Form I-9 to be retained? a. Immigration Reform and Control Act of 1986 b. Civil Rights Act of 1964 c. Age Discrimination in Employment Act 1967 d. Americans with Disabilities Act of 1990

a. Immigration Reform and Control Act of 1986

What visa is available to students or teachers on an exchange program? a. J-1 b. L-1 c. O-1 d. P-1

a. J-1

What must an ER do after learning that a Form W-4 submitted by a current EE is invalid? a. Not implement the Form W-4 b. Withhold as if the EE were single with zero allowances c. Inform the IRS d. Make the necessary corrections

a. Not implement the Form W-4

Under the FLSA, all of the following records are required to be kept for at least 3 years from the last date they were in effect except for a. Records showing additions to or deductions from EEs' wages b. Collective bargaining agreements c. Certificates authorizing the employment of minors d. Records showing total sales volume and goods purchased

a. Records showing additions to or deductions from EEs' wages

What method is used by the majority of states to determine an ER's experience rate for its contribution to state unemployment insurance? a. Reserve ratio b. Benefit ratio c. Benefit wage ratio d. Payroll stabilization

a. Reserve ratio

Which form must be completed in addition to Form 941, when the ER is a semiweekly depositor? (8.3-4/IIC) a. Schedule B b. Schedule D c. Form 943 d. Form 945

a. Schedule B

What must occur for the payroll dept to achieve its goal? a. There must be a plan b. Planning will not help c. Read the daily astrology page d. Roaming around solves all goal achievement needs

a. There must be a plan

Which of the following situations describes one of the general requirements that must be met for workers to be considered statutory EEs? a. They have a continuing relationship with the ER b. They have a substantial investment in the business equipment c. They are licensed real estate agents d. Most of their compensation is related to sales

a. They have a continuing relationship with the ER

When an ER receives Form 668-W from the IRS, when must the ER begin to withhold and remit? a. With the first payment of wages after receipt of Form 668-W b. Within 14 days after receipt of Form 668-W c. Within 30 days after receipt of Form 668-W d. Within 30 days after receipt of Form 668-W or the first date of payment of wages, whichever is later.

a. With the first payment of wages after receipt of Form 668-W

Business expense advances not spent, but which are part of an accountable plan, must be returned to the ER within how many days to avoid taxation? (3.3-5/IIB) a. Within 120 days after the expenses were incurred b. Within 120 days after the advance was disbursed c. Within 60 days after the expenses were incurred d. Within 60 days after the advance was disbursed

a. Within 120 days after the expenses were incurred

How many days must an individual be present in a foreign country over a 12-month period to qualify for the foreign earned income exclusion under the physical presence test? a. 365 days b. 330 days c. 120 days d. 90 days

b 330 days

A salesperson who lives and works in a state with no SIT works for a salary plus a bonus. The EE receives a $2,000.00 bonus has YTD wages of $54,000.00. Using the supplemental optional flat rate, calculate the net amount of the EE's bonus. (6.4-2 &6.7-1/IIIA) a. $1,560.00 b. $1,407.00 c. $1,487.00 d. $1,347.00

b. $1,407.00

An ER provides an EE with the ability to use a company vanpool to come to work. How much is the value of each trip? (3.2-2/IIIA) a. $1.00 b. $1.50 c. $2.00 d. $3.00

b. $1.50

An EE whose YTD wages are $60,000.00 receives a net bonus check of $100.00. The EE is not subject to SIT. Using the supplemental optional flat rate, calculate the gross amount of the EE's bonus payment. (3.4-11/ IIIA) a. $70.35 b. $142.15 c. $148.48 d. $326.26

b. $142.15

What is the maximum elective deferral to a 401(k) plan during 2018 by an EE under 50 years of age which is not included in federal gross income? (4.6-1/IIB) a. $18,000.00 b. $18,500.00 c. $24,500.00 d. $53,000.00

b. $18,500.00

An ER's FUTA taxable wages for the first quarter of 2018 amount to $35,000. What is the ER's FUTA tax liability for the quarter? a. $2,100 b. $210 c. $0 d. $42

b. $210

In 2018, an EE claims single with 2 allowances on Form W-4, and is paid $1,110 on the 1st and 15th of each month. Using the wage-bracket tables, how much federal income tax must be withheld from each wage payment? a. $86 b. $65 c. $45 d. $23

b. $65

What is the transmittal form that accompanies each Form 1099 series if the forms are filed on paper? a. Form W-3 b. Form 1096 c. Form 8109 d. Form 1099-R

b. Form 1096

Which of the following forms must be completed to obtain a SSN? a. Form SS-4 b. Form SS-5 c. Form SS-8 d. Form W-9

b. Form SS-5

Which of the following accounts describes the legal obligation of a business to pay its debts? a. Asset b. Liability c. Owner's equity d. Expenses

b. Liability

When an ER received a federal tax levy for an EE who is paid on a one-time basis or a recurring but irregular basis, how is the exempt amount from levy determined? a. the EE is entitled to the weekly exempt amount for the entire time to which the payment is attributable b. the EE is entitled to the weekly exempt amount for each week to which the payment is attributable c. the EE is entitled to the daily exempt amount for each day to which the payment is attributable d. the EE is entitled to the monthly exempt amount for the entire time to which the payment is attributalbe

b. the EE is entitled to the weekly exempt amount for each week to which the payment is attributable

An EE is paid $1,500.00 biweekly. The EE's deductions are FIT $250.00, SIT $75.00, Medicare tax $19.58, SS tax $83.70, credit union $75.00, union dues $50.00, and pre-tax medical insurance $150.00. What is the EE's disposable pay? (9.1-2/IIB, IIIB) a. $921.72 b. $1,175.00 c. $1,071.72 d. $971.72

c. $1,071.72 Wage, less FIT, SIT, FICA

How much foreign earned income may an EE exclude from gross income in 2017? (14.1-4/IIF) a. $102,100 b. $100,800 c. $103,900 d. The salary of a federal govt EE grade GS-14, step 1

c. $103,900

An ER paid $2,000 of its $3,000 2017 state unemployment tax liability by January 31, 2018 and the remainder when it filed its 2017 Form 940 a week later. What is the ER's normal credit against FUTA liability for 2017? a. $900 b. $2,700 c. $2,900 d. $3,000

c. $2,900

The company pays EEs who work on holidays at a double-time rate. A salaried NE EE earning $48,000.00 per year who normally works a 40-hour workweek works 7 hours on a holiday. What is the additional pay due the EE? (2.6-3/IIIA) a. $161.54 b. $242.31 c. $323.12 d. $369.28

c. $323.12

All of the following resources are available within the company except: a. EEs in the payroll dept b. Other depts c. The local bank's funds d. Company funds

c. The local bank's funds

An EE worked for three ERs by Aug 20, 2018. The EE earned $46,000, $48,000, and $62,000 respectively from each ER. What is the total amount of social security and Medicare taxes that should have been withheld from the EE's wages? a. $10,148.40 b. $9,191.40 c. $9,730.80 d. $11,934.00

d. $11,934.00

Auditors are often concerned with whether RFPs for new computer systems are well formulated. Which of the following items should typically be included in a request for proposal? a. The hardware configuration b. An emphasis on software rather than hardware c. Detailed specifications of the current workload d. An emphasis on the tasks to be performed rather than specific hardware capabilities

d. An emphasis on the tasks to be performed rather than specific hardware capabilities

What is the FLSA salary test for outside salespersons? a. $425 per workweek b. $250 per workweek c. $455 per workweek d. There is no salary minimum

d. There is no salary minimum

The statement "the only people who can manage time are those who use it well," defines an application of what skill? a. Planning b. Organizing c. Good meeting skills d. Time management

d. Time management

What is the PRIMARY purpose of internal audits? (11.8/VIE) a. To balance all accounts b. To avoid posting errors in expense accounts c. To prepare manual entries to the general ledger d. To comply with corporate and legal requirements

d. To comply with corporate and legal requirements

What effect do expenses have on an owner's equity?

decrease owner's equity

What effect does revenue have on an owner's equity?

increases owner's equity

Who would be interested in the financial records of a business?

management, stockholders, investors, EEs, and auditors

Which factors are considered not to be important by the IRS in making a worker classification determination because of changes in the workplace over the years?

part-time or full-time work, the location of the work, and hours of work

What is the name of the program ERs can use to verify the employment authorization status of new hires with USCIS?

the E-Verify Program

What is the role of an internal auditor?

to review the efficiency of the organization's internal control procedures and to identify weaknesses in the controls.

When must ERs report newly hired EEs under the federal new hire reporting requirement?

within 20 calendar days of the DOH. ERs that report magnetically or electronically must send 2 transmissions per calendar month which are 12 - 16 days apart.

What are the three parts of the ABC test, and what is the test used to determine?

~ The worker is free from control or direction in performing the work both by agreement and in reality (Absence of control). ~ The work is performed outside the usual course of the company's business or away from any of the employer's facilities (Business--unusual and/or away). ~ The worker is customarily engaged in an independent trade, occupation, or business (Customarily independent contractor). The ABC test is used by many states to determine a worker's status as an employee or independent contractor under state unemployment insurance laws.

How does the IRC define "medical care" in terms of an EE's reimbursement for such medical care?

"Amounts paid for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure of the body."

What is the meaning of the term "compensable time"?

"Compensable time" is defined as all hours during which the EE is under the ER's control, even if the time is unproductive, so long as the time spent is for the ER's benefit.

Ruth's Shop had a FUTA taxable payroll of $14,000 for the first quarter of 2018. What is the FUTA tax liability for the first quarter? Was Ruth's Shop require to make a deposit of FUTA tax by May 1, 2018? Why

$84 ($14,000 x 0.006) No, because the liability didn't exceed $500

Better Build PC electronically filed all of its information returns--500 Forms W-2--on time with the SSA, but it did not file its 50 Forms 1099-MISC with the IRS until August 10. What is the penalty for late filing?

(50 x $270 maximum penalty) = $13,500 since the returns were filed after August 1.

What is the time limit for filing an FLSA complaint with the Wage and Hour Division?

2 years after the alleged violation or 3 years if the violation was willful

What is a FUTA credit reduction state?

A FUTA credit reduction state is a state or territory that has a loan from the Federal Unemployment Account that is taken out in one year and has not repaid the full amount of the loan by the end of the following calendar year. If the loan is not repaid by November 10 of the year the reduction is scheduled to take effect, a credit reduction of 0.3% goes into effect, with ERs in that state having their effective FUTA tax rate increased to 0.9% (0.6% + 0.3%).

When is the Form 940 that has been mailed through the US Postal Service considered filed?

A Form 940 that is mailed through the US Postal Service is considered filed at the time it is postmarked by the US Postal Service.

When must a newly hired EE's Form W-4 be put into effect?

A Form W-4 filed by a newly hired EE must be put into effect by the ER for the first wage payment after the form is filed.

What does a SS card prove in terms of an EE's work authorization status under IRCA?

A SS card that does not contain language saying that employment is not work-authorized is proof of an EE's authorization to work in the US, but not proof of identity.

How do you define a de minimis fringe benefit?

A benefit whose value is so small that accounting for it would be unreasonable or impracticable.

What is a branded paycard?

A branded paycard has either a MasterCard, Visa, or Discover Network logo imprinted on it and is accepted wherever cards issued by these companies are accepted.

What is a "defined contribution plan" and what are the characteristics of such a plan?

A defined contribution plan sets up individual accounts for each EE, with a set amount being contributed into the account by the ER and/or the EE periodically. The EE's retirement benefit depends on the amount of money in his or her account at retirement, which is determined by the contribution amounts and any investment gains or losses. Other characteristics of defined contribution plans include: ~ The plan provides for a contribution formula involving the ER and/or the EEs ~ ER contributions are made no less frequently than annually (usually more often) ~ Being able to see how much is in their accounts makes the plan easy to understand for EEs ~ No need for actuarial calculations ~ Annual reports must be filed with the IRS and the Department of Labor

What are the advantages of pre-tax benefit contributions?

A pre-tax contribution is one that is made from an EE's wages before the taxes on those wages are calculated, while an after-tax contribution is made after the tax is calculated. A pre-tax contribution will result in higher take-home pay for the EE.

Emma, a sales representative, receives a $1,500 bonus in December 2018 for outstanding performance. The bonus is supplemental wages subject to federal income tax withholding at a flat 22% rate; the social security tax rate is 6.2%, and the Medicare tax rate is 1.45%. Assuming there are no state or local taxes and that Emma has received wages of $100,000 during the year so far, what is the amount Emma must be paid to guarantee her a net bonus of $1,500. A. $2,132.20 B. $2,039.43 C. $2,227.17 D. $2,162.94

A. $2,132.20 $1,500/.7035 = $2,132.20

An ER must withhold on group-term life insurance in excess of $50,000 for which of the following taxes: A. Social security and Medicare taxes only B. Social security, Medicare, and federal income taxes C. Social security, Medicare, and FUTA taxes D. Social security, Medicare, federal income, and FUTA taxes

A. Social security and Medicare taxes only

How does Form 668-W define an EE's take-home pay that is subject to a federal tax levy?

According to Form 668-W, when determining take-home pay the ER should allow the payroll deductions that were in effect when the levy notice was received.

What are reversals, and how do they affect accounting?

Accruals generally are estimates, so they must be corrected by reversing entries during the next accounting period when the actual expenses and liabilities are recorded.

The "white collar" exemption from the minimum wage and OT provisions of the FLSA is made up of what categories of EEs?

Administrative Executive Professional Computer-related professional Outside sales

What are some of the advantages and disadvantages of direct deposit for an ER?

Advantages: ~ Prevents lost and stolen checks ~ EEs do not have to take time out of their work day to cash or deposit their paycheck ~ ERs do not have to file/store cashed checks and related documents ~ Better control of check stock Disadvantages: ~ DD is not a paperless system, since ERs still may have to provide EEs with a written statement of hours worked and deductions from gross pay, as well as collect a written authorization form, depending on their policies and procedures ~ DD cannot be made mandatory in many states ~ ER cannot dictate the financial institution that the EE uses in most states ~ ER's loss of interest on payroll funds before paychecks clear.

What conditions must be satisfied for an EE to claim exempt from withholding?

All of the following: ~ He or she had a right to a refund of all federal income tax withheld in the prior year because the EE had no tax liability. ~ He or she expects to have no tax liability in the current year. ~ He or she cannot be claimed as a dependent on someone else's income tax return if the EE will have more than $1,050 in income (including at least $350 in nonwage income) in 2018.

How does the IRS define a "tax home"?

An EE's tax home is the location of his or her regular place of business. If there is none, the EE's tax home is where the EE regularly lives.

What must an ER do in relation to filing Form 940 when it goes out of business?

An ER that ceases doing business must file a Form 940 for the portion of the last calendar year it was in business and check Box d in the upper right hand corner of page 1 indicating no future returns will be filed. The ER must also attach a statement to the form including the following information: ~ The location where required records will be kept ~ Who is responsible for keeping the records ~ The name and address of the purchaser of the business or the fact that there was no purchaser or that the purchaser's name is unknown

What is an education allowance?

An education allowance is added compensation for an expatriate EE so the EE can send his or her children to a private or boarding school.

An EE uses a company car 40% for personal use in 2018. The car has a fair market value of $25,000. Using the IRS Annual Lease Value Table, calculate the taxable compensation for the EE's personal use of the car.

Annual lease value = $6,850 Taxable amount: $6,850 x 40% = $2,740

Name the five types of accounts that are generally used by businesses to classify transactions.

Asset, Liability, Expense, Revenue, and Equity

What is the general retention period under the IRC for copies of ER tax returns and information returns?

At least 4 years after the due date of the tax (or the date the tax is paid, if later) for the return period to which the records relate.

Many critics claim that direct deposit is not paperless. Explain why.

Authorization agreements (where they are in paper form) still must be signed, checked for accuracy, and retained, and EEs using DD must be given statements on payday showing the compensation they earned and the deductions taken for the pay period. Some ERs do use electronic pay statements in meeting that requirement.

The IRS-approved rate for ER-provided fuel for 2018 is: A. 5 cents per mile B. 5.5 cents per mile C. 7.5 cents per mile D. 9 cents per mile

B. 5.5 cents per mile

All of the following payments are classified as wages subject to federal income tax withholding except: A. Gift certificates for a local supermarket provided at the end of year B. Deceased worker's wages paid to the worker's estate or legal representative C. Bonuses D. Back pay awards

B. Deceased worker's wages paid to the worker's estate or legal representative

All of the following expenses incurred while on business travel qualify as a travel expense except: A. Dry cleaning of suit B. Gift purchased for a prospective customer C. Meals D. Tips

B. Gift purchased for a prospective customer

For what travel expenses may an ER use the high-low per diem rate instead of the individual federal per diem rate of the locality of travel? A. Lodging, not just meals and incidentals, and the travel is within CONUS B. Lodging, meals, and incidental expenses and the travel is within CONUS C. Meals and incidental expenses, and the travel is outside CONUS D. None of the above

B. Lodging, meals, and incidental expenses, and the travel is within CONUS

All of the following benefits are de minimis fringe benefits except: A. Occasional tickets to sporting events B. Subscriptions to business periodicals C. Traditional holiday gifts (e.g., turkeys, candy) D. Occasional personal use of company telephones

B. Subscriptions to business periodicals

Which of the following conditions need not be met for job-related educational assistance to be excluded from income? A. Courses are not taken to qualify the EE for a promotion or transfer B. Courses must be related to the EE's current job C. Must be covered by an Education Assistance Program D. Course must not be necessary to meet the minimum education requirement of the job

C. Must be covered by an Education Assistance Program

What is the CCPA and how does it affect child support withholding?

CCPA stands for Consumer Credit Protection Act. It provides the legal framework around which state child support withholding laws have been constructed and limits the amount that can be withheld for child support.

Name the popular benefit offered by mid-size and large ERs that gives EEs a choice from a "menu" of cash compensation and nontaxable qualified benefits.

Cafeteria Plan

You implement a child support withholding order. Your EE complains that it is the wrong amount. You verify that you are withholding the amount stated in the order correctly. What should you do?

Continue withholding according to the order unless and until you receive notification in writing from the court or issuing agency that a change is necessary.

How long must the ER keep an EE's Form W-4 on file?

ERs must retain each EE's Form W-4 for at least four years after the date the last tax return was due using information from the form, which is April 15 of the following year (e.g., if an EE files an amended W-4 in 2018, the previous W-4 must be retained until at least April 15, 2023).

Why would many ERs rather use workers who are not EEs to perform services for them?

ERs must withhold income and employment taxes from EEs' wages and pay employment taxes with their own funds. ERs must also pay federal and state unemployment taxes based on their ERs' wages. If a worker is an EE, most companies have their own list of benefits and other entitlements that are provided to EEs but not to ICs.

When leasing an EE or using a temporary help agency, aside from looking at the cost, what should you know about the overall company that you are dealing with to avoid having to pay any withholding or employment taxes?

ERs should make sure they are dealing with a financially secure and reputable company before entering into a contract, since the temporary help agency or leasing company's financial failure could lead to the client company becoming liable for any withholding or employment taxes that remain unpaid.

What is the penalty for failing to withhold and remit payment as prescribed under an IRS notice of levy?

ERs that fail to withhold and pay over an amount not exempt from levy after receiving Form 668-W are liable for the full amount required to be withheld, plus interest from the wage payment date. In addition, the ER is liable for a penalty equal to 50% of the amount recoverable by the IRS after the failure to withhold and remit.

How does an ER amend an incorrect Form 940

ERs that make an error on Form 940 need to file an amended return. They do this by filing a new Form 940 for the year being amended with the correct numbers. Box a in the upper right corner of page 1 indicating an amended return should be checked. The form should be accompanied by a statement as to why the amended return is necessary.

What are earnings per share?

Earnings per share show the company's net income divided by the weighted average number of outstanding shares of stock.

Records required by the FLSA must be made available for inspection by the Wage and Hour Division within 48 hours of a notice of inspection.

False 72 hours

A biweekly salary is paid twice a month, usually on the 15th and last day of the month.

False A biweekly salary is paid every two weeks.

A pre-tax deduction will result in less take-home pay for the EE than an after-tax deduction.

False A pre-tax contribution will result in more take-home pay for the EE.

Accounts payable are assets.

False Accounts payable are liabilities

Allocated tips should be included in Box 1 of Form W-2.

False Allocated tips should not be included in Box 1, 5, or 7 of Form W-2, but they should be included in Box 8.

An EE can be reimbursed for amounts spent on over-the-counter drugs that are not prescribed by a licensed physician through her health FSA.

False An EE may not be reimbursed for amounts spent on over-the-counter drugs that are not prescribed by a licensed physician through her health FSA.

An ER may be required to deduct a creditor garnishment from an EE's wages by order of the creditor.

False An ER is only required to garnish an EE's wages by order of a court, not the creditor.

An automated time and attendance system cannot reduce the errors inherent in a manual timekeeping system.

False An automated time and attendance system can often reduce the errors inherent in a manual timekeeping system.

An automated time and attendance system should not integrate with an ER's HR, payroll, and cost accounting systems.

False An automated time and attendance system should integrate with an ER's HR, payroll, and cost accounting systems.

The job title is a strong factor in determining whether an EE is exempt from the minimum wage and OT provisions of the FLSA.

False An important sounding job title does not exempt an EE from the minimum wage and OT pay provisions of the FLSA. The EE's actual duties and salary must meet the tests of exemption.

In a business, the assets must always be equal to the liabilities minus the owner's equity.

False Assets must equal liabilities plus owner's equity.

Legal requirements governing the hiring process are for the lawyers to worry about--not payroll managers.

False At all times during the hiring process--from job analysis through interviewing and orientation--the payroll manager must keep in mind the legal requirements surrounding the process.

The shortfall rule allows an ER to deposit 95% of its payroll tax liability without a penalty.

False At least 98% of the tax liability (or the liability - $100, if that is less) must be deposited to avoid a late payment penalty.

The time spent by EEs during bona fide meal periods is considered working time.

False Bona fide meal periods during which the EE is completely relieved from duty are not working time.

Cafeteria plans can allow EEs to carry over up to $1,000 of their health FSA salary reductions from one year to the next.

False Cafeteria plans can allow EEs to carry over up to $500 of their health FSA salary reductions from one year to the next.

A $25.00 check with a note attached saying, "Buy a Christmas turkey with this." is excluded from taxable earnings as a de minimis fringe.

False Cash gifts or gift certificates with a cash value are never de minimis fringes. They are included in income and are taxable to the EE.

Even though "white collar" workers may be exempt from the FLSA's OT pay requirements, records of their hours worked must still be kept by the ER.

False Certain records relating to OT pay requirements, including hours worked, need not be kept for exempt "white collar" EEs. However, ERs must include in their records the basis on which wages are paid so that each EE's total earning for each pay period can be calculated.

If the EE admits that a severe personal problem is harming his or her work performance, the payroll manager should try to take the place of a professional counselor.

False Counseling should not be used by a payroll manager when an EE has a severe personal problem. The EE should be referred to an appropriate EE counseling program if the ER has an EE Assistance Program.

Documentation of the payroll system and its procedures is not a very important part of a company's overall control mechanisms.

False Documentation is a very important part of a company's overall control mechanisms.

Laid-off or terminated EEs are the only individuals who are eligible for unemployment benefits.

False EEs whose hours are reduced are also eligible, so long as they are not earning more than the weekly benefit amount.

ER contributions to an accident or health insurance plan that provides insurance for its EEs and their spouses and dependents are considered wages and are subject to federal income withholding and social security, Medicare, and FUTA taxes.

False ER contributions to an accident or health insurance plan for the benefit of its EEs and their spouses, dependents, and adult children under age 27 are not wages and are not subject to federal income tax withholding or social security, Medicare, and FUTA taxes.

ERs failing to withhold and pay over amounts not exempt from levy after receiving Form 668-W are not liable for the full amount required to be withheld.

False ERs are liable for the full amount required to be withheld.

An ER can terminate an EE because of inconvenience caused in administering a creditor garnishment order.

False ERs are prohibited by the CCPA from terminating an EE because the EE's earnings have been subjected to garnishment for any one indebtedness.

ERs cannot require eligible EEs to use any paid vacation, personal, sick, medical, or family leave as part of the 12-week guaranteed leave under the Family and Medical Leave Act.

False ERs can require eligible EEs to use any paid vacation, personal, sick, medical, or family leave as part of the 12-week guaranteed leave.

ERs can demand specific documents to prove an EE's eligibility to work in the US.

False ERs cannot demand specific documents to prove an EE's eligibility to work. New hires can produce any approved documents listed in the Form I-9 instructions that prove identity and work authorization.

Under IRCA, nonresident aliens are required to produce their SS cards as proof of authorization to work in the US.

False ERs cannot require nonresident aliens to produce their SS cards as proof of authorization to work in the US. The alien can produce any approved document to show work authorization.

ERs in a credit reduction state pay FUTA tax at a lower rate than ERs in a state that is not subject to credit reduction.

False ERs in a credit reduction state pay FUTA tax at a higher rate than ERs in a state that is not subject to credit reductions.

The FLSA always overrides any state wage-hour law.

False ERs must comply with whichever law is more beneficial to the EE.

An ER should not withhold child support from payments made to independent contractors.

False ERs must withhold child support from payments made to independent contractors when required to do so by order of a court or state child support enforcement agency.

ERs that have a great deal of turnover generally have a lower experience rate.

False ERs that have a great deal of turnover generally have a higher experience rate.

EEs have the option on their Form W-4 to have a flat dollar amount of tax withheld from their pay.

False Employees cannot indicate on their W-4 form that they wish to have a flat amount of tax withheld rather than an amount based on the number of withholding allowances that can be claimed.

