ch 9. Payroll Taxes
Ben has 2 jobs and both employers withhold FICA taxes. From his first job, Ben earned $82,000 and from his second job, he earned $36,000. How much can Ben claim as additional payment on his Form 1040 as excess social security tax paid in 2012? A) $0 B) $331.80 C) $691.80 D) $709.80
A) $0
Juan is married, is paid 1,800 per week, and claims three withholding allowance. What is the amount of federal income tax withheld from Juan's gross wages for the week using the percentage method? A) $203.59. B) $230.59. C) $257.37. D) $308.51.
A) $203.59.
Supplemental wages are only subject to FICA taxes and federal withholding taxes and are not subject to SUTA or FUTA taxes. A) True B) False
B) False
Carolyne is single, is paid $1,500 per week, and claims two withholding allowances. What amount of federal income tax is withheld from her gross wages each week using the percentage method? A) $251.81 B) $258.11 C) $270.05 D) $288.32
A) $251.81
Kim works part-time for Medical Assistants, Inc. and earned $6,385 for 2012. What amount of FUTA tax must her employer remit to the IRS? Assume her employer receives the maximum credit for state unemployment taxes. A) $38.31 B) $39.58 C) $44.70 D) $51.08
A) $38.31
Esmeralda is single and is paid $700 per week claiming two allowances. What is the amount of federal income tax withheld on Esmeralda's gross wages for the week? Use the wage bracket table in Appendix A at the end of the chapter. A) $44. B) $45. C) $55. D) $66.
A) $44.
Sandy is a self-employed health information coder. She has net earnings (profit) from her business of $71,200. Her self-employment taxes for the year are: A) $8,745.18 B) $9,469.60 C) $10,060.24 D) $10,833.60
A) $8,745.18
Brenda is a self-employed accountant. She has net earnings (profit) from her practice of $74,000. Her self-employment taxes for the year are: A) $9,089.09. B) $9,842.00. C) $10,455.87. D) $11,322.00
A) $9,089.09.
A taxpayer had AGI of $300,000 in 2012 and AGI of $250,000 in 2011. When filing her 2012 return, she expects her unpaid tax liability to be at least $1,000. She must make estimated payments equal to the smaller of 90% of the tax shown on her 2011 return or A) 110