The FUTA tax for 2018 is based on 6.0% of each EE's wages up to $128,400.

False FUTA tax is based on the 1st $7,000 in wages paid to each EE in 2018

The Form 941 payroll tax deposit lookback period for calendar year 2018 is January 1, 2017 - June 30, 2017.

False For calendar year 2018, the payroll tax deposit lookback period is July 1, 2016 - June 30, 2017.

For purposes of the foreign earned income exclusion, Guam is considered to be a foreign country.

False For purposes of the Section 911 exclusions, all territories of the US, including Guam, are not considered foreign countries.

When using the wage-bracket method of withholding, if the wage payments are above the maximum table amount, the ER has the option to use the optional flat rate.

False For wage payments equaling or exceeding the maximum amount, the percentage method of withholding must be used.

An EIN is obtained from the SSA using Form SS-4.

False Form SS-4 is filed with the IRS, not the SSA.

Forms 941 that are mailed through the USPS are considered timely if postmarked at least one day before the due date.

False Forms 941 sent by US mail are considered timely if postmarked no later than the form's due date.

Gifts provided to an EE by his or her ER are excluded from income.

False Gifts provided to EEs must be included in the EEs' income unless they can be excluded as a de minimis fringe benefit or as a gift between relatives that is not based on the ER-EE relationship.

Gov't EEs are subject to a different set of child support withholding order requirements than those applicable to private sector EEs.

False Gov't EEs are subject to child and spousal support withholding orders on the same basis as private sector EEs.

When an EE uses a company aircraft for business and personal use, the cost of travel for personal use is excluded from the EE's income.

False If an EE uses a company aircraft for business and personal use, the value of the personal use is included in the EE's income.

If an EE changes jobs during the year, only the first ER pays FUTA taxes on behalf of the EE.

False If an EE works for more than one ER, the wage limit must be applied to the wages paid by each ER.

If an ER uses the E-Verify Program, a new hire does not have to enter their SSN in Section 1 of Form I-9.

False If an ER uses the E-Verify program, new hires must enter their SSN in Section 1 of Form I-9.

Telemarketers working under the direction of a company are usually independent contractors.

False If telemarketers work under the direction and control of a company, they are EEs of that company.

If the ER's FUTA tax liability for the 1st quarter is $600, no deposit is required.

False If the ER's quarterly FUTA tax liability is more than $500, a deposit is required.

If the FUTA tax deposit due date falls on a Saturday, the deposit is due the Friday before.

False If the FUTA tax deposit due date falls on a Saturday, the deposit is due on the next business day.

Wages other than cash are included in the minimum wage calculation if they primarily benefit the ER.

False In addition to wages paid in the form of cash, EEs may be paid in other forms as well. They may be paid partly in room, board, or other facilities provided by the ER. These facilities must primarily benefit the EE, not the ER, in order to be classified as wages.

ERs wishing to use substitute W-2 forms should send a sample to the IRS for approval prior to use.

False In general, ERs wishing to use substitute W-2 forms should not send a sample to the IRS for approval prior to use.

Nonresident aliens exempt from federal income tax are also exempt from FICA taxes.

False In general, FICA taxes apply to all wages paid for work performed in the US, regardless of the citizenship or residency status of the EE (unless exempted by a totalization agreement).

Cafeteria plans that are the result of collective bargaining between an ER and a union are not exempt from the nondiscrimination tests applicable to cafeteria plans.

False In this case, cafeteria plans are exempt from the nondiscrimination tests.

Managers and executives are excluded from the ER-EE relationship for tax purposes.

False Managers and executives are classified as EEs for tax purposes, although they are exempt under most wage-hour and labor relations laws.

Managers who are constantly moving from crisis to crisis are seen to be productive and efficient.

False Managers who are constantly moving from crisis to crisis, or who fail to delegate properly, have no time to focus on the payroll dept's overall mission of quality service or their own personal goals and objectives.

All states regulate the payment of wages owed to deceased EEs.

False More than 15 states have no statutory provisions dealing with paying wages owed to deceased EEs.

Most newly promoted payroll managers achieve their position b/c they have shown great management skills in the past.

False Most payroll managers achieve their position b/c of their technical proficiency.

The FLSA regulates the payment of wages on terminations of employment.

False Most states have a separate set of rules governing when EEs must be paid when they separate from employment, either through discharge, layoff, or resignation.

Under the federal new hire reporting requirements, multistate ERs must report a new hire to the state in which the EE works.

False Multistate ERs can designate one state in which they have EEs as the state to which they will report all new hires.

New ERs deposit their payroll tax liability as a semiweekly depositor.

False New ERs are classified as monthly depositors.

At the beginning of the year, Frances elects to buy medical and dental insurance as part of a package in her company's cafeteria plan. During the year, Frances has the option to change to a different plan at any time.

False Once selected, benefits cannot be changed during the plan year unless the cafeteria plan permits the EE to make a change if there is a change in status that causes the EE or the EE's spouse, dependent, or adult child under age 27 to lose or gain coverage under the plan, or premiums or coverage are significantly altered by the insurance carrier or the ER.

All pay received for overtime hours is excluded from an ER's total payroll when calculating workers' compensation premiums.

False Only the premium portion of overtime is excluded. The straight time portion is included.

All paper Forms 1099-MISC must be sent to the SSA with the appropriate transmittal form by February 28 of the year following the year in which payments were made.

False Paper Forms 1099-MISC must be sent to the IRS Processing Center listed on the 1099 series instructions. Those with an amount reported in Box 7, Nonemployee Compensation, must be sent by January 31 of the year following the year in which payments were made.

Part-time EEs are not covered under the federal payroll tax laws even if they meet the common law test for employment status.

False Part-time EEs are covered under the federal payroll tax laws if they meet the common law test for employment status.

Paychecks that cannot be delivered should be returned to the payroll department.

False Payroll checks that cannot be delivered should be returned to a department other than payroll and be locked up until the EE returns and can receive the check.

Payroll records retained in compliance with IRS recordkeeping requirements must be kept in paper form.

False Payroll records may be retained in any form, including microfilm, microfiche, paper, or computerized.

Regardless of the accounting periods or fiscal year that a company uses, payroll taxes do not have to be reported on a calendar year basis.

False Payroll taxes are always reported on a calendar year basis.

Performance evaluations are considered to be an informal way of giving feedback.

False Performance evaluations are a formal way of giving feedback. They provide a form and written record of how EEs are performing relative to present goals that are designed to help the dept and company meet their overall business goals.

Reduced escheat issues is not an ER benefit of implementing a paycard program.

False Reduced escheat issues is an important ER benefit of implementing a paycard program.

Expenses incurred for a move from the US to a foreign country are not included in foreign earned income.

False Reimbursements for nondeductible moving expenses incurred for a move from the US to a foreign country are included in foreign earned income.

Restaurant ERs can participate in the Tip Rate Determination Agreement by checking a box on Form 941 filed for the fourth quarter of a calendar year.

False Restaurant ERs wishing to participate in a TRDA must agree with the IRS on a certain tip percentage based on the charge tips it reported and an IRS formula to determine cash tips. Also, 75% of the EEs at each establishment must agree to report the tip percentage agreed on in the TRDA.

The revenue earned during the accounting period appears on the balance sheet.

False Revenue appears on the income statement.

Scholarships and fellowships are included in an individual's income even if the individual is a candidate for a degree at an educational institution.

False Scholarships and fellowships covering tuition and related fees are excluded from an individual's income if the individual is a candidate for a degree at an educational institution.

The cost of traveling from Boston to Germany for a trip that is for both business and pleasure may be deducted in full as travel expense.

False Special rules and limitations apply to combined business and pleasure travel outside the United States. Even though the trip is primarily for business, if the trip has any element of pleasure, the cost of traveling to and from the destination must be allocated between the business and personal portions of the trip.

Creditor garnishments are always allowed up to 25% of disposable earnings.

False The Consumer Credit Protection Act imposes a lower limit depending on the amount of the EE's disposable earnings in relation to the minimum wage, and various state laws also have more severe restrictions.

If a monthly depositor has a total tax liability for a quarter of less than $2,500, the ER must pay it with a Form 941.

False The ER has the option to either deposit the amount or pay it with Form 941.

An ER has accumulated payroll taxes on Form 941 of $42,000 during the 2018 lookback period. The ER is a semiweekly depositor for 2018.

False The ER is a monthly depositor for 2018 because its total payroll tax liability for the 2018 lookback period is less than $50,000.

Form 940 is filed each quarter by ERs that are subject to FUTA tax.

False The ER must file Form 940 annually, no later than January 31 following the close of the calendar year.

If an EE resigns after working for an ER for five years, the ER must retain the EE's Form I-9 for three years after the EE's last day of employment.

False The ER must retain the EE's Form I-9 for 1 year after the EE's last day of employment.

An ER that voluntarily chooses to participate in its state's UI program does not receive the normal credit for timely state payments it makes.

False The ER receives the normal credit for timely payments it makes.

ERs that use a payroll service provider are relieved of recordkeeping responsibilities.

False The ER remains ultimately responsible for the recordkeeping requirements.

The FLSA requires that EEs be paid at least monthly.

False The FLSA does not regulate the frequency of wage payments. Each state regulates when EEs must be paid.

The FLSA requires OT pay for hours worked on Sunday.

False The FLSA does not require OT pay for hours worked on Sunday, unless the total hours worked for the workweek exceed 40.

The FLSA requires ERs to pay EEs for hours not worked because of illness.

False The FLSA does not require the ER to pay for hours not worked because of illness.

Sharon works in HI, where the minimum hourly wage is $10.10. At that time, Sharon must be paid at least the federal minimum hourly wage of $7.25 if she is covered by both the state wage-hour law and the FLSA.

False The HI state minimum hourly wage is higher than the federal minimum wage, so Sharon must be paid the state minimum hourly wage of $10.10.

ERs who claim Section 530 status for their workers because a significant segment of their industry classifies similar workers the same way must show that at least 50% of the industry treats those workers as independent contractors.

False The IRS cannot require an ER to show that more than 25% of its industry treated similarly situated workers as independent contractors.

The Internal Revenue Code specifically defines the term "fringe benefits."

False The Internal Revenue Code does not define the term "fringe benefits," although it includes several examples.

The annual lease method for valuing vehicles includes the value of ER-provided fuel.

False The annual lease value does not include the value of ER-provided fuel.

The amount of an EE's wages that is subject to a federal tax levy is the amount remaining after the exempt amount has been subtracted from the EE's "gross pay."

False The exempt amount is subtracted from the EE's "take-home pay."

The final state of team development is norming.

False The final stage of team development is performing.

The final test before going live with a new system is called project testing.

False The final test before going live with a new system is called parallel testing.

The foreign earned income exclusion is only available to one spouse even if both have foreign earned income.

False The foreign earned income exclusion is available to each spouse to the extent that each spouse actually has foreign earned income.

The general ledger is classified as a record of original entry

False The general ledger is the record of final entry.

The general rules for depositing withheld federal income, social security, and Medicare taxes do not apply to sick pay.

False The general rules for depositing withheld federal income, social security, and Medicare taxes do apply to sick pay, although the party liable for depositing the taxes may change.

Qualified EE discounts may be offered to EEs in any line of the ER's business

False The goods or services must be offered for sale to customers in the ER's line of business in which the EE normally works.

The income statement summarizes an organization's revenues, expenses, and earnings for the current year only.

False The income statement summarizes the organization's revenues, expenses, and earnings for the current and preceding fiscal years.

The initial step in selecting a new payroll system is to preare a request for proposal.

False The initial step in selecting a new payroll system is to put together a project team or task force.

The payroll expense journal will debit salaries/wages payable and credit an expense account for the labor cost.

False The payroll expense journal will debit an expense account for the labor costs (salary expense) and credit a liability account (accrued salaries/wages).

The payroll manager can let each EE decide what responsibility or task or portion of a task he or she will take.

False The payroll manager must decide which EE will be assigned the responsibility for each task or portion of a task in the dept.

The period for which a terminated EE is eligible to claim benefits is known as the "taxable year."

False The period for which a terminated EE is eligible to claim benefits is known as the "benefit year."

The property owned by a business is known as its liabilities.

False The property owned by a business is known as assets.

Records required to be kept under the FLSA must be stored at the ER's worksite for inspection.

False The records required by the FLSA may be stored by the ER either at the work site or at a central location where its records are customarily maintained.

The backup withholding rate for 2018 is 28%

False The required rate for backup withholding in 2018 is 24%

US citizens and resident alien EEs working outside the US can exclude up to $102,100 of foreign earned income from their gross income in 2018.

False The total exclusion is up to the first $103,900 of foreign earned income in 2018.

Federal and state laws generally require that a copy of records be retained in paper form for audit purposes.

False The various federal and state laws generally do not require that records be kept in any particular form and often specifically allow record retention on micromedia, digitally, or electronically.

Full-time life insurance salespersons are always considered statutory EEs and are never subject to FUTA tax.

False Their earnings must consist solely of commissions to be exempt from FUTA tax.

If 250 or more EEs consent to direct deposit, then all EEs must comply.

False There is no minimum number required. Each state has its own regulations and requirements regarding mandatory direct deposit.

The FLSA regulates how often EEs must be paid by their ER or how soon they must be paid after performing services.

False These matters are left up to the individual states

Death benefits paid to an EE's estate or beneficiary upon the death of the EE are excluded from income up to $5,000.

False This exclusion was repealed in 1996.

If a semiweekly period overlaps quarters and you have two paydays--one in each quarter--you can choose which quarter to include the wages for purposes of making payroll tax deposits.

False This scenario creates 2 separate deposit obligations that must be satisfied by the same day.

Timely completion of the subtasks won't lead to attainment of the objectives.

False Timely completion of subtasks will lead to attainment of the objectives.

To qualify for the travel expense deduction, the EE must be away from home for at least 24 hours.

False To deduct travel expenses, an EE must be in travel status. The EE must usually be away from home "overnight." Overnight does not literally mean 24 hours. It is a period of time longer than an ordinary work day during which rest or relief from work is required. The deduction may also be available to EEs who travel from their residence to a temporary work location and return home on the same day. In addition, the deduction may be available to EEs staying overnight near where the EE lives if certain requirements are met that show the ER benefits from the overnight stay.

To determine gross earnings, the total OT earnings are subtracted from the total regular earnings.

False To determine gross earnings, the total OT earnings are added to the total regular earnings.

Training is a cure-all for every performance problem.

False Training can improve skills and knowledge, not attitude.

Travel and living expense reimbursements for EEs on a temporary foreign assignment must be included in income.

False Travel and living expense reimbursements for EEs on a temporary foreign assignment may be excluded from income as reimbursed EE business travel expenses if they are provided under an accountable plan.

ERs are required by the FLSA to give rest periods to EEs.

False Under the FLSA, ERs are not required to give rest periods to EEs. However, rest periods may be required by state law.

Under the principle of constructive payment, an EE is considered to have been paid wages when they are earned and become payable.

False Under the principle of constructive payment, an EE is considered to have been paid wages when they are actually or constructively paid, not when they are earned or payable.

If an EE receives training and still does not improve, disciplinary action is the next step to take.

False Use a different training method before resorting to discipline.

Disposable pay is the same as take-home pay.

False Voluntary deductions are not subtracted from gross pay to determine disposable earnings, which only take into account deductions required by law, but they are subtracted to determine take-home pay.

Under the principle of constructive payment, an EE is considered to have been paid wages that have been made available to the EE with "substantial limitation or restriction."

False Wages are considered constructively paid only if they are made available to the EE without "substantial limitation or restriction."

A mechanic must be reimbursed for the cost of laundering his work clothes if the clothes are required by the ER.

False When EEs are required to wear uniforms that cannot be worn as regular "street clothing" and their cost and maintenance would put the EE below the minimum hourly wage, the ER must pay for the purchase, cleaning, and repair of the uniforms. If the uniform can be worn off the job, the ER need not reimburse the EE, even if the EE's wages go below the minimum.

When receiving undercollected taxes from EEs, any overcollection of taxes from one EE may be used to offset an undercollection from another.

False When recovering undercollections from EEs, each EE must be treated separately, so an overcollection of taxes from one EE cannot be used to offset an undercollection from another.

When selecting a paycard vendor, it is not important for an ER to determine whether the vendor can comply with state wage payment requirements.

False When selecting a paycard vendor, it is very important for an ER to determine whether the vendor can comply with state wage payment requirements.

For the purpose of determining whether the minimum wage has been paid, service charges automatically added to a customer's bill are classified as tips.

False Where service charges are automatically added to customers' bills and then turned over to the EE, these amounts are not tips and are considered wages when determining whether the minimum wage has been paid.

For payroll managers, crisis management is probably the least important leadership test they will have.

False While most payroll managers do not like to think about it, crisis management is one of the most important leadership tests they will have.

You receive an IRS levy on an EE. You must receive Parts 3 and 4 filled out and signed by the EE before executing the levy.

False You must use the table for married filing separate with one exemption if the EE does not submit a statement of filing status and exemptions

What form is used to report nonpayroll withheld taxes?

Form 945, Annual Return of Withheld Federal Income Tax.

What is Form I-9 used for?

Form I-9 is used to verify that an individual has the legal right to work in the US. The Immigration Reform and Control Act of 1986 makes it illegal for an employee to hire an unauthorized worker.

What does a Form W-4 tell the ER?

Form W-4 tells the ER how many withholding allowances the EE is claiming and the EE's marital status. The number of allowances and marital status help determine the amount of federal income tax to withhold from the EE's wages. Form W-4 also notifies the ER whether the EE is claiming exempt from withholding and whether the EE is a nonresident alien. In addition, it may indicate that the EE wants an additional dollar amount withheld beyond the amount that is calculated on the withholding allowances and marital status claimed.

What are eligible rollover distributions?

Generally, all nonperiodic payments of all or any portion of the balance of a recipient's account in a qualified deferred compensation plan are eligible rollover distributions other than: ~ Substantially equal periodic payments made over the lifetime or life expectancy of the EE or his or her beneficiary, or made for a specified period of at least 10 years ~ Any minimum distribution that is required under IRC 401(a)(9) regarding qualified plans ~ Distributions not included in gross income (e.g., return of an EE's after-tax contributions), except for net unrealized appreciation of ER securities ~ Returns of amounts deferred under a 401(k) or 403(b) plan that exceed the elective deferral limits ~ Loans treated as deemed distributions ~ Dividends paid on ER securities ~ Distributions of the cost of current life insurance coverage

Mindy earns $8.50 per hour and is paid weekly during 2018. Last pay period she worked 40 hours. Her deductions include: $33.00 FIT $3.30 SIT $21.08 SS $4.93 Med $15.00 US Savings Bond What is Mindy's disposable pay?

Gross pay = $340.00 ($8.50 x 40) Disposable earnings = 340.00 - 33.00 - 3.30 - 21.08 - 4.93 = $277.69

EE Don is paid $2,600 on the 15th and last day of each month. His regular deductions include: $390.00 FIT $195.00 SIT $159.34 SS $37.27 Med $100.00 Child support $50.00 Tax levy $30.00 Life insurance premium $25.00 United Way contribution $30.00 Health insurance (pre-tax) $50.00 Savings On February 1, 2018, Don's ER receives a creditor garnishment order requiring $500 to be withheld. Calculate the maximum amount of Don's disposable earnings that can be withheld for this garnishment under federal law.

Gross pay: $2,600.00 Disposable pay = 2,600.00 - 390.00 - 195.00 - 159.34 - 37.27 = $1,818.39 The lesser of: $1,818.39 x 25% = $454.60 or $1,818.39 - $471.25 (30 x $7.25 x 52/24 fed min wage per week) = $1,347.14 Therefore, the maximum amount of Don's disposable earning that can be garnished is $454.60. However, since $150 of Don's disposable earnings are already subject to a child support withholding order and a federal tax levy, only $304.60 is subject to garnishment ($454.60 - $150).

Compute the net pay for Susie Brown, who is paid weekly and claims married with 2 withholding allowances on her For W-4 in 2018, based on the following information: Gross pay for the pay period: $650 Pre-tax contributions to a qualified cafeteria plan: 6% FITW (wage-bracket method) $23 SS tax rate 6.2% Medicare tax rate 1.45%

Gross wages: $650.00 Cafeteria plan ($650 x 6%): - 39.00 Taxable wages: $611.00 FITW: - 23.00 SS ($611 x 6.2%): - 37.88 Med ($611 x 1.45%): - 8.86 Net Pay: $541.26

Carol Conway is paid $900 in wages every Friday in 2018. Carol claims single and 1 withholding allowance on her Form W-4. She contributes 6% before taxes to a 401(k) plan, and $10 per week in pre-tax deductions to a qualified cafeteria plan. Using the wage-bracket method, the federal income tax withheld is $78.00. The social security rate is 6.2%, the Medicare rate is 1.45%, and there are no state taxes. Calculate Carol's net pay for the week.

Gross wages: $900.00 Cafeteria plan: - 10.00 401(k) plan ($900 x 6%): - 54.00 FITW: - 78.00 SS [($900 - $10) x 6.2%]: - 55.18 Med [($900 - $10) x 1.45%]: - 12.91 Net Pay: $689.91

Margie's annual salary is $23,400, and she is paid every Friday. Margie is a NE EE who normally works 40 hours per workweek. In one workweek, Margie worked 48 hours. Calculate her total earnings for the workweek.

Hours worked in a year: 52 weeks x 40 hours = 2,080 Regular rate of pay: $23,400/2,080 = $11.25 Regular pay: $11.25 x 48 hours = $540.00 OT hours: 48 - 40 = 8 OT premium rate: $11.25 x .5 = $5.63 OT premium pay: $5.63 x 8 = $45.04 Total earnings: $540.00 + $45.04 = $585.04

What must be done with an undeliverable Form W-2c?

If a Form W-2c cannot be delivered to an EE after a reasonable effort to do so has been made, the ER must keep the form for 4 years or maintain an electronic file containing the information on the form for the same time period.

What is the difference between an "accountable plan" and a "nonaccountable plan" in relation to the tax treatment of an EE's business travel expense reimbursements?

If a reimbursement is made under an "accountable plan," the amount reimbursed is excluded from income and is not subject to federal income tax withholding or social security, Medicare, and FUTA taxes. If the reimbursement is made under a "nonaccountable plan," the reimbursement or the excess amount is included in income and is subject to federal income tax withholding and social security, Medicare, and FUTA taxes.

In regards to substantiating EE business expenses, what does the IRS mean by a "pattern of abuse"?

If an ER regularly fails to comply with the requirements for reimbursing or advancing amounts paid or incurred by EEs for business expenses, the IRS will consider this a "pattern of abuse" and will treat all payments as being made under a nonaccountable plan.

Payroll expenses may be recorded in one of two ways, functionally or by type of pay. Explain.

If payroll expenses are recorded functionally, entries must be based on the processes supported by the expenses (e.g., manufacturing, sales, administration). This means that the payroll would have to be distributed into different labor distribution expense accounts and a separate Labor Distribution Subsidiary Ledger would have to be kept. Recording payroll expenses by type of pay can be done where the payroll register breaks down EEs' wages into regular and overtime pay.

Why must payroll managers learn the strengths and weaknesses of their EEs before delegating tasks to them?

If their delegation is unsuccessful, they must do the work themselves, which tends to result in unfulfilled EEs and burned out managers.

What additional records must be kept under the FLSA by ERs of hospital EEs?

In addition to other required records, hospitals and residential care facilities whose EEs have a work period of 14 consecutive days (rather than 7 for other EEs) must keep records of the time and day on which the 14-day period begins, hours worked each day and each 14-day period, and straight-time and OT premium earnings paid in each 14-day period. They also must keep a copy of the written agreement between the hospital and the EE allowing use of the 14-day work period or a memo summarizing its terms if the agreement is oral.

What is the chart of accounts?

In most companies, a "chart of accounts" lists each account by name and number, with the number being used to identify accounts in an automated system.

What reconciliation steps should be taken before filing quarterly and year-end returns?

In preparing to file quarterly Forms 941 and annual Form 940, ERs should verify the following: ~ The FUTA and FICA tax deposits for the quarter equal the current tax rates for each, multiplied by the taxable wages for each, taking into account any wages subject to Additional Medicare tax ~ The total Form 941 tax deposits for the quarter equal the liability section for Form 941 (Line 13 of Form 941 equals Line 16 of Form 941 or the "Total liability for the quarter" line of Schedule B, whichever applies), although monthly depositors may pay their lawful $100 or 2% deposit shortfall with Form 941, in which case total deposits would not equal the liability ~ Total FUTA tax deposits equal Part 4, Line 13 and Part 5, Line 17 of Form 940

Who is a control employee for purposes of using the commuting method of valuation of personal use of a company car?

In the private sector, a control EE is an EE who: ~ Is a corporate officer earning at least $110,000 in 2018 (indexed annually) ~ Is a director ~ Earns at least $220,000 in 2018 (indexed annually) or ~ Is a 1% owner In the public sector, a control EE is an EE who: ~ Is an elected official or ~ Earns more than a federal EE at Executive Level V ($153,800) in 2018

What is the 100% penalty?

Individuals who are responsible for collecting, accounting for, and paying over withheld income and employment taxes and who willfully fail to do so are subject to an additional penalty equal to the total amount of the taxes owed. This is known as the "Trust Fund Recovery Penalty" or the "100% penalty."

Within a payroll system there are checks and balances to ensure the accuracy of a company's financial records and the security of its assets. What are they called?

Internal controls

What types of questions work best in an interview?

Interview questions should be open-ended and force applicants to explain past behavior rather than questions that call for one-word answers.

Match the Box 12 Codes with the item to with they relate. Code A, B, C, D, E, F, G, H, J, K, L, M, N, P, Q, R, S, T, V, W, Y, Z, AA, BB, DD, EE, FF - Sick pay not included as income - Value of group-term life insurance over $50,000 - Section 403(b) elective deferrals - Designated Roth contributions to a governmental 457(b) plan - Nontaxable combat pay - Section 401(k) elective deferrals - Permitted benefits under a qualified small ER HSA - Section 457(b) elective deferrals - HSA contributions - Adoption benefits - Designated Roth contributions to a Section 401(k) plan - Section 408(k)(6) elective deferrals - Section 501(c)(18)(D) elective deferrals - Value of ER-provided health coverage - Deferrals under a Section 409A nonqualified deferred compensation plan - Uncollected Medicare tax on tips - Medical savings account contributions - Uncollected social security tax on tips - Nonstatutory stock options - Designated Roth contributions to a Section 403(b) plan - Nontaxable part of EE business expense reimbursements - Tax on excess golden parachute payments - Income under Section 409A on a nonqualified deferred compensation plan - Uncollected social security tax on value of group-term life insurance coverage over $50,000 - Uncollected Medicare tax on value of group-term life insurance coverage over $50,000 - SIMPLE retirement account contributions

J - Sick pay not included as income C - Value of group-term life insurance over $50,000 E - Section 403(b) elective deferrals EE - Designated Roth contributions to a governmental 457(b) plan Q - Nontaxable combat pay D - Section 401(k) elective deferrals FF - Permitted benefits under a qualified small ER HSA G - Section 457(b) elective deferrals W - HSA contributions T - Adoption benefits AA - Designated Roth contributions to a Section 401(k) plan F - Section 408(k)(6) elective deferrals H - Section 501(c)(18)(D) elective deferrals DD - Value of ER-provided health coverage Y - Deferrals under a Section 409A nonqualified deferred compensation plan B - Uncollected Medicare tax on tips R - Medical savings account contributions A - Uncollected social security tax on tips V - Nonstatutory stock options BB - Designated Roth contributions to a Section 403(b) plan L - Nontaxable part of EE business expense reimbursements K - Tax on excess golden parachute payments Z - Income under Section 409A on a nonqualified deferred compensation plan M - Uncollected social security tax on value of group-term life insurance coverage over $50,000 N - Uncollected Medicare tax on value of group-term life insurance coverage over $50,000 S - SIMPLE retirement account contributions

Ken's Bike Shop began operating on March 5, 2018 and files Forms 941 for the remainder of 2018. What is Ken's Form 941 lookback period for 2019?

March 5, 2018 through June 30, 2018.

ER Mark starts business on July 2, 2019. As a new ER, Mark is classified as a monthly depositor. On Friday, July 6, Mark pays wages and accumulates a tax liability of $55,000. On Friday, July 13, Mark again accumulates taxes of $55,000 after his second payday. How much is Mark's deposit obligation? When must it be paid?

Mark's deposit obligation as of July 13 is $110,000. It must be deposited by the close of the next business day (Monday, July 16). Mark becomes a semiweekly depositor for the rest of 2018 and all of 2019.

What are five areas regulated by the FLSA?

Minimum wage Overtime Child labor Equal pay Recordkeeping

What are the general deposit requirements for monthly, semiweekly, and one-day depositors?

Monthly depositors must deposit their accumulated tax liability for each calendar month by the 15th of the following month. Semiweekly depositors must deposit their payroll tax liability for wages paid on Wednesday, Thursday, and Friday by the following Wednesday. The payroll tax liability for wages paid on Saturday, Sunday, Monday, and Tuesday must be paid by the following Friday. If an ER's accumulated payroll tax liability reaches $100,00 on any day during a monthly or semiweekly deposit period, the liability must be deposited by the close of the next business day.

What restrictions does the FLSA place on ERs regarding the employment of minors under 18?

No minors under age 18 can work in a job that has been declared hazardous by the Wage and Hour Division. Some minors age 16 and 17 are exempt from these restrictions under student learner or apprenticeship programs, under an exception for loading paper balers and compactors, or under an exception for 17-year-olds who work with wood products under the supervision of a parent and meet several other requirements.

What steps must be taken to obtain an EIN by phone?

Only foreign ERs can take the following steps to obtain an EIN by phone: ~ Complete Form SS-4 before calling ~ Call 267-941-1099 ~ Provide the requested information from Form SS-4 ~ Write the EIN on the SS-4, sign and date it, and keep it for your records

Can an EE of a public school who participates in a 403(b) tax-sheltered annuity also participate in a 401(k) plan?

Only if the 401(k) plan existed prior to the effective date of the Tax Reform Act of 1986.

During cutbacks or reductions in force (RIFs), ERs sometimes provide outplacement services for EEs who will be terminated. Under what circumstances is the value of these services not taxable income the EE?

Outplacement services are not included in EEs' income under the following circumstances: ~ The ER derives a substantial business benefit from providing the outplacement services other than providing the compensation (e.g., a positive corporate image, an attractive benefit that encourages new hires). ~ The EEs do not have the choice of accepting cash rather than the outplacement services (e.g., a higher severance payment if the services are refused). ~ The EEs would be able to deduct the cost of the outplacement services as a business expense on their personal tax returns.

What is backup withholding?

Payers must generally withhold 24% of reportable nonpayroll payments during 2018 if payees fail to furnish payers with their taxpayer identification number or the IRS notifies them to withhold. This withholding is referred to as backup withholding.

George, a NE EE, received a production bonus of $38 for a workweek in addition to his regular hourly rate of $10. George worked 44 hours during the workweek. Calculate his total earnings for the workweek.

Regular hourly pay: $10.00 x 44 hours = $440.00 Total regular pay: $440 + $38.00 = $478.00 Regular rate of pay: $478/44 hours = $10.86 OT hours: 44 - 40 = 4 OT premium rate: $10.86 x .5 = $5.43 OT premium pay: $5.43 x 4 = $21.72 Total earnings: $478.00 + $21.72 = $499.72

Barry earns $7.50 per hour for a regular 40-hour week in 2018. Last week, Barry worked 48 hours. His regular deductions include: $58.50 FIT $11.70 SIT $24.18 SS $5.66 Med $25.00 Child Support What is Barry's disposable pay?

Regular pay ($7.50 x 48) = $360.00 OT premium ($7.50 x .5 x 8) = $30 Disposable earnings = 360.00 + 30.00 - 58.50 - 11.70 - 24.18 - 5.66 = $289.96

Bob, a NE EE, receives an hourly wage of $12 for a 35-hour workweek. In one week, in addition to his regular hours he worked 7 hours on Saturday. Calculate his total earning for the workweek.

Regular pay: $12 x 42 = $504 OT hours: 42 - 40 = 2 OT premium rate: $12.00 x .5 = $6.00 OT premium pay: $6.00 x 2 = $12.00 Total earnings: $504.00 + $12.00 = $516.00

Joe, a NE EE, receives an hourly wage of $9 for a 40-hour workweek. During one workweek he worked 47 hours. Calculate his total earnings for the workweek.

Regular pay: $9.00 x 47 hours = $423.00 OT hours: 47 - 40 = 7 OT premium rate: $9.00 x .5 = $4.50 OT premium pay: $4.50 x 7 = $31.50 Total earnings: $423.00 + $31.50 = $454.50

Susan, a NE EE, received a Christmas bonus of $100 from her ER that does not have to be included in her regular rate of pay for the week in which it is received. During that week, Susan worked 48 hours and her hourly rate of pay was $9.50. Calculate her total earnings for the workweek.

Regular pay: $9.50 x 48 hours = $456.00 OT hours: 48 - 40 = 8 OT premium rate: $9.50 x .5 = $4.75 OT premium pay: $4.75 x 8 = $38.00 Discretionary bonus: $100.00 Total earnings: $456.00 + $38.00 + $100.00 = $594.00

Teri is a NE EE whose normal hourly rate is $10, but she receives a $1/hour shift differential for working the midnight to 8 AM shift. During one workweek, she works 45 hours on the late shift. Calculate her total earnings for the workweek.

Regular pay: ($10 + $1) x 45 hours = $495 OT hours: 45 - 40 = 5 OT premium rate: $11.00 x .5 = $5.50 OT premium pay: $5.50 x 5 = $27.50 Total earnings: $495.00 + $27.50 = $522.50

Eric, a NE EE, is paid a shift differential for working different shifts. For 3 days during the workweek he works 8 hours a day for $10/hour. On 2 other days, he works 10 hours a day for $12/hour. Calculate Eric's total earning for the workweek.

Regular pay: ($10 x 24 hours) + ($12 x 20 hours) = $240 + $240 = $480 Regular rate of pay: $480/44 hours = $10.91 OT hours: 44 - 40 = 4 OT premium rate: $10.91 x .5 = $5.46 OT premium pay: $5.46 x 4 = $21.84 Total earnings: $480.00 + $21.84 = $501.84

Debbie agreed with her ER prior to the performance of any work that she would be paid 1.5 times the regular piece rate for any work produced during OT hours. Debbie is paid $0.30 for each unit she produces. In one workweek, she produced 1,560 units in the first 40 hours and 212 in the next 4 hours. Calculate her total earnings for the workweek.

Regular piece work earnings: $0.30 x 1,560 units = $468.00 OT piece rate: $0.30 x 1.5 = $0.45 OT earnings: $0.45 x 212 = $95.40 Total earnings: $468.00 + $95.40 = $563.40

John, a production worker, is paid $0.50 per unit under a piece-rate system. During one workweek, John produced 840 units in 46 hours. Calculate his total earnings for the workweek.

Regular piecework earnings: $0.50 x 840 units = $420.00 Regular rate of pay: $420.00/46 hours = $9.13 OT hours: 46 - 40 = 6 OT premium rate: $9.13 x .5 = $4.57 OT premium pay: $4.57 x 6 = $27.42 Total earnings: $420.00 + $27.42 = $447.42

Mark works under the piece-rate system and receives $2 for each component he produces. He also receives a bonus of $0.50 for each component over 300 in a workweek. In one workweek, Mark produced 326 components in 43 hours. Calculate his total earnings for the workweek.

Regular piecework earnings: $2.00 x 326 units = $652.00 Production bonus: $0.50 x 26 units = $13.00 Total piecework earnings plus bonus: $652.00 + $13.00 = $665.00 Regular rate of pay: $665/43 hours = $15.47 OT hours: 43 - 40 = 3 OT premium rate: $15.47 x .5 = $7.74 OT premium pay: $7.74 x 3 = $23.22 Total earnings: $652.00 + $13.00 + $23.22 = $688.22

Joe, a NE EE, is paid a salary of $520/week for a workweek consisting of 40 hours. OT is paid at 1.5 times the regular rate of pay. Last week, Joe worked 49 hours. Calculate his total earnings for the week.

Regular rate of pay: $520.00/40 hours = $13.00 Regular pay: $13.00 x 49 hours = $637.00 OT hours: 49 - 40 = 9 OT premium rate: $13.00 x .5 = $6.50 OT premium pay: $6.50 x 9 = $58.50 Total earnings: $637.00 + $58.50 = $695.50

Ron Baker is employed by Jasper Tools Industries. He regularly earns $430/week. Calculate the amount of SS and Medicare taxes to withhold from each paycheck.

SS = $430 x 6.2% = $26.66 Med = $430 x 1.45% = $6.24

What is Schedule B (Form 941) used for?

Schedule B records an ER's payroll tax liability, not its deposits. Semiweekly depositors at any time during a quarter must file a Schedule B with Form 941.

What is Schedule R (Form 941) used for?

Schedule R (Form 941), Allocation Schedule for Aggregate Form 941 Filers, is filed to allocate the aggregate information reported on Form 941 to each of the reporting agent's clients.

What is the difference between sick pay and workers' compensation benefits?

Sick pay may take many forms, but its essential purpose is to replace the wages of an EE who cannot work because of a nonjob-related illness or injury. Workers' compensation, however, deals with payments to EEs who cannot work because of job-related injuries or illness.

What laws cover unclaimed paychecks, and what is generally required of the ER?

State escheat laws govern the treatment of unclaimed paychecks. Under these laws, ERs are generally required to: ~ Try to locate and contact the EE ~ File an annual report with the state where the EE resides that includes the EE's name, last known address, amount of the check, and the related payday ~ Hold the checks for a certain length of time before turning them over to the state as abandoned property

Bill was born on March 17, 1979 and earns $75,000 per year. His company provides group-term life insurance coverage at two times each EE's annual salary. Calculate the monthly taxable value of Bill's group-term life insurance coverage for 2018.

Step 1: 2 x $75,000 = $150,000 Step 2: $150,000 - $50,000 = $100,000 Step 3: $100,000 / $1,000 = 100 Step 4: Bill is 39 years old as of 12/31/18 Step 5: $0.09 x 100 = $9.00 monthly taxable coverage

Bill was born on March 17, 1979 and earns $75,000 per year. His company provides group-term life insurance coverage at two times each EE's annual salary. Bill's salary increases by $3,000 on May 1, 2018, and at the same time he begins contributing $5 per month in after-tax dollars toward the insurance coverage. Calculate the monthly taxable value of Bill's group-term life insurance coverage for May - December 2018.

Step 1: 2 x $78,000 = $156,000 Step 2: $156,000 - $50,000 = $106,000 Step 3: $106,000 / $1,000 = 106 Step 4: Bill is 39 years old as of 12/31/18 Step 5: $0.09 x 106 = $9.54 monthly taxable coverage Step 6: $9.54 - $5.00 = $4.54 monthly taxable coverage for May - December

David, a NE hospital EE, has agreed with the hospital to work on a 14-day work period basis, and his regular rate of pay is $10/hour. David works 5 days at 9 hours each and 4 days at 10 hours each during the 14-day period. Calculate his gross pay for the period.

Step 1: Calculate total earnings due if OT pay is required for hours worked over 8 in a day. Regular pay: $10 x 85 hours = $850 OT hours: [5 x (9-8)] + [ 4 x (10 - 8)] = 13 OT premium rate: $10 x .5 = $5 OT premium pay: $5 x 13 hours = $65 Total earnings: $850 + $65 = $915 Step 2: Calculate total earnings due if OT pay is required for hours worked over 80 in the 14-day work period. Regular pay: $10 x 85 hours = $850 OT hours: 85 - 80 = 5 OT premium rate: $10 x .5 = $5 OT premium pay: $5 x 5 hours = $25 Total earnings: $850 + $25 = $875 Step 3: David must be paid the higher of the result in Step 1 or 2--$915.

What are subsidiary ledgers?

Subsidiary ledgers are used for a single type of account and are subordinate to the general ledger. For example, entries documenting payroll expenses and liabilities may be contained in a subsidiary ledger knows as the Payroll Register. Other subsidiary ledgers that contain entries for several accounts might include Accounts Payable, Accounts Receivable, and Fixed Assets.

What are tax equalization plans?

Tax equalization plans ensure that all expatriates continue to incur a tax burden equal to what they would incur if they were living and working in the US, regardless of the actual foreign tax liability.

What are tax protection plans?

Tax protection plans attempt to guarantee that the EE will be reimbursed by the ER to the extent that the EE's combined income and SS taxes in the US and the foreign country exceed the amount the EE would have paid if living and working in the US.

What is the common name of the regulations issued by the Department of Health and Human Services to implement the privacy requirements of the HIPAA?

The Privacy Rule

Why is the date of actual or constructive payment of wages important?

The date of actual or constructive payment is important because it determines when wages are taxed and reported and at what rates.

List the factors used under the common law test in determining whether a business has the right to control the financial aspects of a worker's activities?

The factors used by the IRS in determining whether an ER has the right to direct or control the financial aspect of a worker's activities Include: ~ Whether the worker has made a significant financial investment in performing the work. ~ Whether the worker has business expenses that are unreimbursed. ~ Whether the worker makes his or her services available to the general market. ~ Whether the worker is paid on a regularly recurring basis or by the job.

What is the purpose of the journal?

The journal is used to list all the necessary information about a transaction in one place. The journal is the first accounting record of business transactions and is therefore referred to as a record of original entry.

What is the amount that will be garnished from an EE's pay to satisfy a delinquent federal agency loan?

The lesser of the amount stated on the garnishment order up to 15% of an EE's disposable earnings or the excess of the EE's disposable earnings over 30 times the federal minimum wage may be garnished to satisfy a delinquent federal agency loan unless the EE consents in writing to a higher amount.

What is the lookback period for determining an ER's Form 941 payroll tax depositor status?

The lookback period is the 12-month period ending June 30 of the previous year.

What are some of the problems that may arise when periodic pay is reduced as a result of an extra payday caused by the calendar?

The main problem is whether to recompute weekly or biweekly paychecks for exempt salaried EEs who are earning a certain amount annually. ERs are free to reduce exempt salaried EEs' pay when faced with an extra payday, so long as there is no contract guaranteeing a certain amount of pay each weekly or biweekly pay period and the EE's pay is not reduced below the minimum required by state or federal law. ERs may also face a hostile reaction from salaried EEs whose pay is reduced in this manner.

What is the "normal" credit an ER can take against FUTA tax liability?

The normal credit against FUTA tax liability equals the amount of an ER's required contributions that are timely paid into a certified state UI fund. It is also called the 90% credit because the amount of the credit is limited to 90% of the 6.0% FUTA tax rate.

A plan similar to the fluctuating workweek plan was approved by the US Supreme court and later made part of the FLSA and its regulations. What is this plan called, and what does it provide?

The plan is called the "Belo" plan, named after the company involved in the Supreme Court's decision, and the plan guarantees a fixed salary for irregular hours that includes a set amount of OT pay.

What is the goal of the IRS in establishing procedures for ER records processed by computers?

The procedures are generally aimed at achieving one goal--making it easy for the IRS to determine the ER's correct tax liability.

What is the purpose of backup withholding?

The purpose of backup withholding is to ensure that income tax is paid on income reported on Forms 1099.

What is the "regular rate of pay" and how is it determined?

The regular rate of pay is an hourly rate of pay determined by dividing the total regular pay actually earned for the workweek by the total numbers of hours worked. For salaried NE EEs, the regular rate of pay is the EE's salary divided by the number of hours the salary is intended to compensate.

What method of withholding must be used if the EE claims exempt from withholding, has received $10,000 in regular and supplemental wages so far during the year, and is paid a bonus of $1,000 during a payroll period?

The withholding exemption would apply to the supplemental wages as well, so no withholding for federal income tax would be done.

How do US citizens and resident aliens qualify for the foreign earned income exclusion under the physical presence test?

This test is met if the expatriate EE has a foreign tax home and is physically present in a foreign country (or countries) for 330 full days during any consecutive 12-month period.

Joan has been granted a bonus of $6,000 net in 2018. Perform the gross-up for tax purposes. Use 22% for FIT, 3.5% for SIT, 6.2% for SS, and 1.45% for Medicare. The bonus will not put Joan over the SS wage limit. Please determine the amount for the following: a. Gross-up b. FIT c. SIT d. SS e. Med f. Net payment

Total tax % = 22% + 3.5% + 6.2% + 1.45% = 33.15% Gross-up % = 100 - 33.15% = 66.85% a. Gross earnings = $6,000/0.6685 = $8,975.32 b. FITW = 22% x $8,975.32 = $1,974.57 c. SITW = 3.5% x $8,975.32 = $314.14 d. SS = 6.2% x $8,975.32 = $556.47 e. Med = 1.45% x $8,975.32 = $130.14 f. Check = $8,975.32 - $1,974.57 - $314.14 - $556.47 - $130.14 = $6,000

What are totalization agreements?

Totalization agreements are agreements between the US and another country under which expatriate EEs working "temporarily" in the foreign country would be subject to US SS tax only. Wages earned by EEs working "permanently" in the foreign country would be subject only to the foreign country's SS taxes. The reverse is also true for foreign EEs working in the US.

A car salesman who receives a $1,000 award for having the top sales for the month must have this amount included in his income.

True

A credit against FUTA tax is available for state unemployment tax paid by the ER.

True

A disadvantage of using a service provider is that it may not have the programming personnel needed to timely meet a user's changing individual needs.

True

A journal entry containing more than one debit or more than one credit is called a compound entry.

True

A new EIN is necessary if a new corporation emerges from a consolidation that does not qualify as a reorganization.

True

A paycheck is classified as a negotiable instrument.

True

A program that allows 2 systems to share data is called an interface.

True

A regular review of all dept policies, procedures, and documentation is vital in crisis prevention.

True

A reward to reinforce and encourage continued positive behavior or a punishment to encourage modified behavior is an element of effective feedback.

True

A separate account is kept for each asset, liability, and owner's equity item that a business has.

True

A successor ER retains the unemployment contribution rate it had immediately before the acquisition of the predecessor occurred if the successor was a covered ER in the state at that time.

True

A system edit is a warning or alert built into the system that checks for errors.

True

A worker who is regularly paid on a weekly basis may receive 53 wage payments in a year.

True

After all amounts on the balance sheet have been recorded in accounts, the total debits must equal the total credits.

True

After an ER forwards abandoned (uncashed) paychecks to the appropriate state agency, state law may require that the ER keep a record of the EE's name and last known address for a specified period of time.

True

After entries have been recorded in the journal, they are posted to the General Ledger.

True

All ERs that are required to deposit their withheld income and employment taxes face a penalty if they do not make their tax deposits electronically.

True

Always be specific when giving feedback, whether it is positive or negative.

True

Amounts charged for the sale of services or goods are referred to as revenue.

True

An EE can be a bona fide resident of a foreign country even though he or she intends to return to the US at the end of the foreign assignment.

True

An EE cannot have a foreign tax home if he or she regularly lives in the US.

True

An EE cannot receive advance payments of the Earned Income Credit based on wages paid after December 31, 2010.

True

An EE's social security number is needed even if there is no withholding.

True

An ER is not subject to FUTA tax if it is a tax-exempt nonprofit, religious, charitable, or educational organization.

True

An ER may not discriminate in favor of highly compensated EEs when providing no-additional-cost services.

True

An ER may provide transit passes valued at up to $260 in a month to its EEs in 2018 without including the fair market value of the benefits in their income.

True

An ER should refuse to change an EE's name until a new social security card with the EE's new name is presented or the new information has been otherwise verified with the SSA.

True

An ER that changes its classification of a worker from IC to EE may still claim Section 530 protection for the period before the change in treatment.

True

An ER with secondary worksites in a state totaling 8 EEs is not required to file a multiple worksite report.

True

An IRS agent conducting an employment tax audit must give the ER written notice of the availability of the Section 530 protections.

True

An RFP can be used to design an in-house payroll system.

True

An accountant who provides bookkeeping and payroll services to several local businesses and works at her own office is an independent contractor.

True

An amended Form W-4 filed by a current EE must be put into effect by the ER no later than the beginning of the first payroll period ending on or after the 30th day after the form is filed with the ER.

True

An automated time and attendance system can remind managers to review and submit time sheets for their EEs.

True

An in-house computer system is only as good as the software that is run on it.

True

Any accounting period of 12 consecutive months can serve as a company's fiscal year.

True

Any reimbursement for medical care expenses in excess of the amount actually spent or incurred by the EE is taxable income to the EE.

True

As soon as an EE's wage payments from an ER for 2018 reach $128,400, the ER must stop withholding social security tax from the EE's wages for the rest of the year.

True

Before you can select a new system, you must document in detail what your current system can and cannot do.

True

Blank checks should never be stored in the same place as the check signing machine.

True

Building a team network must have high priority and wide visibility throughout the company.

True

Business Process Outsourcing is the outsourcing of end-to-end business processes and functions.

True

Businesses that must file 250 or more Forms 1099-MISC are required to file them electronically.

True

Copy A of all paper W-2 Forms and Form W-3 must be filed with the SSA by January 31 of the year following the calendar year for which wages are reported.

True

Direct deposit is one area where the federal and state governments share regulatory responsibility.

True

Dismissal pay is included in a terminated EE's income and is subject to federal income tax withholding and social security, Medicare, and FUTA taxes.

True

Dollar amounts should be entered on Form W-2 without commas or dollar signs.

True

EE business travel expense reimbursements under a nonaccountable plan are subject to income withholding and employment taxes.

True

EEs on foreign assignments expected to last more than one year are on indefinite assignment and maintain a foreign tax home.

True

ERs are entitled to a 10-day filing extension for Form 941 if they have deposited all payroll taxes when due throughout the quarter.

True

ERs are not required to withhold federal income tax on excess group-term life insurance coverage.

True

ERs are required to notify EEs who have no federal income tax withheld from wages and do not claim exempt of their possible eligibility for a tax refund because of the EIC.

True

ERs are required to pay FUTA tax on wages paid to nonresident aliens working in the US.

True

ERs that enter into an agreement with their EEs to pay them a fixed weekly wage even though their hours vary from week to week are operating under a fluctuating workweek.

True

ERs that store payroll records on microfilm or microfiche must have viewing equipment available when an inspection is requested.

True

ERs that withhold and pay federal income and FICA taxes must maintain records according to the IRC.

True

Enforcement of child support orders is a joint federal and state responsibility.

True

Entering an amount on the left side of an account is called debiting the account.

True

Exempt EEs do not have to be paid the required minimum wage or OT payments.

True

Expatriates are US citizens or resident aliens working abroad.

True

FLSA wages include the fair market value of facilities such as board and lodging.

True

FUTA tax applies only to wages when they are actually or constructively paid, not when earned.

True

For a 40-hour workweek, Paul, who is a NE EE, is paid $270. This is a violation fo the FLSA.

True

For federal tax purposes, same-sex couples are considered to be married if they were married in a state, territory, or foreign country where same-sex marriage was legal at that time.

True

For levies carrying over to the next calendar year, if an EE does not complete a new Part 3 of Form 668-W, the ER must use the exempt amount table for the year during which the most recent Part 3 statement of exemptions was filed.

True

For state income tax purposes, nonresidents are taxed only on their income from state sources.

True

Foreign earned income is considered to be income in the year it was earned, not in the year in which it is paid.

True

General ledger accounts are arranged in the order they appear on the chart of accounts.

True

Gov't ERs that withhold FIT and only the Medicare portion of FICA taxes must report these taxes on Form 941.

True

Hospital workers are covered by the FLSA regardless of the hospital's annual volume of revenue.

True

If EEs choose to take cash instead of purchasing benefits with their flex dollars under a cafeteria plan, the payments are wages subject to federal income tax withholding and social security, Medicare, and FUTA taxes.

True

If a meal and incidental expense (M+IE) per diem allowance is used, the amount deemed substantiated is the lesser of the per diem allowance or the federal M+IE rate for the locality of travel.

True

If a new EE does not provide a Form W-4, the ER must withhold as if the EE were single with no allowances.

True

If a self-insured health insurance plan is discriminatory, only those reimbursements and benefits that discriminate in favor of highly compensated EEs are taxable and only to the highly compensated EEs receiving the benefit.

True

If a vendor balks at answering some of the questions about a proposal, that may be a good indication that its products are not right for the job.

True

If a withholding agent has 250 or more Forms 1042-S to file with the IRS, it must do so electronically.

True

If an EE chooses to receive part of an eligible rollover distribution and to directly roll over the rest, federal income tax withholding is required only on the portion received by the EE.

True

If an EE is rehired by an ER 75 days after being terminated, the ER must report the EE as a new hire.

True

If an EE receives wages from more than one ER and only one receives a notice of levy, the ER must determine the exempt amount in the usual way unless the IRS notifies the ER that the exempt amount should be reduced because the other wages are not subject to levy.

True

If an EE terminates employment during the year because of a permanent disability, then the value of group-term life insurance over $50,000 is not included in the EE's income.

True

If an EE works at two or more jobs during the same day, the cost of transportation from one job to the other may be treated as a deductible expense.

True

If an EE works for more than one ER, each ER is liable for withholding and paying the EE's share of FICA.

True

If an ER accumulates taxes of $100,000 or more on any one day during a deposit period, it must deposit the liability by the next business day.

True

If positive or negative feedback is to be useful, it must be given as soon as possible after the behavior has occurred.

True

If supplemental wages paid with regular wages are not clearly identified, the ER must withhold federal income tax as if the combined payment is a wage payment for that payroll period.

True

If the EE does not maintain adequate records of miles driven, the business standard mileage rate cannot be used in reimbursing the EE for local business travel.

True

If the ER has the right to control what work will be done and how that work will be done, an ER-EE relationship exists under the common law test.

True

If the ER's FUTA tax liability for the 4th quarter is $500 or less, payment can be sent in with the ER's Form 940 by the due date of the form.

True

Immigrant visas are sought by individuals who wish to become lawful permanent residents of the US.

True

In most states, the base period for claiming unemployment benefits is the 1st 4 calendar quarters out of the 5 preceding the quarter during which the EE first filed the claim for benefits.

True

Involuntary deductions are those over which an ER and EE have no control

True

Lawful permanent residents of the US are considered residents for income tax purposes.

True

Length of employment makes no difference in determining employment status.

True

Most states require ERs to contact EEs in an attempt to keep unclaimed wages from becoming abandoned.

True

New ERs can obtain an EIN immediately when applying online.

True

On payday, the RDFI is responsible for crediting the EE's account when direct deposit is used as a method of payment.

True

One method of reducing phantom EEs is the physical payout.

True

One of the most important aspects of a payroll manager's responsibilities is keeping on top of current developments in the payroll field.

True

Orders to withhold wages for child support take priority over all other garnishments or attachments issued against the EE's wages except for tax levies received by the ER before the child support withholding order.

True

Paychecks mailed to EEs are not constructively paid when mailed unless the EEs have the option of picking up their checks at the office on the day they are mailed.

True

Payments of expenses decrease assets and decrease owner's equity.

True

Payments received as workers' compensation benefits are not included in an EE's gross income and are not subject to social security, Medicare, or FUTA taxes.

True

Payroll expenses are accrued when the payroll period ending date and the accounting period ending date do not coincide.

True

Pension recipients may claim a certain number of withholding allowances on Form W-4P to be used in calculating the amount to withhold.

True

Plastic surgery for cosmetic purposes is not "medical care" as defined by the Internal Revenue Code.

True

Pre-tax contributions by the EE are considered to be ER contributions when determining the taxable value of a benefit.

True

Problem solving includes the ability to trace reconciling problems back to the source and decide on appropriate corrections.

True

Public sector EEs' wages are exempt from creditor garnishment unless provided otherwise by state law.

True

Qualified EE discounts qualify as nontaxable fringe benefits.

True

Reflective listening is a technique where the listener repeats what they think they heard and asks the speaker for verification.

True

Regulation E establishes the basic rights, requirements, and liabilities for the protection of EEs being paid through EFT.

True

Revenue can be obtained in the form of cash or accounts receivable.

True

Salary advances (prepaid wages) must be included in the EE's income for the payroll period in which they are received.

True

Seamen working on foreign ships are fully exempt from the FLSA's minimum wage and OT requirements.

True

State child support withholding laws may impose lower limits on the amount that may be withheld than federal law.

True

State law may allow ERs to charge the EE an administrative fee for processing a wage garnishment order each pay period.

True

States can set their own state taxable wage base for state UI as long as it is at least equal to the FUTA wage base for that year.

True

The FLSA is commonly known as the Federal Wage-Hour Law.

True

The FLSA requires ERs to pay tipped EEs a cash wage of $2.13/hour.

True

The FLSA requires OT pay at 1.5 times the EE's regular hourly rate of pay.

True

The Family and Medical Leave Act of 1993 is administered and enforced by the Department of Labor's Wage and Hour Division.

True

The IRS requires that machine-readable records be kept at least until the expiration of the statute of limitations for the tax year to which they relate.

True

The Portal-to-Portal Act of 1947 generally states that travel time spent commuting from home to work and work to home is not considered compensable work time.

True

The amount contributed to a 401(k) plan through elective deferrals is a pre-tax contribution that reduces the EE's income subject to federal income tax withholding.

True

The balance sheet is a financial statement that shows the financial position of a business on a certain date.

True

The basic unit for determining the proper wages due EEs is the workweek.

True

The current demands of the American workplace make it necessary for managers to tailor their management workstyle to fit different jobs and different EEs.

True

The determination of residency made under the IRC applies to an alien's status for US income tax purposes.

True

The essential purpose of sick pay is to replace the wages of an EE who cannot work because of a non job-related illness or injury.

True

The goal of a shared services environment is to have EEs' payroll and benefits questions answered with one phone call.

True

The rate of social security tax paid by an EE on an EE's wages in 2018 is 6.2%.

True

The responsibility for determining the employment status of an individual who performs services rests with the ER.

True

The substantial presence test has nothing to do with the alien's intent to stay in the US.

True

The third-party administrator acting as the ER's agent may use the optional flat rate for federal income tax withholding from sick pay provided to EEs.

True

The trend today is for a company to maintain one EE master file that includes payroll, HR, and benefits information.

True

The value of ER-provided group-term life insurance up to $50,000 is excluded from an EE's federal taxable income.

True

The value of an EE's personal use of a company-provided vehicle is taxable income to the EE.

True

There must be a plan for the payroll dept to achieve its mission of satisfying EEs, gov't, and upper management.

True

To qualify for the normal credit against FUTA tax liability, the state law requiring payment of state unemployment taxes must be certified by the US DOL as complying with federal requirements regarding the joint federal/state program.

True

Training must be aimed at improving the skills and knowledge needed to achieve the dept's mission.

True

US citizens and resident alien EEs working for companies outside the US may exclude certain housing costs from their gross income.

True

Under a direct deposit system, the EEs' wages are deposited by electronic funds transfer (EFT) into their personal accounts in one or more financial institutions.

True

Under generally accepted accounting principles, the realization principle governs the recording of revenue.

True

Under the ABC test, one of the determining factors is whether the worker in question is free from control or direction in performing the work both by agreement and in reality.

True

Under the Family and Medical Leave Act, EEs returning from leave are entitled to their previous job or one that is equivalent with no loss of pay or benefits that had accrued before the leave.

True

Wages earned abroad by a US citizen or resident alien may be exempt from federal income tax withholding if the ER is required to withhold foreign taxes under the law of the foreign country.

True

Wages paid to a deceased EE's estate or legal representative after the EE dies but in the year of death are subject to social security, Medicare, and FUTA taxes.

True

When EEs perform services all in one state, the ER pays unemployment taxes to that state.

True

When an EE requests FMLA leave to care for a newborn or newly adopted child, he or she must give the employer 30 days' notice or as much as can be given under the circumstances.

True

When an EE requests federal income tax withholding on sick pay, Form W-4S directs the third party to withhold a flat dollar amount.

True

When an EE's wife regularly uses a company car to go shopping, the value of this EE fringe benefit is included in the EE's gross income.

True

When an ER-provided vehicle is used for business-related purposes, it is a working condition fringe benefit.

True

When determining the amount of federal income tax to withhold using the percentage method, ERs may round off the withholding amount to the nearest dollar.

True

When determining the reserve ratio, the higher the ratio, the lower the tax rate.

True

When valuing vehicles, if the ER uses a special valuation method, the EE must also use the same rule or the general valuation method.

True

Where the ER's sick pay plan is self-insured, the ER must withhold federal income tax based on the EE's Form W-4 when payments are made to the EE.

True

Where there has been a merger or consolidation of 2 ERs and one survives, the surviving corporation is considered to be the same ER as the acquired company and therefore must provide Forms W-2 to all the EEs of the acquired company.

True

Withholding for a federal tax levy must continue until a release is received from the IRS because interest continues to accumulate on the amount that remains due after each levy payment is made.

True

Workers hired through a temporary help agency are not EEs of the client company.

True

What are medical child support orders?

Under a medical child support order, a noncustodial parent is required to provide health insurance for the child by enrolling the child in the parent's ER-sponsored health insurance plan. The order may also provide for automatic enrollment of the child if the parent fails to accomplish the enrollment.

Explain accrual accounting as it applies to payroll.

Under accrual accounting, revenue is recognized and recorded when earned and expenses are recognized and recorded when incurred. Accrual entries are made at the end of an accounting period to estimate payroll expenses and liabilities incurred between the end of the last payroll period and the accounting period end.

Under the FLSA, what are the differences between enterprise coverage and individual EE coverage?

Under enterprise coverage, all the EEs of a business are covered by the FLSA so long as at least two EEs of the business are engaged in interstate commerce or involved in the production of goods or services for interstate commerce, and the business has annual gross sales of at least $500,000. Individual EEs can be covered even if the business is not a covered enterprise if the EE is engaged in interstate commerce or the production of goods for interstate commerce.

Define the shortfall rule for semiweekly depositors.

Under the "shortfall" rule, ERs are not penalized for depositing a small amount less than the entire amount of their deposit obligation. An ER satisfies its deposit obligation if the shortfall is no more than the greater of $100 or 2% of the entire amount due and the shortfall is made up by the appropriate "make-up" date.

When a client company contracts with a certified PEO, who is responsible for withholding and/or paying federal income, social security, Medicare, and FUTA taxes on the wages the PEO pays to the EEs at the client's worksite?

Under the Certified Professional Employer Organization program, a certified PEO may assume the responsibility for withholding and/or paying federal income, social security, Medicare, and FUTA taxes on the wages the PEO pays to the EEs at the client's worksite.

How do ERs determine if EEs are resident or nonresident aliens?

Under the IRC, an alien qualifies as a resident if he or she meets either one of two tests--the lawful permanent resident test or the substantial presence test. Otherwise, the alien is a nonresident alien.

What is the penalty for late filing of employment tax returns?

Unless an ER has reasonable cause and is not guilty of willful neglect, late filing of Form 941 or other employment tax returns results in an "addition to tax," the amount of which depends on how late the return is filed. The amount is: 5% of the amount of tax required to be shown on the return (after accounting for deposits and credits) for each month or fraction of a month that the return is late, to a maximum of 25% (15% per month to a maximum of 75% of the unpaid tax if the late filing is fraudulent).

What are the penalties for not paying FUTA tax timely?

Unless there is reasonable cause and no willful neglect, late payment of tax owed as shown on Form 940 results in an "addition to tax," the amount of which depends on how late the payment is made. The amounts are: ~ 5% of any unpaid tax shown on the return (after accounting for credits) for each month or fraction of a month that the payment is late, up to a maximum of 25% ~ An additional 0.5% per month of any unpaid tax that is not shown on the return but for which the IRS has issued a notice and demand, if the tax is not paid within 21 calendar days of the notice and demand (10 business days if the amount is at least $100,000), up to a maximum of 25%

Estelle Carter is paid $10,000 on the 1st and 15th of each month. Assuming her salary payments remain the same throughout the year, calculate the amount of SS and Med taxes to withhold from her November 15 wage payment.

Wages paid to date = $10,000 x 21 = $210,000 SS = $128,400 - $210,000 = $0.00 SS to withhold Med = $10,000 x 1.45% = $145.00 Additional Med = $210,000 - $200,000 = $10,000 x .9% = $90.00 Total Med and Add'l Med = $145 + $90 = $235

Joe Long is paid $11,000 per month. Assuming his earnings remain the same each pay period, calculate the amount of SS and Med taxes to withhold from his December paycheck.

Wages paid to date = $11,000 x 11 = $121,000 SS = $128,400 - $121,000 = $7,400 x 6.2% = $458.80 Med = $11,000 x 1.45% = $159.50

Roy Wright is a salaried EE of the Alexander Masonry Co and is paid $2,800 every Monday. Before being paid on November 12, Roy had been paid 45 weeks' salary to date. Calculate the amount of social security and Medicare taxes to withhold from Roy's pay on November 12.

Wages paid to date = $2,800 x 45 = $126,000 SS = $128,800 - $126,000 = $2,400 x 6.2% = $148.80 Med = $2,800 x 1.45% = $40.60

Terry earns $10/hour for a 40-hour week in 2018 and is paid biweekly. During the last pay period, Terry worked 43 hours in the first week and 39 hours in the second week. His regular deductions include: $125.25 FIT $25.05 SIT $51.77 SS $12.11 Med $50 Creditor garnishment $10 Life Insurance premium $5 Union dues What is Terry's disposable pay?

Week one: Regular pay ($10.00 x 43): $430.00 OT premium ($10 x .5 x 3): + 15 Total: $445.00 Week two: Regular pay ($10 x 39): $390 Total earnings (2 weeks): $835.00 Disposable earnings: 835.00 - 125.25 - 25.05 - 51.77 - 12.11 = $620.82

Sally is a salaried EE of the Wild West Rodeo Club. Her annual salary is $36,000 and she is paid on a weekly basis. Calculate the amount of SS and Medicare taxes to withhold each week.

Weekly wage = $36,000/52 = $692.31 SS = $692.31 x 6.2% = $42.92 Med = $430 x 1.45% = $10.04

What questions must be answered before OT pay can be calculated?

What is the EE's workweek? What constitutes hours worked? What payments made to the EE are considered wages? What is the EE's regular rate of pay?

With regard to bonuses, what is meant by the "push money exception"?

When a manufacturer pays a bonus to sales EEs working for a retailer to get them to "push" its products, the bonus is not wages because it is being paid by a third party, not the ER (for services performed for the third party), and is not subject to federal income tax withholding or social security, Medicare, and FUTA taxes. The bonus is taxable income to the sales EEs, however, and must be reported on their personal income tax return.

What is meant by the term "golden parachute" payments?

When companies change ownership, key executives are often provided with "golden parachutes" to soften their landing should they be terminated by the new owner. The tax law defines a "parachute payment" as compensation that is paid to an officer, shareholder, or highly compensated EE only after a change in corporate ownership or control and that is at least three times the EE's average compensation during the five most recent tax years.

When is group health insurance deducted from an EE's gross wages in determining disposable pay?

When the law of the state where the EE works requires that health insurance be deducted to determine the EE's disposable earnings.

What records must an ER keep under the FLSA for an EE who is receiving remedial education?

Where EEs are exempt from OT pay requirements for time spent receiving remedial education, the ER must keep, in addition to other required records, records of the hours spent by each EE receiving such remedial education and the wages paid for those hours.

ERs are assigned "classification codes" based on their type of business for determining the ER's workers' compensation premium. Outline the classification code exemptions.

While an ER's business generally determines its classification code, and the more dangerous the business the higher the dollar value assigned to that code, some EEs may be assigned a different or less costly code because of the duties they perform. EEs who work exclusively in an office, outside sales EEs, and drivers and their helpers may be assigned a "standard exception classification." Such classifications generally carry a significantly lower dollar value than other EE classifications.

What are the criminal penalties for FLSA recordkeeping violations?

Willful violations of the recordkeeping requirements can bring a criminal penalty of up to $10,000 and/or imprisonment for up to 6 months, although a jail sentence can be imposed only for second and subsequent convictions.

Sandra works 32 hours per week, is a NE EE, and is paid a semimonthly salary of $1,000. In one workweek, Sandra worked 42 hours. Calculate her total earnings for the week.

Yearly earnings: $1,000 x 24 = $24,000 Hours worked in a year: 52 weeks x 32 hours = 1664 Regular rate of pay: $24,000/1664= $14.42 Regular pay: $14.42 x 42 hours = $605.64 OT hours: 42 - 40 = 2 OT premium rate: $14.42 x .5 = $7.21 OT premium pay: $7.21 x 2 = $14.42 Total earnings: $605.64+ $14.42 = $620.06

Jim is a NE EE who is paid a monthly salary of $1,500 and normally works 40 hours/workweek. Last week Jim worked 49 hours. Calculate his total earnings for the workweek.

Yearly earnings: $1,500 x 12 months = $18,000 Hours worked in a year: 52 weeks x 40 hours = 2,080 Regular rate of pay: $18,000/2080 = $8.65 Regular pay: $8.65 x 49 hours = $423.85 OT hours: 49 - 40 = 9 OT premium rate: $8.65 x .5 = $4.33 OT premium pay: $4.33 x 9 = $38.97 Total earnings: $423.85 + $38.97 = $462.82

Tony is a NE EE who works 35 hours/week and is paid a monthly salary of $2,500. During a certain workweek, Tony worked 43 hours. Calculate his total earnings for the workweek.

Yearly earnings: $2500 x 12 months = $30,000 Hours worked in a year: 52 weeks x 35 hours = 1820 Regular rate of pay: $30,000/1820= $16.48 Regular pay: $16.48 x 43 hours = $708.64 OT hours: 43 - 40 = 3 OT premium rate: $16.48 x .5 = $8.24 OT premium pay: $8.24 x 3 = $24.72 Total earnings: $708.64 + $24.72= $733.36

Company B hires a computer systems analyst and agrees to pay the EE $25/hour. If this person works over 40 hours in a week, is the EE due OT pay?

Yes. In order for the computer professional exemption to apply to an hourly paid EE, the EE would have to be paid at least $27.63/hour

Does an ER have to withhold child support from payments to independent contractors?

Yes. Payments to independent contractors constitute property subject to a child support withholding order.

An EE who is injured away from work on July 24, 2018 receives $1,000 per month in disability payments from a third party for 10 calendar months beginning August 1, 2018. The ER has paid 60% of the disability insurance premiums, and the EE paid 40% through an after-tax payroll deduction. a. Calculate the amount of the payments that are subject to FICA b. Calculate the amount of the payments that are subject to FIT

a. $1,000 x 6 months x 60% = $3,600 b. $1,000 x 10 months x 60% = $6,000

Casey Company has 5 EEs with earnings for 2017 as follows: David Bates $23,500 John Smith $27,000 Doreen Saunders $24,500 William Jones $21,000 Sam Frazer $21,000 The state unemployment rate is 5.4% on the first $7,000 in wages paid to each EE, the state is not a credit reduction state, and Casey paid all its SUTA tax liability by January 31, 2018. Calculate the following amounts for Casey Company: a. FUTA tax before state tax credit b. SUTA tax c. FUTA tax after state tax credit

a. $2,100 ($7,000 x 5 x 6.0%) b. $1,890 ($7,000 x 5 x 5.4%) c. $210 ($2,100 - $1,890)

Which of the following amounts of employment tax liability in a lookback period qualifies the ER to deposit federal taxes monthly? (8.2-1/IIC) a. $25,000 b. $52,000 c. $98,000 d. $105,000

a. $25,000

The Boulder Company has a taxable payroll for 2017 for FUTA and state unemployment tax of $70,000. The SUTA tax rate in the state in which the Boulder Company does business is 3.2%, the state is not a credit reduction state, and Boulder paid its entire SUTA tax liability by January 31, 2018. Calculate: a. Net FUTA tax liability for 2017 b. Net SUTA tax liability for 2017 c. Total unemployment tax liability

a. $420 ($70,000 x 0.006) b. $2,240 ($70,000 x 0.032) c. $2,660 ($420 + $2,240)

George Brown is a supervisor for Wind Power Alternatives in Los Angeles, CA. In March 2018, George was transferred by the company to its plant in Sacramento, CA. The company's contribution rate in the state of CA is 4.9% and the SUTA wage base is $7,000. During 2018, George's total earning are $38,500, of which $6,000 was paid in Los Angeles and the remainder is Sacramento. Calculate: a. SUTA tax on wages paid in Los Angeles b. SUTA tax on wages paid in Sacramento c. Net FUTA tax on George's wages

a. $6,000 x .049 = $294 b. $1,000 x .049 = $49 c. $7,000 x .006 = $42

On April 1, 2018, Martin Earnest left Phelps Tires in Philadelphia, PA to work for Bill's Auto in Pittsburgh, PA. Martin was paid $6,600 by Phelps and $32,000 by Bill's Auto during 2018. Assuming both ERs are entitled to the full normal credit for timely paid state unemployment taxes, calculate: a. Net FUTA on wages from Phelps Tires b. Net FUTA on wages from Bill's Auto

a. $6,600 x .006 - $39.60 b. $7,000 x .006 = $42

What is the maximum FUTA wage base per EE? (7.1-4/IC) a. $7,000.00 b. $8,000.00 c. $17,500.00 d. $128,400.00

a. $7,000.00

During 2018, Rachel Roberts is paid a salary of $50,000. She participates in a 401(k) plan that allows EEs to elect to defer up to 15% of their annual compensation but does not allow catch-up contributions. a. What is the maximum amount of her salary Rachel can defer to the 401(k) plan on a tax-deferred basis? b. If Rachel's salary was $130,000 instead of $50,000, what is the maximum amount that she could defer to the 401(k) plan on a tax-deferred basis?

a. $7,500 -- lesser of 15% x $50,000 ($7,500) or $18,500 (annual dollar limit effective for 2018) b. $18,500 -- the lesser of 15% x $130,000 ($19,500) or $18,500 (annual dollar limit effective for 2018)

EE Sam qualifies for the foreign housing cost exclusion under the physical presence test for all of 2018, spending $26,250 on reasonable housing expenses. On January 1, 2018, the maximum foreign earned income exclusion was $103,900. What is Sam's foreign housing cost exclusion for 2018? a. $9,626 b. $26,250 c. $16,624 d. $103,900

a. $9,626 Foreign housing cost exclusion = reasonable housing expenses - base housing amount Base housing amount = maximum foreign earned income exclusion x 16% Base housing amount = $103,900 x .16 = $16,624 Foreign housing cost exclusion = $26,250 - $16,624 = $9,626

a. An EE earns $30,000 per year, and the company provides group-term life insurance of three times the EE's salary. How much of the insurance coverage is subject to taxation? b. Using the above example, if the EE is 46 years old as of December 31, 2018, what rate is used to compute the imputed monthly income for 2018?

a. $90,000 - $50,000 = $40,000 b. $0.15 per $1,000 of the taxable value of the coverage

An EE who is injured away from work on March 19, 2018 receives $900 per month in disability payments from a third party for 7 calendar months beginning April 1, 2018. The ER paid 2/3 of the disability premiums, and the EE paid the rest through an after-tax payroll deduction. a. Calculate the amount of the payments that are subject to FICA b. How much would be reported as federal wages on the EE's Form W-2, Box 1? c. How much of the payments would be reported on the EE's Form W-2, Box 12, Code J?

a. $900 x 6 months x 2/3 = $3,600 b. $900 x 7 months x 2/3 = $4,200 c. $900 x 7 months x 1/3 = $2,100

If the number of withholding allowances decreases for an EE, how long does the EE have to submit a new Form W-4? a. 10 days b. 30 days c. 15 days d. 1 year

a. 10 days

Under federal law what is the maximum amount of an EE's "disposable earnings" that can be garnished to repay a debt to a creditor? a. 25% b. 27% c. 50% d. 65%

a. 25%

If an ER uses prenotification to test the EE's banking information before initiating direct deposit, how long before any actual pay is sent through the ACH network must the prenotification be sent? a. 3 banking days b. 2 weeks c. 6 banking days d. 6 calendar days

a. 3 banking days

For federal tax purposes, what is the minimum retention period for records when the ER does not claim a refund, credit, or abatement? (10.2/IID) a. 4 years from the due date of the return or the date the tax is paid, whichever is later b. 4 years from the last IRS audit c. 7 years from the due date of the return or the date the tax is paid, whichever is later d. Indefinite

a. 4 years from the due date of the return or the date the tax is paid, whichever is later

What is the maximum number of hours a NE EE can work in a workweek under the FLSA before OT premium pay is due? a. 40 b. 55 c. 80 d. 168

a. 40

Match the following retirement plans with the section of the IRC that applies to each: a. Simplified EE Pensions b. EE-Funded Plans c. Deferred Compensation Plans for Public Sector and Tax-Exempt Groups d. Tax-Sheltered Annuities e. Cash or Deferred Arrangements f. Qualified Pension and Profit Sharing Plans g. SIMPLE IRAs 501(c)(18)(D) 457(b) 408(p) 401(a) 408(k) 403(b) 401(k)

a. 408(k) Simplified EE Pensions b. 501(c)(18)(D) EE-funded Plans c. 457(b) Deferred Compensation Plans for Public Sector and Tax-Exempt Groups d. 403(b) Tax-Sheltered Annuities e. 401(k) Cash or Deferred Arrangements f. 401(a) Qualified Pension and Profit Sharing Plans g. 408(p) SIMPLE IRAs

What is a defined contribution pension plan? (4.6-1/ID) a. A plan in which benefits are based upon EE and/or ER contributions b. A plan in which benefits are based only upon ER contributions c. A plan in which EEs are promised a certain level of benefits d. A plan in which EEs are required to make contributions

a. A plan in which benefits are based upon EE and/or ER contributions

How is an interface in an automated payroll system defined? (12.2-1/IVB) a. A procedure to pass information from one system to another b. A Diagram of how data flows between systems c. A piece of equipment that connects the terminal to the mainframe d. Written instructions for users which describe the system's functions

a. A procedure to pass information from one system to another

Some of the ledger accounts of the Morris Bookkeeping Service, owned and operated by Paul Morris, are listed below. Indicate whether these accounts are shown on the income statement or the balance sheet: a. Accounts payable b. Accounts receivable c. Advertising expense d. Cash e. Salaries payable f. Office equipment g. Paul Morris, capital h. Miscellaneous expense i. Office furniture j. Rent expense

a. Accounts payable -- Balance Sheet b. Accounts receivable -- Balance Sheet c. Advertising expense -- Income Statement d. Cash -- Balance Sheet e. Salaries payable -- Balance Sheet f. Office equipment -- Balance Sheet g. Paul Morris, capital -- Balance Sheet h. Miscellaneous expense -- Income Statement i. Office furniture -- Balance Sheet j. Rent expense -- Income Statement

Enter the normal balance (debit or credit) for each of the following accounts: a. Accounts receivable b. Social security tax payable c. Sales d. Sales tax payable e. Accounts payable f. Wage garnishments payable g. Payroll taxes expense h. Professional fees payable i. Freight expense j. Life insurance premiums payable

a. Accounts receivable -- Debit b. Social security tax payable -- Credit c. Sales -- Credit d. Sales tax payable -- Credit e. Accounts payable -- Credit f. Wage garnishments payable -- Credit g. Payroll taxes expense -- Debit h. Professional fees payable -- Credit i. Freight expense -- Debit j. Life insurance premiums payable -- Credit

All of the following methods are used to determine an ER's state UI experience rate except: a. Age ratio b. Reserve ratio c. Benefit ratio d. Benefit wage ratio

a. Age ratio

How many years must an ER keep the authorization agreement for direct deposit after revocation by the EE a. At least two years b. At least one year c. There is no retention requirement d. At least three years

a. At least two years

Training can improve all of the following attributes of an EE except: (13.2-2/VC) a. Attitude b. Skills c. Knowledge d. Abilities

a. Attitude

Classify each item that follows as an asset, liability, or owner's equity: a. Cash b. Loan payable to a bank c. Delivery equipment d. Account payable to a creditor e. Office furniture f. Owner's financial interest g. Petty cash h. Mortgage payable to a bank i. FUTA taxes payable

a. Cash -- Asset b. Loan payable to a bank -- Liability c. Delivery equipment -- Asset d. Account payable to a creditor -- Liability e. Office furniture -- Asset f. Owner's financial interest -- Owner's Equity g. Petty cash -- Asset h. Mortgage payable to a bank -- Liability i. FUTA taxes payable -- Liability

Which of the following deductions is not a voluntary deduction? a. Child support b. Charitable contributions c. Credit union deductions d. Life insurance premiums

a. Child support

What code is entered in Box 12 of Form W-2 when the value of group-term life insurance over $50,000 is reported? a. Code C b. Code D c. Code E d. Code F

a. Code C

How are marketable securities classified? a. Current assets b. Tangible assets c. Intangible assets d. Current liabilities

a. Current assets

Who, if anyone, is liable if an ER fails to respond to an IRS tax levy against an EE's wages? (9.1-1/IIIB) a. ER only b. EE only c. Both EE and ER d. No one is liable

a. ER only

How, if at all, are payments made to EEs during absence from work due to illness under their ER's sick pay/disability plan treated for FICA taxation? (4.3-2/IIIA) a. FICA taxable for the first 6 calendar months b. Not subject to FICA tax c. FICA taxable after the first 3 months d. FICA taxable the entire time

a. FICA taxable for the first 6 calendar months

Which taxes are elective deferrals to a 457(b) plan for public sector EEs subject to if the ER is subject to FICA taxes? a. FICA taxes b. FICA and FIT withholding c. FICA and FUTA taxes d. FICA, FIT, and FUTA taxes

a. FICA taxes

From which of the following taxes are cafeteria plan contributions generally exempt? (4.5-8/IIIB) a. FICA, FIT, and FUTA only b. FICA, FIT, and SIT only c. FICA, FUTA, and SUTA only d. SIT and FIT only

a. FICA, FIT, and FUTA only

Sarah Simmons has an annual salary of $38,000. She is paid semimonthly, and she contributes $125 per month on a pre-tax basis to her ER's cafeteria plan and 5% of her salary on a pre-tax basis to a 401(k) plan. Assuming that Sarah has not reached the SS and FUTA taxable wage limits, calculate the following for the current pay period: a. FIT taxable b. SS taxable wages c. Medicare taxable wages d. FUTA taxable wages

a. FIT taxable wages: Gross wages ($38,000/24): $1,583.33 Cafeteria plan ($125/2): -62.50 401(k) plan ($1,583 x .05): -79.17 Taxable wages: $1,441.66 b. SS taxable wages: Gross wages ($38,000/24): $1,583.33 Cafeteria plan ($125/2): -62.50 Taxable wages: $1,520.83 c. Medicare taxable wages: Gross wages ($38,000/24): $1,583.33 Cafeteria plan ($125/2): -62.50 Taxable wages: $1,520.83 d. FUTA taxable wages: Gross wages ($38,000/24): $1,583.33 Cafeteria plan ($125/2): -62.50 Taxable wages: $1,520.83

Timothy White is paid $3,760 per month. He contributes 7.5% of his salary before taxes to a 401(k) plan and 2% to an after-tax investment. The company matches his pre-tax contribution. He also participates in the company's cafeteria plan and contributes $75 per month before taxes. Assuming Timothy has not reached the SS and FUTA taxable wage limits, calculate the following for the current pay period: a. FIT taxable b. SS taxable wages c. Medicare taxable wages d. FUTA taxable wages

a. FIT taxable wages: Gross wages: $3,760.00 Cafeteria plan: -75.00 401(k) plan ($3,760 x .075): -282.00 Taxable wages: $3,403.00 b. SS taxable wages: Gross wages: $3,760.00 Cafeteria plan: -75.00 Taxable wages: $3,685.00 c. Medicare taxable wages: Gross wages: $3,760.00 Cafeteria plan: -75.00 Taxable wages: $3,685.00 d. FUTA taxable wages: Gross wages: $3,760.00 Cafeteria plan: -75.00 Taxable wages: $3,685.00

An EE has been absent from work for nine months because of a non job-related illness and is not expected to return to work for another three months. Which taxes must be withheld at this point from disability payments made to the EE by the ER? a. Federal income tax b. Social security and Medicare taxes c. Social security, Medicare, and FUTA taxes d. No withholding required

a. Federal income tax

An ER has received several attachments against an EE's wages. The attachments were received in the following order: Federal tax levy, consumer garnishment, and child support withholding order (the underlying order was issued by a court after the federal tax levy was received by the ER). In which order are the attachments applied against the EE's wages? (9.1-1, 9.1-2, & 9.1-3/IIB, IIIB) a. Federal levy, child support withholding order, consumer garnishment b. Child support withholding order, consumer garnishment, federal levy c. Child support withholding order, federal levy, consumer garnishment d. Federal levy, consumer garnishment, child support withholding order

a. Federal levy, child support withholding order, consumer garnishment

On what form is federal unemployment tax reported? (7.1-7/IIC) a. Form 940 b. Form 941 c. Form 945 d. Form 944

a. Form 940

What form is completed by new ERs when requesting an EIN? a. Form SS-4 b. Form SS-5 c. Form SS-8 d. Form W-9

a. Form SS-4

In 2017 an ER paid FUTA taxable wages of $72,680. The wages actually paid to EEs in 2017 in excess of $7,000 each amounted to $26,230. The ER's state unemployment tax rate is 5.4%, the state unemployment wage base is $7,000, the state is not a credit reduction state, and all state unemployment taxes were by January 31, 2018. Calculate: a. Gross FUTA tax b. State tax credit against FUTA c. Net FUTA tax

a. Gross FUTA tax: Total wages paid during 2017 = $72,680.00 Wages paid in excess of $7,000: -26,230.00 Total taxable wages: $46,450.00 Rate of tax: x 6.0% Amount of gross FUTA tax: $2,787.00 b. State tax credit: Total taxable wages: $46,450.00 Credit against tax: x 5.4% Total credit: $2,508.30 c. Net FUTA tax: $2,787.00 - $2,508.30 = $278.70

Under the management theory of situational leadership, under which management style would a manager be likely to control the job and the procedures while relying on personal communication with EEs to coach them in performing the job? (13.1/VC) a. High task/high relationship b. Low task/high relationship c. Low task/low relationship d. High task/low relationship

a. High task/high relationship

What is the term for the income tax an EE would have paid if the EE had remained in the US rather than taking a foreign assignment? a. Hypothetical tax b. Excise tax c. Equalization tax d. Gift tax

a. Hypothetical tax

Where does the ER send Form 1099-MISC? a. IRS b. SSA c. USCIS d. Wage and Hour Division

a. IRS

Don earns $600 per week in 2018, claims single and zero withholding allowances on his Form W-4, and contributes $25 per week to his ER's cafeteria plan for medical and dental insurance. Using the wage-bracket method, Don's FITW if the contribution is after-tax is $60.00. If the contribution is pre-tax, Don's FITW is $57.00. The SS tax rate is 6.2%, the Medicare tax rate is 1.45%, and the state tax rate is 10% of the amount withheld for FIT. a. If Don's contribution is pre-tax, calculate his net pay for the week. b. If Don's contribution is after-tax, recalculate his net pay for the week.

a. If the contribution is pre-tax: Regular wages $600.00 Medical and dental -25.00 FITW -57.00 SS ($600 - 25) x 6.2% -35.65 Med ($600 - 25) x 1.45% - 8.34 SITW $57.00 x 10% - 5.70 Net Pay: $468.31 b. If the contribution is after-tax: Regular wages $600.00 FITW -60.00 SS $600 x 6.2%) -37.20 Med $600 x 1.45% - 8.70 SITW $60.00 x 10% - 6.00 Medical and dental -25.00 Net Pay: $463.10

What financial statement shows the net income or net loss of a business? a. Income statement b. Balance sheet c. Statement of owner's equity d. Statement of cash flow

a. Income statement

Copy A of Form W-2 must be sent to the SSA no later than: (8.8-2/IIC) a. January 31 b. February 15 c. Last day of February d. March 31

a. January 31

Where are business transactions first recorded? a. Journal b. General ledger c. Trial balance d. Balance sheet

a. Journal

To qualify as an executive exempt from the minimum wage and OT requirements of the FLSA, what must the EE's responsibilities include? (2.4-1/IB) a. Manage 2 or more FT equivalent EEs b. Receive a salary of at least $1,500 per week c. Have no ability to hire and fire d. Nonexempt duties performed exceed 30% of time worked

a. Manage 2 or more FT equivalent EEs

Which of the following requirements would not appear in a mid-level payroll job description? a. Maximum age b. Minimum education c. Specialized skills d. Key responsibilities

a. Maximum age

Which day of the week occurs 53 times in 2018? a. Monday b. Thursday c. Tuesday d. Wednesday

a. Monday

Blaire Textiles electronically files all of its information returns--1,400 Forms W-2--on time with the SSA, 30 of which contain incorrect information. Corrections were filed on May 10. a. How many returns are subject to penalty? b. What is the penalty?

a. No penalty is imposed for 10 of the failures to provide correct information (i.e., the greater of 10 or 0.5% x 1,400 = 7). Late returns subject to penalty: 30 - 10 = 20 b. 20 x $100 = $2,000 since the corrections were made more than 30 days after the due date (January 31) but before August 1.

World Wide Express electronically files all of its information returns--2,600 Forms W-2--on time with the SSA, 40 of which contain incorrect information. Corrections were filed on May 30. a. How many returns are subject to penalty? b. What is the penalty?

a. No penalty is imposed for 13 of the failures to provide correct information (i.e., the greater of 10 or 0.5% x 2,600 = 13) Late returns subject to penalty: 40 - 13 = 27 b. 27 x $100 = $2,700 since the corrections were made more than 30 days after the due date (January 31) but before August 1.

Each of the following behaviors is an example of affiliation other than: a. Not including EEs in lunch and after-work activities b. Putting EEs on project teams and task forces c. Encouraging EEs to join and participate in professional organizations d. Providing EEs with networking opportunities

a. Not including EEs in lunch and after-work activities

When each transaction is described by a business document that proves the transaction did occur, which accounting concept is being applied? a. Objectivity b. Cost c. Matching d. Business entity

a. Objectivity

All of the following items are needed for web-enablement except: a. PCs with extensive memory b. Sufficient Internet infrastructure c. Web-enabling tools d. HRMS application expertise

a. PCs with extensive memory

What is the final test before going "live" with a new system? a. Parallel test b. Spot test c. Stress test d. Conversion test

a. Parallel test

What does a totalization agreement allow an EE to do? (14.2-4/IIF) a. Pay SS tax in only one country b. Pay SS taxes in two countries c. Pay income tax in two countries d. Pay income tax in only one country

a. Pay SS tax in only one country

What method of internal control requires EEs to show identification to get paid, thus discouraging the creation of phantom EEs? a. Physical payouts b. Segregation of duties c. Job rotation d. System edits

a. Physical payouts

All of the following types of evidence support an ER's treatment of a worker as an IC under the "reasonable basis" test except: a. Place of work b. Court decisions c. Private letter rulings d. Past IRS employment tax audits

a. Place of work

What is an IRS decision on how the tax laws apply to a set of facts involving a single taxpayer called? a. Private Letter Ruling b. News Release c. Revenue Ruling d. Revenue Procedure

a. Private Letter Ruling

Which section of the Internal Revenue Code regulates cafeteria plans? a. Section 125 b. Section 127 c. Section 128 d. Section 162

a. Section 125

What may ERs require when implementing direct deposit? (5.3-2/IG) a. That participating EEs authorize the deposit b. That participating EEs deposit their net pay in their checking account c. That new EEs must participate d. That all payroll and systems dept EEs must participate

a. That participating EEs authorize the deposit

A single EE with no dependents earns $43,000 in 2018. The EE claims 12 allowances on a Form W-4 for 2018. Which of the following is correct concerning the Form W-4? a. The EE may claim 12 allowances b. The ER will require the EE to verify the 12 allowances c. The ER will disregard the Form W-4 and withhold as single with no allowances d. The ER will notify the IRS of the claim by submitting a copy of the Form W-4

a. The EE may claim 12 allowances

XYZ Corporation, a semiweekly depositor, has a payroll tax liability of $65,000 on the first Thursday in December 2018. When must the liability be deposited? a. The following Wednesday b. The following Friday c. The 15th of the following month d. With the quarterly Form 941

a. The following Wednesday

In order to use the optional flat rate for determining the federal income tax to withhold from a supplemental wage payment, how must supplemental wage payments made at the same time as a regular wage payment treated? (6.4-4/IIIB) a. The supplemental wages must be identified separately b. The supplemental wages must be combined with the wage payment when calculating taxes c. The supplemental wages must be combined with the wages paid for the last preceding payroll period or with the wages to be paid for the current payroll period d. Supplemental payments can never be paid with regular wage payments

a. The supplemental wages must be identified separately

You are instructed to issue a bonus to EE Sean in the net amount of $4,500 and to tax it as supplemental wages. The following tax rates apply: FIT - 22%, SIT - 5%, SS - 6.2%, Medicare - 1.45%. a. Calculate this check if Sean is $15,000 short of reaching the SS wage limit. b. Calculate this check if Sean is $1,500 short of reaching the SS wage limit.

a. Total tax % = 22% + 5% + 6.2% + 1.45% = 34.65% Gross-up % = 100% - 34.65% = 65.35% Gross earnings = $4,500/0.6535 = $6,886.00 To check: FITW = 22% x $6,886.00 = $1,514.92 SITW = 5% x $6,886.00 = $344.30 SS = 6.2% x $6,866.00 = $426.93 Med = 1.45% x $6,866.00 = $99.85 $6,886.00 - $1,514.92 - 344.30 - 426.93 - 99.85 = $4,500.00 b. SS on $1,500 = .062 x $1,500 = $93 Total to be grossed-up = $4,500 + 93 = $4,593 Total tax % = 22% + 5% + 1.45% = $28.45% Gross-up % = 100% - 28.45% = 71.55% Gross earnings = $4,593/0.7155 = $6,419.29 To check: FITW = 22% x $6,419.29 = $1,412.24 SITW = 5% x $6,419.29 = $320.97 SS = 6.2% x $1,500 = $93.00 Med = 1.45% x $6,419.29 = $93.08 $6,419.29 - $1,412.24 - $320.97 - $93 - $93.08 = $4,500

What are the retention requirements for Form I-9?

at least 3 years after the date of hire or 1 year after the date of termination, whichever is later.

An ER pays for 100% of the insurance for its EEs as part of a sickness and disability benefits plan. Assume an EE received $1,800 in disability pay from a third-party insurer during the first six calendar months of disability and $600 over the seventh and eighth months. How much of the disability pay would be social security and Medicare taxable, and how much is FIT taxable? a. $1,800 FICA and $1,800 FIT taxable b. $1,800 FICA and $2,400 FIT taxable c. $2,400 FICA and $2,400 FIT taxable c. $2,400 FICA and $1,800 FIT taxable

b. $1,800 FICA and $2,400 FIT taxable

In 2018, Wilson Corporation had three EEs. Two of the EEs worked full time and earned salaries of $25,000 each. The third EE worked only part time and earned $3,000. The ER timely paid state unemployment tax equal to 5.4% of each EE's wages up to the state's wage base. How much FUTA tax is due from Wilson Corp for 2018, after the credit for state unemployment taxes is taken? a. $0 b. $102 c. $136 d. $918

b. $102

In 2018, an EE claims married with 5 allowances on Form W-4, and is paid $2,356 every other Wed. Using the wage-bracket tables, how much federal income tax must be withheld from each wage payment. a. $116 b. $119 c. $102 d. $164

b. $119

For 2018, what is the SS tax wage base? a. $118,500 b. $128,400 c. $127,200 d. $117,000

b. $128,400

An ER pays an EE a bonus of $2,000 and chooses to pay the employment taxes on the bonus. The EE lives and works in a state which has no income tax and has year-to-date wages of $55,000. What amount is included in the EE's wages? (3.4-11/ IIIB) a. $2,969.56 b. $2,842.93 c. $2,000.00 d. $1,347.00

b. $2,842.93 net pay / net percent = gross pay $2000 / 0.7035 (1 - 0.22 (supplemental wage tax) + .0765 (FICA))

Barbara is an hourly paid EE making $7.48/hour. She is scheduled to work 35 hours a week. For the past week, Barbara worked 43 hours. Under the FLSA, what is the minimum she must receive as gross pay? a. $261.80 b. $332.86 c. $310.42 d. $321.64

b. $332.86 ($7.48 x 43) + ($7.48 x 0.5 * 3)

A nonexempt EE's hourly rate of pay is $8.00 per hour and the EE is paid 8 hours for holiday during the week. What is the EE's gross pay for the week under the FLSA if the EE works the following hours? (2.6-3/IIIA) Sun: 0, Mon: 8, Tue: 0, Wed: 8, Thu: 8, Fri: 8, Sat: 4 a. $288.00 b. $352.00 c. $368.00 d. $384.00

b. $352.00

An EE claims single and one withholding allowance and is paid $550 every Fri in 2018. Using the wage-bracket tables, how much federal income tax must be withheld? a. $34 b. $45 c. $58 d. $54

b. $45

What must a nonexempt EE be paid under the FLSA if the EE is paid $10.00 per hour, works 40 hours in a workweek, and is paid 8 hours for a holiday in accordance with company policy? (2.6-4/IB, IIIA) a. $400.00 b. $480.00 c. $500.00 d. $520.00

b. $480.00

Cherise Pitts has two EEs who are paid $17,000 and $5,000, respectively, during 2018. If Cherise timely pays 5.4% of their wages for state unemployment tax, what is the amount of her 2018 FUTA tax liability after the state tax credit is taken? a. $0 b. $72 c. $720 d. $96

b. $72

On which form are payments to independent contractors reported to the IRS? (8.12-1/IIC) a. W-2 b. 1099-MISC c. SS-8 d. 1099-INT

b. 1099-MISC

An EE subject to a student loan garnishment loses her job and gets another one six months later. How long is it before the garnishment can be reinstated? a. 6 months from her date of reemployment b. 12 months from her date of reemployment c. 9 months from her date of reemployment d. No grace period is allowed

b. 12 months from her date of reemployment

If a payer receives a "B" notice from the IRS, how long does the payer have to send a copy to the payee along with Form W-9, Request for Taxpayer Identification Number and Certification? a. 30 days b. 15 days c. 10 days d. 5 days

b. 15. days

What percentage of the maximum foreign earned income exclusion is used to determine the base housing amount? a. 14% b. 16% c. 18% d. 30%

b. 16%

EE Ben, an alien, is present in the US for 155 days during the current year, 123 days during the first preceding year, and 144 days in the second preceding year. How many days is Ben present in the US during the current year under the substantial presence test? a. 150 days b. 220 days c. 223 days d. 365 days

b. 220 days 155 days in the current year + 41 (1/3 x 123) days in the first preceding year + 24 (1/6 x 144) days in the second preceding year = 220 days

How long does the ADEA require that records of an EE's name, address, date of birth, occupation, pay rate, and compensation be kept? a. 2 years b. 3 years c. 4 years d. 5 years

b. 3 years

How long are FUTA tax records normally required to be retained? a. 3 years b. 4 years c. 5 years d. Indefinitely

b. 4 years

A governmental educational institution may offer qualified deferred compensation under what section of the Internal Revenue Code? (4.6-3/ID) a. 401(k) b. 403(b) c. 408(k)(6) d. 501(c)(18)(D)

b. 403(b)

Adjustments for fractional cents are reported on what line of Form 941? a. 8 b. 7 c. 4 d. 9

b. 7

What is a "Request for Proposal"? (12.4-3/IVD) a. A vendor's written bid to the prospective purchaser of the service or software b. A company's description of its structure, requirements, and expectations of a new system prepared for the vendor c. The project team's recommendations to the appropriate approval committee d. The agreement between the company and vendor describing the software to be provided

b. A company's description of its structure, requirements, and expectations of a new system prepared for the vendor

Which of the following facts does not indicate the intent to meet the bona fide residence test? a. Purchase of a home or signing a long-term lease in a foreign country b. A temporary assignment of up to three months c. Involvement in the cultural and social life of a foreign country d. The type of visa or residence permit secured by the EE

b. A temporary assignment of up to three months

Which of the following participants in the direct deposit process distributes EFT payments to the receiving financial institutions? a. ODFI b. ACH c. RDFI d. FRB

b. ACH

The definition of a "newly hired" EE for the purposes of new hire reporting includes an EE who was previously employed by the ER but has been separated from that prior employment for: a. At least 6 weeks b. At least 60 consecutive days c. At least 2 calendar months d. At least 30 consecutive days

b. At least 60 consecutive days

What system is designed to eliminate the time taken to punch in and out and to write and sign information on time cards, as well as the errors that such procedures can cause? a. Software system b. Automated time and attendance system c. In-house system d. Time-sharing system

b. Automated time and attendance system

Which of the following states allows ERs to use the federal Form W-4 to calculate state income tax withholding? a. AZ b. CA c. MI d. NC

b. CA

Which of the following deductions from an EE's pay has the highest priority? (9.1-2/IIIB) a. Credit union b. Child support c. Creditor garnishment d. EE benefits

b. Child support

What account is credited for child support withheld? a. Child support expense b. Child support payable c. Accounts payable d. Payroll taxes expense

b. Child support payable

A manager building a successful team must deal with EEs who have different personal styles. Each of the following styles is represented on a team other than: a. Contributors b. Controllers c. Collaborators d. Communicators

b. Controllers

When a company purchases a computer on credit for $2,500, which of the following journal entries is made? a. Debit assets and debit liabilities b. Debit assets and credit liabilities c. Credit assets and debit liabilities d. Credit assets and credit owner's equity

b. Debit assets and credit liabilities

What entries are required to record $45,000.00 in salaries earned between March 27 and March 30 but not paid until April 6? (11.5/VIIC) a. Debit assets, credit salary expense b. Debit salary expense, credit salary payable c. Debit salary payable, credit payroll checking d. Debit salary payable, credit salary expense

b. Debit salary expense, credit salary payable

A profit sharing pension plan is what type of pension plan? (4.6-1/ID) a. Defined Benefit Plan b. Defined Contribution Plan c. Cash or Deferred Arrangement d. Nonqualified Deferred Compensation

b. Defined Contribution Plan

All of the following items of information are needed to calculate the value of group-term life insurance except: (3.3-1/IIIA) a. EE's age at December 31 b. ER's cost of the group-term life insurance c. IRS table of group-term life insurance values d. EE's after-tax group-term life insurance deduction

b. ER's cost of the group-term life insurance

Who pays FUTA tax? a. EEs only b. ERs only c. Both EEs and ERs d. Statutory nonEEs only

b. ERs only

What government agency enforces the Equal Pay Act? a. National Labor Relations Board b. Equal Employment Opportunity Commission c. Wage and Hour Division d. Federal Trade Commission

b. Equal Employment Opportunity Commission

Which of the following areas is not governed by the Portal-to-Portal Act? a. Travel time b. Equal pay for equal work c. De minimis time d. Preliminary and postliminary activities

b. Equal pay for equal work

Which of the following laws established minimum wage and OT standards in the US? a. Civil Rights Act b. Fair Labor Standards Act c. Age Discrimination in Employment Act d. Federal Insurance Contributions Act

b. Fair Labor Standards Act

Which of the following forms must be submitted to an IC (who is paid at least $600) after the end of the year for services performed during that year? a. Form W-2 b. Form 1099-MISC c. Form 1096 d. Form SS-8

b. Form 1099-MISC

What form may EEs receiving $20.00 or more in tips per month use to report the tips to their ER? (3.4-27/IIC) a. Form SS-8 b. Form 4070 c. Form 3903 d. Form 8919

b. Form 4070

Which of the following forms is used by the EE to report tips to the ER? a. Form 8821 b. Form 4070 c. Form 8027 d. Form 1099-MISC

b. Form 4070

On what form must ERs covered by FUTA report their liability? a. Form 945 b. Form 940 c. Form W-3 d. Form 941

b. Form 940

What form must be filed to report and explain corrections to amounts previously reported on Form 941? a. Form 941-M b. Form 941-X c. Form 944-X d. An amended Form 941

b. Form 941-X

For payments made to a disabled EE by a third party who is not an agent, the third party is not required to withhold federal income tax unless the EE requests that a certain amount be withheld by furnishing the third party with: a. Form W-4 b. Form W-4S c. Form W-4P d. Form 1099-R

b. Form W-4S

EEs' paychecks are mailed from their corporate office on Mon for a Thu payday. Because of a disaster in the area, no mail will be delivered until Sat, when the EEs are not at work. So the EEs can get paid during this week, the ER wires cash wages to the EEs on Friday. The checks arrive at the office on Mon. When are the wages considered paid? a. Thu b. Fri c. Sat d. Mon

b. Friday

The ER's Tax Guide, Circular E is found in which IRS Publication? a. IRS Pub. 12 b. IRS Pub. 15 c. IRS Pub. 18 d. IRS Pub. 37

b. IRS Pub. 15

After the new system has been selected and approved, what is the next step in the selection process? a. Specify scope b. Implementation c. Review d. Define requirements

b. Implementation

Which of the following is NOT an EE benefit of using paycards to pay EE wages? a. Eliminating check cashing fees b. Increased risk of paycheck theft c. Protection from loss because paycard can be replaced d. No time or geographic limitations on funds access

b. Increased risk of paycheck theft

What is the program that allows for the exchange of information between two computer systems? (12.2/IVB) a. Integration b. Interface c. On-line d. Time Sharing

b. Interface

ERs must provide Form W-2 to EEs no later than: (8.8-1/IIC) a. December 31 b. January 31 c. February 28 d. March 31

b. January 31

Which of the following features is a possible disadvantage of the direct deposit system to the ER? a. Direct deposit b. Loss of float c. Check printing cost d. Check storage cost

b. Loss of float

All of the following features are advantages of an in-house payroll system except: a. Convenient access b. Low fixed costs c. Scheduling flexibility d. System security

b. Low fixed costs

All of the following features are disadvantages of using a service provider for processing your payroll except: a. Lack of control over security b. Low fixed costs c. No control over breakdowns d. Responsibility for filing errors

b. Low fixed costs

Which of the following systems is least likely to interface with payroll? a. HR b. Marketing c. Benefits d. Accounting

b. Marketing

When revenue and expenses are recorded in the same accounting period, which accounting concept is being applied? a. Business entity b. Matching c. Realization d. Continuing concern

b. Matching

Which of the following entities is a foreign country for purposes of qualifying for the Section 911 exclusions? a. Puerto Rico b. Mexico c. Guam d. Virgin Islands

b. Mexico

What are the three main areas regulated by the FLSA? (2.1/IB) a. Minimum wage, OT, garnishments b. Minimum wage, OT, child labor c. Equal pay, child labor, garnishments d. Minimum wage, child labor, garnishments

b. Minimum wage, OT, child labor

How frequently are new ERs that anticipate having an annual tax liability of more than $1,000 required to make withheld federal income and employment tax deposits? a. Semiweekly b. Monthly c. The next banking day d. Quartely

b. Monthly

EEs covered by collective bargaining agreements may be exempt from which provisions of the FLSA? a. Minimum wage requirements b. OT pay requirements c. Minimum wage and OT pay requirements d. Child labor restrictions

b. OT pay requirements

What is the due date for depositing FUTA taxes for the third quarter? a. September 30 b. October 31 c. November 30 d. December 31

b. October 31

The ER prepares an automated file of direct deposit records that indicates where its EEs' pay is to be deposited. What is the name of the financial institution where this file is then sent? a. Automated Clearing House b. Originating Depository Financial Institution c. NACHA d. Receiving Depository Financial Institution

b. Originating Depository Financial Institution

All of the following facts and circumstances would be typical of an IC except: a. Works off site b. Paid by the hour c. Furnishes own tools d. Sets own work hours

b. Paid by the hour

What document records payroll data for each payroll period? a. Earnings record b. Payroll register c. Payroll ledger d. Accounts receivable ledger

b. Payroll register

What is the process of transferring entries from the journal to the general ledger called? a. Journalizing b. Posting c. Footing d. Balancing

b. Posting

What is the main objective of any payroll system? a. Prepare internal reports b. Provide for compliance with federal, state, and local withholding, depositing, and reporting requirements c. Accurately paying EEs in a restricted time frame on payday d. Maintain adequate records of all data and transactions

b. Provide for compliance with federal, state, and local withholding, depositing, and reporting requirements

All of the following workers are statutory EEs except: a. Full-time life insurance salespersons b. Qualified real estate agents c. Homeworkers d. Traveling or city salespersons

b. Qualified real estate agents

A $260 per month parking space provided by an ER to an EE is defined as a: (3.2-1/IIIA) a. De minimis fringe benefit b. Qualified transportation fringe benefit c. No-additional-cost fringe benefit d. Qualified EE discount

b. Qualified transportation fringe benefit

Which of the following conditions of employment is governed by the FLSA? a. The frequency of pay for EEs b. Recordkeeping requirements c. Hours worked by EEs over the age of 16 d. Lunch and rest break requirements

b. Recordkeeping requirements

What is a decision by the IRS on how a section of the IRC is to be applied to a certain given set of facts called? a. Revenue Procedure b. Revenue Ruling c. New Release d. Private Letter Ruling

b. Revenue Ruling

During 2018, a corporate officer is paid a semimonthly salary of $9,000 on the 15th and last day of the month. How much social security and Medicare taxes should be withheld from the officer's Aug 31 paycheck (i.e., 16th pay period)? a. SS $0.00, Med $0.00 b. SS $0.00, Med $130.50 c. SS $74.40, Med $130.50 d. SS $558.00, Med $130.50

b. SS $0.00, Med $130.50

What program does the SSA provide to verify EE's SSNs? a. Immigration Reform and Control Act b. Social Security Number Verification Service c. New Hire Reporting d. Online TIN Verification

b. Social Security Number Verification Service

Which of the following payments is not foreign earned income? a. Professional fees b. Social security benefits c. Tax reimbursements d. Cost of living allowances

b. Social security benefits

Which of the following laws governs unclaimed wages? a. Federal wage-hour laws b. State escheat laws c. Equal employment opportunity laws d. Labor relations laws

b. State escheat laws

Which of the following requirements regulates the handling of unclaimed wages? (5.5/IIA) a. Internal Revenue Service b. State escheat laws c. The Walsh-Healy Act d. The Consumer Credit Protection Act

b. State escheat laws

What are "escheat" laws? a. Federal laws governing the treatment of unclaimed wages as abandoned property b. State laws governing the treatment of unclaimed wages as abandoned property c. State laws protecting EEs from their ER d. State laws outlining the frequency with which EEs are paid

b. State laws governing the treatment of unclaimed wages as abandoned property

What is a warning or alert called that is built into the system that checks for errors and either corrects the error or notifies the operator that something may be wrong? a. Monitor edit b. System edit c. Control edit d. Procedure edit

b. System edit

Mark contributes $75 per month to a FSA as part of a cafeteria plan to pay for uncovered medical and dental expenses for his family. At the end of the year (the plan has no grace period or carryover), Mark has $250 left in the account. What happens to the balance in the account? a. The balance will be carried over to the following year b. The balance is forfeited c. It will be included in Mark's income d. It can be transferred to a separate plan

b. The balance is forfeited

Which of the following developments is not a circumstance that would allow benefit changes during the plan year under a cafeteria plan? a. A strike or lockout b. The company institutes a 1% across-the-board salary reduction c. A change in the participant's legal marital status d. The EE terminates during the plan year

b. The company institutes a 1% across-the-board salary reduction

Northwestern Shipping Corp accumulates a payroll tax liability on the Friday before Labor Day of $131,640. When is the deposit due? a. The Friday before Labor Day b. The following Tuesday c. The following Wednesday d. The following Friday

b. The following Tuesday

When must a semiweekly depositor with a Friday payday deposit its employment tax liability? a. The following Tuesday b. The following Wednesday c. The following Thursday d. The following Friday

b. The following Wednesday

What action must occur for the ER to correctly designate a worker as an independent contractor? (1.2-1/IA) a. The worker signs an agreement of independent contractor status b. The worker meets the common law test of independent contractor status c. The worker is part-time or temporary d. The worker uses the ER's tools

b. The worker meets the common law test of independent contractor status

What is the Medicare wage base for 2018? a. $128,400 b. There is no limit on taxable Medicare wages c. $127,200 d. $200,000

b. There is no limit on taxable Medicare wages

Which of the following statements is true concerning EE salary deferrals to a 401(k) plan? a. They are subject to FIT b. They are subject to FICA c. They are subject to FIT and FICA d. EE contributions are not taxable

b. They are subject to FICA

What are the due dates for Form W-2? a. To EEs by Jan 31 and to SSA by the last day of Feb (Mar 31 if filed electronically) b. To EEs and SSA by Jan 31 c. To EEs and IRS by Feb 28 d. To EEs by Jan 31 and to IRS by Feb 28

b. To EEs and SSA by Jan 31

What phase of in-house system design follows the Development Phase? (12.4/IVE) a. Evaluation Phase b. User Testing Phase c. Analysis Phase d. Conceptual Definition Phase

b. User Testing Phase

What do situational leadership proponents emphasize? a. Using a style that comes naturally b. Whatever style fits the demands of the particular job c. Payroll dept edicts d. Company edicts

b. Whatever style fits the demands of the particular job

When does an ER stop withholding for a federal tax levy? a. When Form 668-W is received b. When Form 668-D is received c. When Form 668-S is received d. When the IRS collection officer calls

b. When Form 668-D is received

Which of the following benefits is not a qualified benefit for a cafeteria plan? a. Coverage under accident and health insurance plans (medical, dental, vision, sick pay, etc.) b. Working condition fringes c. Participating in a 401(k) plan cash or deferred arrangement d. Group-term life insurance in excess of $50,000

b. Working condition fringes

All of the following skills are management skills except: (13.2/VC) a. Strategic planning b. Writing documentation c. Defining goals d. Defining subtasks

b. Writing documentation

What is the threshold for requiring ERs to report to EEs their charitable contributions made through payroll deductions during a calendar year so the EE may claim the contribution on a personal income tax return? a. more than $3,000 in total deductions for the year b. any amount deducted during the year c. more than $250 deducted from a single paycheck d. more than $600 in total deductions for the year

b. any amount deducted during the year

What amount would be included in the EE's income when the ER chooses to pay the taxes on a bonus of $800.00 and to use the supplemental optional flat rate for calculating the FIT? The EE's YTD earnings are $17,500.00 and the EE is not subject to any SIT. (3.4-11/IIIA) a. $562.80 b. $1,000.00 c. $1,137.17 d. $1,187.82

c. $1,137.17

What is the maximum amount that can be excluded from gross income under the foreign earned income exclusion for 2018? a. $101,300 b. $102,100 c. $103,900 d. Cannot exclude income earned abroad

c. $103,900

What are the maximum wages, if any, on which social security tax is withheld? (6.7-2/IC) a. $118,500 b. $127,200 c. $128,400 d. There is no maximum

c. $128,400

During 2018, Matt qualified for the foreign housing cost exclusion under the physical presence test for 335 days, spending $20,000 on reasonable housing expenses. The maximum foreign earned income exclusion on January 1, 2018 was $103,900. What was Matt's base housing amount for 2018? a. $16,624.00 b. $4,740.75 c. $15,259.25 d. $14,182.00

c. $15,259.25 Daily base housing amount = annual base housing amount ($103,900 x .16)/number of days in the year ($16,624/365 = $45.55) Base housing amount = daily base housing amount x number of qualifying days ($45.55 x 335 = $15,259.25)

For 2018, the maximum amount of salary that an EE may elect to defer to a 401(k) plan that does not allow catch-up contribution is: a. $17,500 b. $18,000 c. $18,500 d. $55,000

c. $18,500

Under 403(b), where an annuity plan includes a salary reduction agreement but does not allow catch-up contributions, assuming no other plan exists, what is the maximum amount EEs can defer to the plan in 2018? a. $17,500 b. $18,000 c. $18,500 d. Maximum exclusion allowance

c. $18,500

What is the minimum a nonexempt EE must be paid under the FLSA when the EE is paid $8.00 per hour for the first 30 hours of work and $10.00 per hour for the next 20 hours of work in a workweek? (2.6-4/IB, IIIA) a. $440.00 b. $480.00 c. $484.00 d. $490.00

c. $484.00 ($8 x 30)+($10 x 20) = $440 $440/50 = $8.80/hour 10 OT hours x ($8.80 x 0.5) = $44 $440 + $44 = $484

A nonexempt EE who is paid $10.00 per hour works the following hours in a workweek. What must the EE be paid under the FLSA? (2.6-3/IIIA) Sun: 0, Mon: 8, Tue: 8, Wed: 10, Thu: 8, Fri: 8, Sat: 4 a. $400.00 b. $460.00 c. $490.00 d. $550.00

c. $490.00

ER-provided dependent care assistance must be reported in Boxes 1, 3, and 5 of Form W-2 when the assistance exceeds what amount? a. $2,000 b. $3,000 c. $5,000 d. $7,500

c. $5,000

Under a dependent care assistance FSA, EEs may be reimbursed up to what amount of dependent care expenses for each plan year? a. $2,000 b. $3,000 c. $5,000 d. $10,000

c. $5,000

In 2018, what is the maximum amount of contributions that can be made by an EE and an ER to the EE's account in a defined contribution plan? a. $18,500 b. $24,500 c. $55,000 d. $275,000

c. $55,000

An ER's wages subject to FUTA tax liability for the first 3 quarters of 2018 are $35,000, $30,000, and $28,000 respectively. How much FUTA tax must be deposited in the third quarter? a. $58 b. $744 c. $558 d. $668

c. $558 Q3 is 1st quarter that FUTA tax is over $500

An EE who is paid $15.00 per hour works a 43-hour week. The EE is claiming married with 3 withholding allowances, is paid weekly, and has no voluntary or required deductions other than withholding taxes. The EE has YTD wages of $25,000.00 and lives and works in a state with no state income tax. Using the percentage method, calculate the EE's net pay. (2.6-3 & 6.4-2/IIA, IIIB) a. $589.65 b. $632.49 c. $595.82 d. $646.89

c. $595.82

What is the threshold amount for requiring reporting of service payments to individuals who are not EEs on Form 1099-MISC? a. $10 b. $400 c. $600 d. $550

c. $600

Payments made by a business to non-corporate independent contractors for services rendered must be reported to the IRS when the payments exceed: (8.12-1/IIC) a. $1,000.00 for the calendar year b. $600.00 in the last 12 months c. $600.00 for the calendar year d. $1,500.00 for the calendar year

c. $600.00 for the calendar year

A federal tax levy is received with the EE claiming married filing jointly with two exemptions on Form 668-W. The EE's biweekly gross pay is $1,000.00, and the EE claims married with 2 allowances on Form W-4. The EE has no other voluntary or involuntary deductions from pay and is not subject to state income tax. Using the wage-bracket method to calculate federal income tax withholding, what amount, if any, must be paid to the IRS biweekly for the federal tax levy? (9.1-1/IIIB) a. $819.23 b. $486.50 c. $81.27 d. $0.00

c. $81.27

How long must an ER maintain records it is required to keep under the Family and Medical Leave Act? a. 4 years b. 6 years c. 3 years d. 1 year

c. 3 years

Documents relating to federal income, SS, and federal unemployment taxes must be retained for a minimum of: (10.2/IID) a. 2 years b. 3 years c. 4 years d. 5 years

c. 4 years

If an ER fails to withhold FICA taxes from a worker it misclassifies as an IC and does not file a Form W-2 or a Form 1099 for that worker, what penalty may the IRS impose? a. 10% of the EE's share of FICA taxes b. 20% of the EE's share of FICA taxes c. 40% of the EE's share of FICA taxes d. 100% of the EE's share of FICA taxes

c. 40% of the EE's share of FICA taxes

The Family and Medical Leave Act applies to private sector ERs with: a. 75 or more EEs b. 150 or more EEs c. 50 or more EEs d. 50 or fewer EEs

c. 50 or more EEs

Under the CCPA, what is the maximum amount that can be withheld from an EE's wages for spouse or child support when the EE is supporting another family and is not in arrears for the support owed? a. 50% of gross pay b. 50% of take-home pay c. 50% of disposable pay d. 55% of disposable pay

c. 50% of disposable pay

At what age is an EE no longer subject to a 10% excise tax when the EE receives a distribution from his or her qualified retirement plan? a. 60 b. 62 c. 59 1/2 d. 58

c. 59 1/2

What is the FUTA tax rate in 2018? a. 7.65% b. 6.2% c. 6.0% d. 5.4%

c. 6.0%

For 2018, at what rate is social security tax withheld from an EE's wages? (6.7-1/IC) a. 4.20% b. 1.45% c. 6.20% d. 7.65%

c. 6.20%

Under the CCPA, what is the maximum amount that can be withheld from an EE's wages for spouse or child support when the EE is not supporting another family and is 15 weeks in arrears for the support owed? a. 65% of gross pay b. 60% of disposable pay c. 65% of disposable pay d. 55% of disposable pay

c. 65% of disposable pay

If the records required by the FLSA are maintained at a central location, how soon after a DOL request must the ER make them available? a. 24 hours b. 48 hours c. 72 hours d. 10 days

c. 72 hours

According to NACHA--The Electronic Payments Association, what was the portion of the US workforce that had their pay directly deposited in 2016? a. 90% b. 25% c. 82% d. 74%

c. 82%

Which of the following workers would be considered an IC? (1.2-1/IA) a. A life insurance agent b. A lawyer hired on a project-by-project basis with the company providing secretarial services and office space c. A lecturer who is paid a percentage of the money collected at fund raisers when speaking on behalf of a nonprofit clinic d. An outside salesperson who is paid by commission but is guaranteed a minimum salary

c. A lecturer who is paid a percentage of the money collected at fund raisers when speaking on behalf of a nonprofit clinic

What is a defined benefit pension plan? (4.6-1/ID) a. A plan in which benefits are based upon EE contributions b. A plan in which benefits are based upon ER contributions c. A plan is which EEs are promised a certain level of benefits d. A plan in which EEs are required to make contributions

c. A plan in which EEs are promised a certain level of benefits

All of the following aspects of a job may be delegated except: a. Authority b. Responsibility c. Accountability d. Job tasks

c. Accountability

The special discrimination tests for 401(k) plans are both based on the ADP of EEs who are eligible to participate in the plan. What does ADP mean? a. Automatic deferred pension b. Actual deferred pension c. Actual deferral percentage d. Actual defined percentage

c. Actual deferral percentage

Which of the following steps must an ER take before initiating an International ACH Transaction (IAT)? a. Contact the Office of Foreign Assets Control to let them know about the IAT b. No steps need to be taken c. Add coding to the transaction that identifies it as an IAT d. Contact the RDFI to let them know that an IAT is being processed.

c. Add coding to the transaction that identifies it as an IAT

What is sick pay? (4.3-1/IIIA) a. Amounts paid when the EE has a doctor appt b. Amounts paid when the EE's child has a doctor appt c. Amounts paid due to sickness or illness d. Amounts paid due to job-related sickness or illness

c. Amounts paid due to sickness or illness

Which of the following individuals is performing as a manager? a. A door-to-door salesperson b. A person repairing a machine c. An individual checking the quality of work performed by others d. An individual deciding which of two assigned tasks to do next

c. An individual checking the quality of work performed by others

An EE who uses a company car which is available for personal use and has a fair market value of $37,000.00 may value the personal use under what method? (3.2-2/IIIA) a. Cents-per-mile b. Commuting valuation c. Annual lease value d. EE's estimate of value

c. Annual lease value

Each of the following individuals would be classified as an EE except: a. Controller of a company b. College professor c. Attorney (solo practitioner) d. City police officer

c. Attorney (solo practitioner)

An EE receives serious car injuries while away from work on February 15, 2018 and does not return to work until November 1, 2018. Through what date must the ER withhold and pay social security, Medicare, and FUTA taxes on sick pay given to the EE by the ER? a. July 15, 2018 b. August 15, 2018 c. August 31, 2018 d. September 1, 2018

c. August 31, 2018

What financial statement presents the financial position of a business entity by summarizing assets, liabilities, and owner's equity? (11.7-1/VIIA) a. Income Statement b. Trial Balance c. Balance Sheet d. Cash Flow Statement

c. Balance Sheet

If a monthly depositor accumulates $100,000 in tax liability on any day during a month, how does this affect the ER's depositor status? a. Remains monthly b. Becomes semiweekly for the rest of the year c. Becomes semiweekly for the rest of the current year and all of next year d. Becomes a one-day depositor for the rest of the year

c. Becomes semiweekly for the rest of the current year and all of next year

All of the following benefits are taxable compensation except: (3.2-1/IIIA) a. Personal use of a company car b. Noncash sales prizes and awards c. Business use of a company car d. Back pay award

c. Business use of a company car

What is the IRS definition of wages? (3.1/IIIA) a. Monies received as benefits paid by the ER b. Regular pay plus OT compensation c. Compensation received for services rendered d. Commissions and bonuses

c. Compensation received for services rendered

When the same accounting concepts are applied in the same way in each accounting period, which accounting concept is being applied? a. Objectivity b. Continuing concern c. Consistency d. Business entity

c. Consistency

To satisfy federal, state, and local taxing agency requirements, which copies of the Form W-2 must the EE receive by Jan 31? a. Copies A, B, & C b. Copies B, C, & 1 c. Copies B, C, & 2 d. Copies B, 1, & 2

c. Copies B, C, & 2

Which of the following facts disqualifies an EE from the executive exemption from minimum wage and OT? (2.4-1/IB) a. Having the authority to hire EEs b. Being paid a salary of $1,000.00 per week c. Directing the work of one EE d. Spending more than 20% of time worked on nonexempt duties

c. Directing the work of one EE

Each of the following transactions is recorded as an expense except: (11.1/VIIA) a. Vacation pay b. Cost of EE benefits c. EE portion of SS d. ER portion of SS

c. EE portion of SS

When depositing withheld income and employment taxes, what method of deposit must be used by an ER? a. Form 8109 b. Mailing through the USPS c. EFTPS d. Delivering a check to a financial institution

c. EFTPS

What are disposable earnings? (9.1-2/IIIB) a. Contributions deducted from the EEs' pay, which are a liability for the ER b. Contributions of EEs to a disability benefit fund c. Earnings remaining after withholding for income taxes and other amounts required by law d. Earnings remaining after a federal tax levy is deducted

c. Earnings remaining after withholding for income taxes and other amounts required by law

In what account is the payment of salaries and wages recorded? a. Asset b. Liability c. Expense d. Revenue

c. Expense

An agreement is made between the ER and the EEs whereby the ER pays the EEs all or part of their salary while they are receiving WC benefits, in return for which the EEs turn over their WC benefits to the ER. Under such an arrangement, any amount paid in excess of the EE's WC benefits is wages subject to: a. FICA only b. FIT only c. FICA and FIT d. Excess is not taxable

c. FICA and FIT

Full-time life insurance salespersons paid solely by commission are exempt from: a. FICA taxes b. SS tax only c. FUTA tax d. FIT and FUTA taxes

c. FUTA tax

Which of the following laws and regulations does not regulate EFT? a. Regulation E b. Title IX of the Consumer Credit Protection Act c. Fair Labor Standards Act d. Electronic Fund Transfer Act

c. Fair Labor Standards Act

When must an EE file a new Form W-4 to continue exempt status from 2017? (6.3-1/IIB) a. When the EE receives more than $350.00 in unearned income b. December 31 c. February 28 d. When the EE earns more than $455.00 a week

c. February 28

If all the following withholding orders are received at the same time, which must the ER deduct first? a. Creditor garnishment b. Student loan garnishment c. Federal tax levy d. State tax levy

c. Federal tax levy

In a computer system, what is the organization of related data called? (12/IVB) a. Job b. Field c. File d. Record

c. File

Other than an EE's name, address, and SSN, and the ER's name, address, and EIN, federal law requires that a new hire report must include the EE's: a. Date of birth b. Health insurance coverage c. First day of work for pay d. Starting salary or hourly rate of pay

c. First day of work for pay

What form is filed to claim bona fide resident status? a. Form 1042 b. Form 2442 c. Form 2555 d. Form 1116

c. Form 2555

What form does an ER receive from the IRS to levy on an EE's salary? a. Form 668-D b. Form 916 c. Form 668-W d. Form 2159

c. Form 668-W

Which of the following forms may be completed and submitted to the IRS to determine the employment status of an individual for federal income and employment tax purposes? a. Form SS-4 b. Form SS-5 c. Form SS-8 d. Form W-9

c. Form SS-8

Which form is completed by recipients of pension and annuity payments to determine the amount to withhold? a. Form W-4 b. Form W-4S c. Form W-4P d. Form 1099-R

c. Form W-4P

All of the following areas are regulated by the FLSA except: (2.1/IB) a. Child labor b. OT compensation c. Holiday payments d. Minimum wage

c. Holiday Payments

Under the FLSA, all of the following payments are included in the regular rate of pay except: (2.6-3/IB) a. Remuneration paid EEs b. Salaries, commissions, bonuses c. Holiday pay d. Room and board provided by ER

c. Holiday pay

Which of the following is NOT an ER benefit of using paycards to pay EE wages? a. Reduced costs for off-cycle checks b. All EEs are eligible for electronic pay c. Increased escheat issues d. Increased EE productivity because of less time spent cashing paychecks

c. Increased escheat issues

What is the due date for Form 940? a. December 31 b. January 15 c. January 31 d. February 15

c. January 31

In what document are financial transactions first posted? (11.3/VIIC) a. Chart of Accounts b. General Ledger c. Journal d. Balance Sheet

c. Journal

What is the Form 941 tax deposit lookback period for calendar year 2018? a. Jul 1, 2015 - Jun 30, 2016 b. Jan 1, 2015 - Dec 31, 2015 c. Jul 1, 2016 - Jun 30, 2017 d. Jan 1, 2017 - Dec 31, 2017

c. July 1, 2016 - June 30, 2017

On May 31, a monthly depositor's payroll tax liability is $15,000. When is the deposit due? a. June 7 b. June 1 c. June 15 d. June 30

c. June 15

FUTA and SUTA taxes payable are what types of accounts? a. Owner's equity b. Assets c. Liabilities d. Net worth

c. Liabilities

What kind of account is Accrued Salaries Payable? (11.1-1/VIIA) a. Asset b. Expense c. Liability d. Revenue

c. Liability

All of the following features are advantages of an automated time and attendance system except: a. Less time spent on processing b. Fewer errors introduced during processing c. More time spent on administrative tasks d. Decreased costs

c. More time spent on administrative tasks

With which of the following countries does the US not have a totalization agreement? a. Belgium b. Finland c. New Zealand d. Sweden

c. New Zealand

Which of the following individuals are statutory nonEEs? a. Homeworkers b. Full-time life insurance salespersons c. Newspaper deliverers d. Traveling salespersons

c. Newspaper deliverers

If an ER wants to offer a SIMPLE plan to its EEs, how many EEs must work for the company? a. At least 100 EEs b. 25 or more EEs c. No more than 100 EEs d. 25 or few EEs

c. No more than 100 EEs

ERs wishing to bring aliens of extraordinary ability in the arts, sciences, education, or athletics to the US seek what visa? a. B-1 b. H-1 c. O-1 d. Q-1

c. O-1

Once an EE has given authorization for EFT and the ER creates electronic pay transactions for deposit, where does the ER send them? a. ACH b. RDFI c. ODFI d. NACHA

c. ODFI

All of the following wage payments are included when calculating the EE's regular rate of pay except: (2.6-3/IIIA) a. Nondiscretionary bonus b. Shift differential c. Paid time not worked d. Premium pay less than 1.5 times the base rate

c. Paid time not worked

An ER has decided to change from an old to a new payroll system. In implementing the new system, both the old and the new system are maintained during the testing period. What is this changeover technique called? a. Debugging b. Pilot testing c. Parallel testing d. Back-up system conversion

c. Parallel testing

Which of the following procedures is the best internal control procedure? (11.8VIA) a. Canceled checks are reviewed by payroll dept, then passed on to the internal audit dept b. The check signer is stored by the payroll dept for safekeeping c. Payroll checks are signed and sealed by the cash management dept d. The payroll dept operates the check signer and mails all payroll checks

c. Payroll checks are signed and sealed by the cash management dept

What is the prime factor that ERs can use in determining to which state an EE should be "allocated" for UI purposes? a. Location of base of operations b. Location of EE's residence c. Place where the work is localized d. Place of direction or control

c. Place where the work is localized

Under the EFT system, what participating party receives the individual transactions and posts them for the customers'/EEs' accounts? a. ODFI b. ACH c. RDFI d. NACHA

c. RDFI

All of the following duties would be included in the job description of an EE working in the payroll dept except: (13.2-2/VB) a. Data entry of payroll input b. Review source documents for proper authorization c. Reconciliation of payroll bank account d. Distribution of payroll related reports

c. Reconciliation of payroll bank account

What is a common name for a journal? a. Record of final entry b. Record of secondary entry c. Record of original entry d. Record of cross-reference

c. Record of original entry

Which basic management skill focuses on communicating with top management? (13.2-5VD) a. Planning b. Organizing c. Reporting d. Directing

c. Reporting

Each of the following actions is considered a good guideline when conducting meetings except: a. Plan b. Prepare c. Start with a meal d. Control the time

c. Start with a meal

Which of the following requirements determines how soon EEs must be paid after a pay period ends? (5.1/IG) a. Internal Revenue Service b. The ability of the payroll system to process pay c. State law d. Fair Labor Standards Act

c. State law

When determining the amount to send to the IRS to satisfy a tax levy, the exempt amount is deducted from what amount? a. Gross pay b. Disposable pay c. Take-home pay d. Federal income tax withheld

c. Take-home pay

Each of the following conditions is a fundamental dimension that grows out of principle-centered leadership except: a. Security b. Wisdom c. Tenacity d. Guidance

c. Tenacity

Johnny's ER contributes $150 per month to his stock bonus option plan as part of his benefits package. Johnny now wishes to take the $150 per month in cash. What will be the tax treatment of the benefit? a. The $150 will be a tax-free benefit to Johnny b. The $150 is subject to FIT only c. The $150 is subject to FIT, FICA, and FUTA taxes d. The $150 is subject to FICA and FUTA taxes only

c. The $150 is subject to FIT, FICA, and FUTA taxes

If a company closes its book on March 31, which of the following statements is true? (11.4/VIIA) a. The company's fiscal year is calendar year. b. For corporate income tax purposes the company operates on a calendar year. c. The company's fiscal year is April 1 to March 31. d. The company has two overlapping fiscal years.

c. The company's fiscal year is April 1 to March 31.

If payday for the last week in December falls in January, what date governs the year for which the wages are reported? (6.1/IG) a. The date in the year in which the wages were earned b. The date in the year in which the wages are recorded on the General Ledger c. The date in the year in which the pay was made available to EEs d. The date in the year chosen at the ER's option

c. The date in the year in which the pay was made available to the EEs

Each of the following objectives is considered to be a valid reason why companies conduct performance evaluations except: a. To provide documentation for salary increase decisions b. To determine which EEs are promotable c. To fire EEs who conflict with other EEs d. To encourage EEs' personal growth and development

c. To fire EEs who conflict with other EEs

Each of the following goals is a reason why states might require ERs to report newly hired EEs except: a. To detect welfare fraud b. To detect unemployment compensation fraud c. To locate individuals who have not claimed state lottery winnings d. To locate noncustodial parents subject to a child support withholding order

c. To locate individuals who have not claimed state lottery winnings

Which of the following types of compensation is reported on Form W-2, but is NOT subject to federal income tax withholding? (3.4-29/IIIB) a. Dismissal pay b. Uniform allowances c. Value of group-term life insurance over $50,000.00 d. Whole life insurance

c. Value of group-term life insurance over $50,000.00

In which of the following situations would it be appropriate for a supervisor to counsel an EE? (13.2-3/VC) a. When the EE has a dependency problem b. When the EE has family problems c. When the ER has a budget freeze on salary increases d. When the EE's parent has died

c. When the ER ha a budget freeze on salary increases

What income earned by resident aliens is subject to federal income tax? a. US income b. Foreign income c. World-wide income d. Unearned income

c. World-wide income

Under the ER's disability plan, the ER pays 80% of the cost of insurance and the EE pays the difference. An EE received $3,000 in disability pay from a third-party insurer during the first six calendar months of disability, and $500 a month for each of the next three months. How much of the disability pay is taxable for FICA, and how much is taxable for FIT? a. $4,500 FICA, $4,500 FIT taxable b. $3,000 FICA, $4,500 FIT taxable c. $2,400 FICA, $4,500 FIT taxable d. $2,400 FICA, $3,600 FIT taxable

d. $2,400 FICA, $3,600 FIT taxable $3,000 x 80% = $2,400 FICA ($3,000 + $500 + $500 + $500) x 80% = $3,600 FIT

What is the monthly maximum amount of ER-provided parking that is excluded from income as a qualified transportation fringe benefit? (3.2-1/IIIA) a. $255.00 b. $130.00 c. $250.00 d. $260.00

d. $260.00

What is the minimum wage that hourly paid computer professionals must be paid to be exempt from the OT requirements of the FLSA? a. $4.25 per hour b. $10.00 per hour c. $29.967 per hour d. $27.63 per hour

d. $27.63 per hour

What is the federal minimum wage as of January 1, 2018? (2.5/IB) a. $6.55 per hour b. $5.85 per hour c. $7.00 per hour d. $7.25 per hour

d. $7.25 per hour

If the state law requires a minimum wage of $8.00 per hour, but the FLSA requires $7.25, what hourly minimum wage must be paid to EEs who are covered by both state law and the FLSA? (2.2/IB) a. $6.55 b. $4.25 c. $7.25 d. $8.00

d. $8.00

What is the maximum that a temporary foreign assignment can realistically be expected to last for purposes of excluding EE business expense reimbursements from income? a. 3 months b. 6 months c. 9 months d. 12 months

d. 12 months

Sam's regular workweek consists of 40 hours and he is paid biweekly. If Sam works 38 hours in week one and 43 hours in week two, how many OT hours must he be paid for? a. 0 b. 1 c. 1.5 d. 3

d. 3

When an EE leaves employment before the end of the calendar year and requests Form W-2 in writing, how long does the ER have to send it? a. 10 days from the request b. 15 days from the request c. 20 days from the request d. 30 days from the request

d. 30 days from the request

Under the Walsh-Healey Public Contracts Act, how long must a separate log of occupational injuries and illnesses be kept? a. 2 years b. 3 years c. 4 years d. 5 years

d. 5 years

How many parts does Form 668-W, Notice of Levy on Wages, Salary, and Other Income, contain? a. 3 b. 4 c. 5 d. 6

d. 6 parts

Which of the following payments is subject to SS tax? (3.4-10/IIIA) a. WC benefit b. Wages paid in the year after the worker's death c. Payments to ministers of churches performing duties as such d. A back pay award as part of a settlement of a suit for unpaid OT pay

d. A back pay award as part of a settlement of a suit for unpaid OT pay

What state uses the payroll stabilization method to determine an ER's state unemployment tax rate? a. MN b. MI c. AR d. AK

d. AK

All of the following accounts are asset accounts except: (11.1-1/VIIA) a. Cash b. Accounts Receivable c. Inventory d. Accounts Payable

d. Accounts Payable

When an ER receives a federal tax levy for an EE, what deductions from the EE's pay are allowed when determining the amount due the IRS? (9.1-1/IIIB) a. All mandatory taxes only b. All mandatory taxes, dependent health insurance, and child support deductions only c. All mandatory taxes and all wage attachments currently in place only d. All mandatory taxes and all voluntary and involuntary deductions currently in place only

d. All mandatory taxes and all voluntary and involuntary deductions currently in place only

Under the principles of double entry bookkeeping, what does a credit to an account signify? (11.1/VIIB) a. An increase in an asset account b. A decrease in a capital account c. A decrease in a liability account d. An increase in a liability account

d. An increase in a liability account

ER must store records in what form? (10.8-3/IID) a. Paper b. Micromedia c. Computer media d. Any form is acceptable

d. Any form is acceptable

When must taxes advanced by an ER on behalf of EEs during a calendar year be recovered so that the amount advanced is not included in the EE's income for the year? (3.5-2/IIIA) a. January 1 of the following calendar year b. January 31 of the following calendar year c. March 31 of the following calendar year d. April 1 of the following calendar year

d. April 1 of the following calendar year

Foreign students receiving scholarships or fellowships are not exempt from federal income tax withholding when holding what visa? a. F-1 b. J-1 c. M-1 d. B-1

d. B-1

What is the difference between the debits and credits to an account called? a. Single-entry b. Double-entry c. Cross-footing d. Balance

d. Balance

Which of the following is not a payroll department internal control? a. Segregation of duties b. Physical payouts c. Computer edits d. Balancing accounts

d. Balancing accounts

Under what law are ERs required to extend health care coverage to terminated EEs? (4.1-5/IIB) a. OBRA '89 b. TAMRA '88 c. OBRA '87 d. COBRA '85

d. COBRA '85

Under the FLSA, which of the following records must be kept for more than two years from the last date they were in effect? a. Wage rate tables b. Piece rate tables c. Work time schedules establishing the hours and days of employment d. Collective bargaining agreements

d. Collective bargaining agreements

Managers are involved in all of the following processes as part of their managerial responsibilities other than: a. Planning b. Organizing c. Directing d. Completing tasks

d. Completing tasks

What law governs the maximum amount that can be withheld from an EE's wages for spousal or child support? a. Family Support Act of 1988 b. Omnibus Budget Reconciliation Act of 1993 c. Child Support Enforcement Amendments of 1984 d. Consumer Credit Protection Act

d. Consumer Credit Protection Act

Which of the following laws restricts states in their regulation of creditor garnishments? a. Fair Labor Standards Act b. Omnibus Budget Reconciliation Act of 1993 c. Family Support Act of 1988 d. Consumer Credit Protection Act

d. Consumer Credit Protection Act

Which of the following costs is not a reasonable housing expense? a. Occupancy taxes b. Fees paid for securing a house c. Furniture rental d. Cost of domestic labor

d. Cost of domestic labor

What journal entry is made to record the deposit of federal income tax? a. Debit payroll taxes expense, credit federal income tax payable b. Debit cash, credit federal income tax payable c. Credit payroll taxes expense, debit cash d. Debit federal income tax payable, credit cash

d. Debit federal income tax payable, credit cash

Where does the hiring process begin? a. Decision not to fill a position b. Decision not to create a position c. Decision not to analyze a job d. Decision to terminate the incumbent

d. Decision to terminate the incumbent

Which of the following entries would be posted as a credit? (11.2/VIIA) a. Increase in an asset account b. Decrease in a liability account c. Increase in an expense account d. Decrease in asset account

d. Decrease in asset account

What is the place the EE intends to return to after a foreign assignment? a. Tax home b. Vacation home c. Residence d. Domicile

d. Domicile

In which of the following situations may an EE claim to be exempt from FIT withholding on Form W-4? (6.3-1/IIB) a. EE is not a US citizen b. EE pays estimated quarterly taxes c. EE claims numerous exemptions and consequently will not incur a tax liability d. EE did not incur tax liability in the preceding year and does not expect to incur tax liability in the current year

d. EE did not incur tax liability in the preceding year and does not expect to incur tax liability in the current year

If an ER has made timely deposits of its full FUTA tax liability, what is the Form 940 due date? a. January 10 b. January 15 c. January 31 d. February 10

d. February 10

Distributions from retirement plans and payments of matured annuity, endowment, and life insurance contracts must be reported on what form? a. Form W-2P b. Form W-2 c. Form W-3 d. Form 1099-R

d. Form 1099-R

What form is used to request a credit for overpaid taxes? a. Form 941 b. Form 843 c. Form 940 d. Form 941-X

d. Form 941-X

What form is used to report backup withholding? a. Form 941 b. Form 944 c. Form 943 d. Form 945

d. Form 945

When an ER has been unable, after a reasonable effort, to deliver an EE's copies of Form W-2, how long must it keep those copies or be able to reproduce the electronic file containing the EE's W-2 information? a. Five years b. Three years c. Two years d. Four years

d. Four years

Which of the following visas is an immigrant visa? a. B-1 b. F-1 c. H-1 d. I-551

d. I-551

Where should negative feedback be given? a. Where everyone can benefit from hearing it b. Negative feedback should never be given c. Directly to the HR dept d. In private to the worker

d. In private to the worker

All of the following behaviors are common mistakes to avoid when selecting a new system except: a. Making decisions w/o sufficient input b. Failing to consider all the costs associated c. Not considering future company needs regarding expansion and downsizing d. Including personnel from all related departments on the project team

d. Including personnel from all related departments on the project team

What effect does revenues have on accounts? a. Increasing expenses b. Decreasing liabilities c. Decreasing owner's equity d. Increasing owner's equity

d. Increasing owner's equity

All of the following steps are taken when recruiting for a new EE except: (13.2-2/VC) a. Writing a job description b. Evaluating candidates c. Interviewing d. Introducing the candidate to all EEs

d. Introducing the candidate to all EEs

If a pension recipient fails to complete Form W-4P, what withholding status must be used by the payer to calculate withholding? a. Single, with 0 allowances b. Single, with 1 allowances c. Married, with 0 allowances d. Married, with 3 allowances

d. Married, with 3 allowances

If an ER that hires EEs in more than one state wants to report all its new hires to just one state, it can request permission to do so by filing the following form with the Dept of Health and Human Services: a. Form W-4, EE's Withholding Allowance Certificate b. Form W-9, Request for Taxpayer Identification Number and Certification c. Multiple Worksite Report d. Multistate ER Notification Form for New Hire Reporting

d. Multistate ER Notification Form for New Hire Reporting

What are the maximum earnings, if any, subject to Medicare tax? (6.7-2/IC) a. $135,000 b. $200,000 c. $118,500 d. No limit

d. No limit

What tax withholding, if any, is required when unpaid wages due an EE at death are paid to the EE's estate in a calendar year subsequent to the EE's death? (3.4-30/IIIB) a. FICA only b. FIT only c. FICA and FIT d. No tax withholding is required

d. No tax withholding is required

Tammy selects a dependent care package from her ER's cafeteria plan. The cost of the package is $200 per month. Tammy's ER pays $150 per month to her cafeteria plan and Tammy defers part of her salary to pay the difference. What taxes must the ER withhold? a. FIT and FICA from the ER contribution b. FIT and FICA from the EE contribution c. FIT and FICA from both the ER and EE contributions d. No taxes must be withheld from either the ER or EE contributions

d. No taxes must be withheld from either the ER or EE contributions

Which of the following agencies made it necessary for NACHA to adopt rules creating special requirements for International ACH Transactions? a. Internal Revenue Service b. Federal Reserve Board c. Department of State d. Office of Foreign Assets Control

d. Office of Foreign Assets Control

What is the penalty for failure to file Form W-2 electronically when required? (8.13-1/IIE) a. $5.00 per statement to a maximum of $100,000.00 b. $5.00 per statement to a maximum of $200,000.00 c. $5.00 per statement to a maximum of $20,000.00 d. Penalty is dependent upon number of days correctly filed W-2s are late

d. Penalty is dependent upon number of days correctly filed W-2s are late

What is the most successful strategy for motivating EEs? a. Taking notice of negative behavior only b. Not providing positive feedback c. Realizing an EE is not a "team player" d. Rewarding an EE's positive behavior

d. Rewarding an EE's positive behavior

An EE is supposed to receive his last paycheck of $1,500 for 2018 on Wed, Dec 26. Because of a system failure, paychecks are not available until Wed, Jan 2, 2019. Before Dec 26, the EE's 2018 earnings were $127,700. How much social security and Medicare taxes must be withheld? a. SS $43.40, Med $21.75 b. SS $93, Med $0 c. SS $0, Med $21.75 d. SS $93, Med $21.75

d. SS $93, Med $21.75

In the modern audit process how does testing occur? a. Checking every transaction b. Checking those transactions indicated by the company c. Checking similar transactions to the last audit d. Sampling

d. Sampling

All of the following features are disadvantages of an in-house computer system except: a. High fixed costs b. Additional staffing c. Sufficient secure space needed d. Scheduling flexibility

d. Scheduling flexibility

All of the following payments are subject to SS tax except: (4.3-1/IIIA) a. Dismissal payments b. Tips exceeding $20.00 per month c. EE's elective deferral to a 401(k) plan d. Sick-leave payments after six calendar months of absence from work

d. Sick-leave payments after six calendar months of absence from work

At the start of the year, Donna elects to buy medical and dental insurance as part of her company's cafeteria plan. During the year Donna gets married and her husband has full medical and dental insurance which can be extended to cover his whole family. Donna wants to replace the medical and dental insurance with group-term life insurance. Which of the following statements is true? a. If the amount is not spent by the end of the year, it has to be forfeited b. The replacement package becomes fully taxable c. Once selected, benefits cannot be changed during the plan year d. Since Donna has had a change in status and her new election is consistent with that change, this option is available to her

d. Since Donna has had a change in status and her new election is consistent with that change, this option is available to her

A newly hired EE who is married with two children fails to complete Form W-4 by his first payday. What withholding status does the ER use when calculating the EE's withholding? a. Married, with 2 allowances b. Married, with 3 allowances c. Single, with 2 allowances d. Single, with 0 allowances

d. Single, with 0 allowances

Which account has an entry when the deposit of state income tax withheld is made? a. EEs' income tax payable b. Payroll tax expenses c. State tax expense d. State income tax payable

d. State income tax payable

If an ER overwithholds FIT from its EEs' wages and discovers the error after filing Form 941 for the quarter during which the error was made but before the end of the year, which option is not available to the ER? a. The ER may reimburse the EE for the overwithheld amount b. The ER may reduce future withheld taxes during the same calendar year that the error occurred c. The ER may apply the overwithheld amount to the next calendar quarter in the same year that the error occurred d. The ER may apply the overwithheld amount to the following year to reduce the amount withheld in the new year

d. The ER may apply the overwithheld amount to the following year to reduce the amount withheld in the new year

What is the purpose of an accrual? (11.5/VIIA) a. To allow adjustments to budgets b. To spread large payments over 12 months c. To offset debits and credits as they are incurred d. To assign revenue and expenses to the period in which they are earned or incurred

d. To assign revenue and expenses to the period in which they are earned or incurred

When the IRS publishes regulations they are coded "T.D." What does T.D. stand for? a. Tax Data b. Tax Development c. Technical Decision d. Treasury Decision

d. Treasury Decision

To which taxes are payments received as workers' compensation subject? a. FICA only b. FIT only c. FICA and FIT d. WC benefits are not taxable

d. WC benefits are not taxable

Under which of the following situations may all health insurance premiums paid be excluded from the EE's income? (4.1-2/IIIA) a. When the EE pays the premium directly to the insurance company b. When the EE and ER share the premium c. When the ER withholds the premium d. When the ER pays the premium

d. When the ER pays the premium

What are the penalties for failure to file information returns on time and with correct information?

~ $50 per return if the failure to file or provide correct information is corrected within 30 days after the due date, with a maximum penalty of $545,500 a year ($191,000 for small businesses) ~ $100 per return if the failure to file or provide correct information is corrected more than 30 days after the due date but before August 1 of the same year the return is due, with a maximum penalty of $1,637,500 a year ($545,500 for small businesses) ~ $270 per return if the failure to file or provide correct information is not corrected by August 1, with a maximum penalty of $3,275,500 ($1,091,500 for small businesses)

Outline the penalties for failing to make payroll tax deposits on time.

~ 2% of the undeposited amount if it is deposited within 5 days of the due date ~ 5% of the undeposited amount if it is deposited within 6 - 15 days of the due date ~ 10% of the undeposited amount if it is deposited more than 15 days after the due date ~ 15% of the undeposited amount if it is not paid within 10 days after the ER receives its first IRS delinquency notice or on the same day that a notice and demand for payment is received

What are the four categories of statutory employees?

~ Agent-drivers or commission-drivers ~ Full-time life insurance salespersons ~ Homeworkers ~ Traveling or city salespersons

An EE's personal use of a company-provided vehicle generally is a taxable benefit. What are the 3 special valuation methods that can be used to determine the taxable amount?

~ Annual lease value method ~ Vehicle cents-per-mile method ~ Commuting method

What are the four factors that ERs can use in determining which state an EE who is working in two or more states should be "allocated" to for UI purposes?

~ Are services "localized"? ~ Does the EE have a "base of operations"? ~ Is there a "place of direction or control"? ~ What is the EE's "state of residence"?

What records must be kept under the FLSA for at least two years from their last date of entry?

~ Basic employment and earning records that support the data for each NE EE's hours of work, basis for determining wages, and wages paid (e.g., time or production cards) ~ Order, shipping, and billing records showing customer orders, shipping and delivery records, and customer billings ~ Records substantiating additions to or deductions from EEs' wages, including purchase orders, operating cost records, wage assignments, and garnishments

When faced with a claim for unemployment benefits, what should the ER do?

~ Be complete and truthful in listing the grounds for an EE's termination when responding to forms and notices from the unemployment benefits agency ~ Document any and all evidence of misconduct that may be needed to challenge a claim for benefits ~ Respond to notices and requests for information within the time frame allowed ~ Detail any final payments made to terminated EEs, since they may disqualify the EE, at least temporarily ~ Urge the unemployment agency to make sure the claimant is looking for work

What are the requirements for filing Form 941 by ERs that are going out of business?

~ Check the box on Line 17 when completing its last Form 941 indicating that it will not file any returns in the future ~ Enter the date that final wages were paid ~ Attach a statement showing the address where the ER's records will be kept, the name of the person keeping the records, and, if the business has been sold or transferred, the name and address of the new owner and the date of the sale or transfer ~ File the Form 941 by the end of the first month after the end of the first quarter during which the ER stopped paying wages, and ~ File Schedule D (Form 941), Report of Discrepancies Caused by Acquisitions, Statutory Mergers, or Consolidations, if the ER is no longer in business as the result of a statutory merger or consolidation, or if it qualifies as a predecessor or successor after an acquisition.

Once a crisis is over, what are some of the things the payroll manager can do to ensure the lessons it taught are not forgotten?

~ Conduct a meeting of the team to discuss the crisis and determine which of the problems that occurred during the crisis are preventable ~ Initiate a plan to prevent those problems that can be prevented from reoccurring ~ List the successful results of the crisis management operation and include them in a "Crisis File" for future reference ~ List all the issues that were not satisfactorily resolved and formulate procedures to resolve them ~ Express your appreciation to your staff once again for their hard work during the crisis

List the advantages of using an in-house payroll system.

~ Control of the system ~ Convenient access ~ Downtime can be reduced ~ System security ~ Scheduling flexibility ~ Interactive applications

Under IRS regulations, what methods may ERs use to notify EEs who have no income tax withheld and do not file exempt of the possible eligibility for a tax refund because of the EIC?

~ Copy B of Form W-2, Wage and Tax Statement (IRS-supplied forms have the required EIC statement on the back of Copy B; substitutes used for this purpose must have the required statement on the back of the EE copy) ~ Notice 797, Possible Federal Tax Refund Due to the Earned Income Credit ~ A written statement with the exact same wording as Notice 797

As part of a "needs and wants analysis" in choosing a new payroll system, a Current Situation Analysis is essential. What does this entail?

~ Documentation of all workflow into/out of the current system ~ Documentation of the procedures for maintenance, including who is called, response time, and average downtime ~ Identify who receives information from the payroll system, how often, and whether they are using it ~ Along with the end users, identify and prioritize complaints, problems, and restrictions ~ Identify any actual or potential compliance problems ~ Document any manual processes that might be eliminated by automation ~ Identify all costs of the current system--tax updates, corporate policy changes, computer time, paper, system shutdowns, etc.

List those areas affected by union contract obligations which can affect areas of payroll processing.

~ Dues checkoffs ~ Fringe benefit contributions ~ Upcoming layoffs ~ Wage increases ~ Probationary EEs ~ OT and other premium pay

Who are the payroll department's customers?

~ EEs ~ Other departments ~ Upper management ~ Federal, state, and local government agencies

What standards (required by all the states) must be met by claimants to become and remain eligible for benefits?

~ Earning a certain amount of wages in the "base period" ~ Being involuntarily unemployed for reasons other than misconduct connected with their work ~ Filing a claim for benefits ~ Registering for work with the state employment security office ~ Being physically and mentally able to work ~ Be looking for and available for work (other than during time spent on job training or jury duty) ~ Not being unemployed because of a labor dispute other than a lockout ~ Being truthful in applying for benefits

Name the three main nondiscrimination tests that cafeteria plans must satisfy to qualify for preferential tax treatment.

~ Eligibility test ~ Contributions and benefits test ~ Concentration test

What conditions and limitations must be satisfied for ER-provided dependent care assistance to be excluded from an EE's income?

~ Exclusion limitation: The excluded amount of dependent care assistance cannot exceed $5,000 in a year or the EE's earned income for the year, whichever is less. ~ When expenses are incurred: An ER's dependent care expenses are treated as incurred when the care is provided, not when payments are made to the EE or third party. ~ Written plan: The dependent care assistance program must be a separate, written plan of the ER and it must be designed solely for the EEs' benefit. ~ No discrimination: The program must not discriminate in favor of highly compensated EEs. ~ Notification: Eligible EEs must receive reasonable notification of the availability and terms of the program. ~ Annual statement: The ER must give the EE a statement each year by January 31 showing the dependent care assistance provided by the ER during the previous year (Box 10 of Form W-2).

What categories of ERs are not subject to FUTA tax?

~ Federal, state, and local government ERs, including their political subdivisions ~ Indian tribes ~ Nonprofit religious, charitable, or educational organizations that are tax-exempt

What are the four stages of development?

~ Forming ~ Storming ~ Norming ~ Performing

The planning and organizing process consists of defining three key activities. What are these activities?

~ Goals and objectives ~ The time frame ~ The subtasks

Name the three most common mistakes that managers commit when conducting EE performance appraisals.

~ Guilt over negative evaluations ~ No accountability for the manager ~ Improper application of standards

Name three qualities that can help make a payroll manager a strong leader.

~ Having a vision ~ Building team support ~ Seeking partners

Name three voluntary deductions that are not subtracted from earnings to calculate disposable pay.

~ Health insurance premiums (unless state law says otherwise) ~ Life insurance premiums ~ Union dues ~ Retirement plan contributions ~ United Way contributions ~ Other charitable contributions ~ Savings plan deductions, etc.

What information must the payroll department maintain for the proper administration of defined benefit plans?

~ Hours worked ~ Compensation earned ~ Date of birth ~ Date of hire

Name four other systems that often interface with payroll within a company.

~ Human resources ~ Benefits ~ Accounting ~ Bank reconciliation ~ Direct deposit ~ Time and attendance ~ General ledger

What are the three important characteristics of a payroll management report?

~ Include only the relevant information ~ The information should be produced in a timely manner ~ It should be written clearly but briefly

What are the advantages of storing payroll and employment records on microfilm or microfiche?

~ Less space needed for storage ~ Reduced storage costs ~ Less chance of losing individual documents ~ Increased durability

What are the four communication skills the manager must possess in directing EEs?

~ Listening ~ Providing feedback ~ Coaching ~ Leading

List the disadvantages of paying EEs by paycheck as far as the ER is concerned.

~ Lost or stolen checks ~ Unclaimed or uncashed checks ~ EE time off needed to cash checks ~ Storage of cashed checks and related documents ~ Early preparation of vacation checks ~ Reconciliation of bank account with outstanding checks

What are three examples of changes in status that allow a cafeteria plan to permit an EE to change a cafeteria plan benefit election during the plan year?

~ Marital status changes -- marriage (including same-sex marriage), divorce, death of a spouse, legal separation, or annulment ~ Changes in the number of dependents -- birth, adoption, placement for adoption, or death of a dependent ~ Employment status changes (applies to EE, spouse, dependent, or adult child under 27) -- termination or commencement of employment, strike or lockout, starting or ending an unpaid leave of absence, change in worksite, change from full-time to part-time, exempt to nonexempt, or salaried to hourly status ~ Change in dependent or adult child status -- any event that causes an EE's dependent or adult child under 27 to become covered or lose coverage (e.g., attainment of a certain age) ~ Residence change -- a change in the place of residence of the EE, spouse, dependent, or adult child under 27 ~ Adoptions -- the commencement or termination of an adoption proceeding ~ Reductions in hours not resulting in loss of coverage -- a change in work hours from at least 30 to less than 30 per week ~ Enrollment in a qualified health plan through a Marketplace under the ACA -- EE can revoke current coverage

Under the FLSA, name 4 types of employment data records that must be kept for each covered EE for at least 3 years after the last date of entry

~ Name, as it appears on the EE's social security card ~ Home address, including apt number, if any, and Zip code ~ Date of birth, if under age 19 ~ Sex and occupation (for use in determining Equal Pay Act compliance) ~ The beginning of the EE's workweek (time and day) ~ Regular rate of pay for OT weeks, the basis for determining the rate, and any payments excluded from the regular rate ~ Hours worked each workday and workweek ~ Straight-time earnings (including straight-time pay for OT hours) ~ OT premium earnings ~ Additions to and deductions from wages for each pay period ~ Total wages paid for each pay period ~ Date of payment and the pay period covered

What are four environmental concerns (i.e., physical plant issues) commonly addressed in protecting system hardware?

~ Need for climate controlled rooms ~ Power surges or spikes ~ Dirt ~ Humidity

States that offer the voluntary contribution option routinely impose restrictions on its use. What classifications of ERs are often barred from making such contributions?

~ New ERs ~ Negative reserve balance ERs ~ ERs that have not paid state taxes on time

What are some common income tax treaty benefits?

~ Nondiscrimination clauses allowing resident aliens to qualify for the foreign earned income and housing cost exclusions under the bona fide residence test as well as the physical presence test ~ A partial or total exemption from taxation by the foreign country for an EE's wages for personal services performed in the treaty country if the EE's stay is short and certain other requirements are met ~ Wages received by a US teacher or professor in a treaty country are exempt from foreign taxes under most treaties for temporary periods of up to 2 to 3 years ~ Amounts received by US residents for study, research, or business and technical training are generally exempt from the treaty country's income tax ~ To avoid double taxation, tax treaties provide for credits and deductions to reduce taxes imposed by the foreign country

What are three common mistakes made during system selection which could seriously damage the project at a later phase?

~ Not including representatives of all the potential user departments ~ Failing to provide enough time for project team members to work on their system selection duties ~ Failing to prioritize needs and desires ~ Making decisions w/o sufficient input ~ Failing to consider all the costs associated with a new system ~ Making on-site visits only to customers referred by a vendor or service provider ~ Failing to thoroughly check for signs of obsolescence ~ Failing to negotiate performance guarantees ~ Not considering future company needs--shortsightedness

When selecting a new system, who should be included on the project team?

~ Payroll ~ HR ~ Benefits ~ Accounting ~ Tax ~ Budget/finance ~ Data processing/MIS ~ Facilities

What factors determine an EE's residence?

~ Physical presence ~ Where family members live and children attend school ~ Where the EE works, has business interests, and owns property ~ Where bank accounts and business interests are maintained

What steps must be taken to conduct a successful meeting, once the type of meeting has been determined?

~ Prepare an agenda ~ Keep the meeting on track ~ Promote participation ~ Keep written records

What changes were enacted by OBRA '93 to make sure that both insurers and ERs in each state comply in carrying out medical child support orders?

~ Prohibit insurers from denying medical insurance under a parent's coverage to a child because the child was born out of wedlock, is not a dependent on the parent's income tax return, or does not live with the parent or in the insurer's service area. ~ Where a qualified medical child support order exists, require insurers and ERs to allow the parent to enroll the child without restrictions, and to enroll the child themselves if the parent does not do it. ~ Where a qualified medical child support order exists, require ERs to withhold the EE's share of health insurance premiums and pay it to the insurer ~ Require insurers to make it easier for custodial parents to submit and collect on claims where the non-custodial parent's insurer carries the child's coverage. ~ Permit state Medicaid agencies to garnish an EE's wages so the state can be reimbursed for payments made to the EE on behalf of a child who is eligible for Medicaid.

What are the objectives of an automated payroll system?

~ Provide for compliance with federal, state, and local withholding, depositing, and reporting requirements ~ Issue timely and accurate paychecks and/or make accurate direct deposits and payroll card account deposits ~ Maintain adequate records of all data and transactions ~ Prepare internal reports ~ Guarantee the security of the system

List four rewards you can give EEs who have demonstrated the potential for leadership.

~ Public recognition ~ Promotion to supervisory positions ~ Leadership roles (projects, teams, or tasks) ~ Taking them into your confidence (seeking their input)

What are the two categories of statutory nonemployees?

~ Qualified real estate agents ~ Direct sellers

What are some of the benefits for ERs in paying EEs with electronic paycards?

~ Reduced costs for manual checks, lost and stolen checks, stop payment orders, fraudulent cashing of duplicate checks, paycheck production and handling, and bank reconciliation fees ~ Enhanced efficiency by eliminating paper paychecks ~ All EEs are eligible for electronic funds transfer ~ Increased EE productivity as less time is spent cashing paychecks ~ Reduction of escheat issues

List six types of supplemental wage payments.

~ Reported tips ~ Overtime pay ~ Bonuses ~ Back pay ~ Commissions ~ Payments made under reimbursement or other expense allowance arrangements that are made under a nonaccountable plan ~ Nonqualified deferred compensation payments included in wages ~ Noncash fringe benefits ~ Sick pay paid by a third party as an agent of the ER ~ Amounts includible in gross income under IRC Section 409A ~ Income recognized on the exercise of a nonstatutory stock option ~ Wages imputed for health coverage of someone who is not a spouse, dependent, or adult child under age 27 of an EE ~ Wages recognized on the lapse of restrictions on restricted property transferred from an ER to an EE

What are the 4 methods that states use to determine an ER's experience rate?

~ Reserve ratio ~ Benefit ratio ~ Benefit-wage ratio ~ Payroll stabilization

Other than IRS regulations, what other sources of guidance are available for the interpretation of tax laws?

~ Revenue Procedures ~ Revenue Rulings ~ Private Letter Rulings ~ Publications ~ Announcements, Notices, and New Releases ~ Field Service Advice, Service Center Advice, Internal Legal Memoranda

Name three types of EE compensation that are exempt from FUTA

~ Sick or disability pay paid more than six calendar months after the month the EE worked for an ER ~ Sickness or injury payments made under a state WC law or a law in the nature of a WC law ~ Payments made under a deferred compensation plan, except elective deferrals to the plan ~ Noncash payments to an EE for work done outside the ER's trade or business ~ Qualified moving expense reimbursements (This exclusion has been suspended for tax years 2018 through 2025. The suspension, however, does not apply to certain moves of American military personnel. (see Sections 7.1 and 3.3-2)) ~ Death or disability retirement benefits ~ Noncash payments to agricultural workers ~ Reimbursements for, or provision of, deductible dependent care assistance ~ Value of group-term life insurance coverage ~ Value of deductible meals and lodging provided by the ER ~ Wages owed to a deceased EE and paid to a beneficiary after the year of the EE's death ~ Tips not reported by an EE to an ER (generally if less than $20 a month)

Which amounts on Forms 941, W-2, and W-3 does the SSA compare to make sure ERs are taxing and reporting wages correctly?

~ Social Security wages ~ Social Security tips ~ Medicare wages and tips

What additional records must be kept under the FLSA by ERs of tipped EEs?

~ Some notation of the records showing that the EE's wages are determined partly by tips ~ The amount reported by the EE to the ER as tips (weekly or monthly), which may be taken from IRS Form 4070 ~ The amount of the tip credit taken by the ER ~ Hours worked and straight-time earnings for the time worked other than as a tipped EE ~ Hours worked and straight-time earnings for time worked as a tipped EE

What are the fundamental skills that must be mastered in most managerial positions?

~ Strategic planning/organizing ~ Staffing ~ Giving directions ~ Controlling progress ~ Reporting to upper management

List three major reason why payroll, HR, and benefits would benefit from an integrated system.

~ Streamlining functions that make up the highest percentage of cost in most organizations ~ Storing complete data in a single separate database, which means that the information needed to make intelligent business decisions is readily available ~ Significant improvements in existing systems are often impossible, b/c most of their time and energy is spent supporting necessary interfaces among the existing systems' databases

When an EE travels on business for his or her ER and receives an advance to pay business-related expenses, what are the general rules for determining when the advance is taxable to the EE and when is it not?

~ Taxable: When the ER has a nonaccountable plan because it does not require the EE to substantiate business travel expenses and to return any amount not spent by the EE on business within a reasonable period of time. ~ Nontaxable: When the ER has an accountable plan and the EE is required to substantiate business travel expenses and refund the balance of the advance not used within a reasonable period of time.

Name two things that reasonable housing expenses do not include.

~ Telephone and cable TV charges ~ Capital expenditures such as mortgage payments or furniture ~ Cost of domestic labor such as a maid or gardener ~ Lavish or extravagant expenses under the circumstances

Compare a temporary help agency EE and a leased EE.

~ Temporary workers are hired, screened, and trained by the temporary help agency to provide services for clients. They are EEs of the temporary help agency, which sets their wages and has the sole right to hire and fire. The agency is also responsible for all payroll taxes. ~ Leased EEs are hired, trained, and qualified by a leasing company, which provides workers for a client company. The client pays a fee to the leasing company to cover the cost of payroll, benefits, etc. Responsibility for payroll taxes depends on the degree of control exercised by the client over the EEs' work and which entity has control over the payment of their wages.

What factors determine an alien's status under the substantial presence test?

~ That the alien be present in the US for at least 31 days during the current calendar year ~ That the total of the numbers of days of US presence during the current calendar year, plus 1/3 of the US days during the first preceding calendar year, plus 1/6 of the US days during the second preceding calendar year, be at least 183 days (no rounding allowed--fractions must be used)

What conditions must be met for an ER to take advantage of the tip credit?

~ The EE must be a "tipped EE," which is an EE working in an occupation in which he or she regularly receives at least $30/month in tips ~ The EE must receive at least as much in tips as the credit taken by the ER ~ The EE must be informed about the tip credit provisions of the law before the credit is taken ~ All tips received by the EE must be kept by the EE, although tip pooling may be required among EEs who are customarily and regularly tipped ~ Credit cards tips must be given to the EE by the next payday.

What are the steps involved in establishing an electronic funds transfer?

~ The EE must give authorization for direct deposit by designating the financial institution(s) to which the EE's pay will be transferred, the type of account to which the pay will be transferred, the number of the account, and the financial institution's routing number. ~ The ER prepares an automated file of direct deposit records which is sent to a financial institution with the ability to process the file, known as the Originating Depository Financial Institution (ODFI). ~ The ODFI processes the file through the Automated Clearing House (ACH) operator. ~ The ACH operator processes electronic payments between the ODFI and the financial institutions designated by the EEs to receive the payments and coordinates the financial settlement between the participating financial institutions. ~ The Receiving Depository Financial Institutions (RDFI) designated by the EEs accept the electronic payments and post them to their customers' (the EEs') accounts. ~ On payday, the EEs receive an information statement containing the same data that would have been shown on the pay stub, had the EE been paid by check.

What must an EE's primary duty be to qualify for the administrative EE exemption under the FLSA?

~ The EE's primary duty must be the performance of office or nonmanual work directly related to the management or general business operations of the ER or the ER's customers. ~ The EE's primary duty must include the exercise of discretion and independent judgment regarding matters of significance.

What conditions must be satisfied for the ER to use the vehicle cents-per-mile method in determining the fair market value of the personal use of a company-provided vehicle?

~ The ER must expect the EE to regularly use the vehicle while conducting the ER's business, or the vehicle must actually be driven at least 10,000 miles and be used primarily by EEs. ~ The fair market value of the vehicle cannot exceed $15,600 for cars placed in service in 2018. ~ If the EE pays for fuel, the mileage rate is reduced by $0.055 per mile.

What should be included in a request for proposal (RFP)?

~ The ER's purpose in issuing the request ~ Specific payroll information--size, frequency, union vs. nonunion, salaried and hourly ~ Functional requirements of a new system now and in the future ~ Number of fields required for earnings and deductions ~ Whether HR and benefits will be integrated with the payroll system and what interfaces will be required ~ Training needs and whether this should be included in the bid ~ Level of support (maintenance) expected ~ Contract terms and conditions ~ Instructions to vendor on how to submit proposal

Under what circumstances must an ER submit Forms W-4 to the IRS?

~ The IRS directs the ER to do so in a written notice to the ER ~ The IRS directs the ER to do so in published guidance, such as a revenue procedure

Who can sign the ER's Form 940?

~ The individual owning the business, if it is a sole proprietorship ~ The president, vice president, or other principal corporate officer authorized to act, if the ER is a corporation (including an LLC treated as a corporation) ~ An authorized member, partner, or officer of an unincorporated association or partnership (including an LLC treated as a partnership) having knowledge of the organization's affairs ~ The owner or principal officer authorized to act, if it is a single member LLC treated as a disregarded entity ~ A fiduciary if the ER is a trust or estate

Attendance at lectures, meetings, seminars, and training sessions is considered work time unless certain conditions are met. What are these conditions?

~ The meeting, lecture, etc., is not held during the EE's regular work hours ~ Attendance is voluntary ~ The meeting, lecture, etc., is not directly related to the EE's job ~ The EE does not perform any productive work for the ER while attending

What special conditions must be satisfied for "commercial travelers" to be exempt from federal income tax withholding?

~ The nonresident alien EE is in the US for no more than a total of 90 days during the taxable year ~ Compensation received for work performed in the US totals no more than $3,000 during the taxable year ~ The nonresident alien is employed by: a US ER in a foreign country or a US possession or by a foreign ER not engaged in a trade or business in the US

What are some of the characteristics of a successful team?

~ The team has clear and specific goals and objectives. ~ Team meetings have a relaxed atmosphere where members can offer help and share experiences. ~ Each member has a role in reaching the team's goals. ~ Team members listen without judging and with interest in what others are saying. ~ There is civilized disagreement among team members, who criticize constructively. ~ Decisions are reached by a consensus of support, not unanimity, with even disagreeing members pledging to support the final decisions. ~ There is open communication and trust among members. ~ Each member has a clear assignment. ~ All members are responsible for the team's success or failure. ~ The team builds networks with EEs outside the team and asks for their feedback. ~ The team contains a diversity of EE styles--contributors, collaborators, communicators, and challengers. ~ The team performs a formal or informal self-assessment.

In terms of third-party sick pay, what information should the ER provide the third party to aid the third party in properly meeting its withholding, depositing, and reporting responsibilities?

~ The total wages paid by the ER to the EE during the calendar year before the third party begins making payments (helps determine whether the social security and FUTA wage bases have been met) ~ The last month in which the EE worked for the ER (helps determine how long the third party is responsible for social security and Medicare taxes) ~ EE contributions made to the cost of the insurance after taxes have been withheld (helps determine how much of each disability payment is taxable)

What is the purpose of an external audit?

~ To determine the accuracy of financial statements ~ To depict the company's financial condition and determine whether the notes to financial statements accurately summarize the company's accounting policies and procedures ~ To guard against any possible conflict of interest ~ To safeguard the company's assets ~ To provide an objective opinion as to the fairness of the financial statements

Name the three major types of health care plans offered by ERs to their EEs.

~ Traditional health insurance (fee-for-service) ~ Health Maintenance Organizations ~ Preferred Provider Organizations

What are the four combinations of time categories which tell a manager what his or her priorities should be?

~ Urgent and important--crisis management, immediate attention needed ~ Not urgent but important--planning and prevention activities ~ Urgent but not important--pressing activities that may be easy to accomplish ~ Not urgent and not important--easily accomplished, time-wasting activities

Name three commonly used system edits in payroll systems.

~ Warning that a payment is being generated for a terminated EE ~ Report for new hires ~ Error message when no payment is generated for an active EE ~ Error message for negative net pay ~ Error message for negative deductions ~ Report when compensation exceeds certain amounts ~ Report for excessive OT (or any OT in some companies) ~ Report when rate of pay changes

List the five questions the payroll manager must answer when developing a job description.

~ What are the educational requirements needed to perform the job? ~ What knowledge/skills must the applicant have before being offered the job? ~ What training opportunities can be offered to the new EE? ~ What is the level of supervision required on the job? ~ How much communication and interaction with other EEs will be necessary?

What factors determine an EE's domicile?

~ Where the EE votes ~ Where the EE maintains a residence ~ Where the EE's immediate family lives and where children attend school ~ Whether the EE owns a new abode or has a short-term lease ~ Where the EE returns after vacations or other leaves from work ~ The state issuing the EE's driver's license ~ Where bank accounts and business associations are maintained

What factors determine whether an expatriate EE is a bona fide resident of a foreign country?

~ Whether the EE brings his or her family and they intend to make the foreign country their home for the duration of the assignment ~ Purchase of a home or signing a long-term lease in the foreign country ~ Involvement in the culture and social life of the foreign country ~ The terms of the employment agreement regarding the foreign assignment ~ The type of visa or residence permit secured by the EE

What factors do the courts and the Department of Labor consider when making an employment status determination under the FLSA?

~ Whether the work performed is an integral part of the ER's business operation ~ Whether the worker has the chance to make a profit or risks a loss based on his or her managerial skills ~ Whether the worker invests in tools or materials required to perform the work and the extent of the worker's investment in relation to the ER's ~ Whether the work requires special skills or initiatives ~ How permanent the working relationship is ~ The degree of control exercised or retained by the employer

Name three types of employment that are exempt from FUTA.

~ Work on a foreign ship outside the US ~ Work done by students for the school where they attend classes or for an organized camp ~ Work performed as student nurses or hospital interns ~ Life insurance agents who receive only commissions ~ Newspaper deliverers under age 18 who deliver directly to customers ~ Certain nonimmigrant aliens working under F, J, M, or Q visas ~ Work performed for a spouse or child ~ Work performed by a child under age 21 for his or her parents ~ Work performed by an inmate of a penal institution ~ Work performed by an election worker who is paid less than $1,800 in 2018 ~ Work performed by alien agricultural workers under an H-2A visa ~ Work performed by statutory nonemployees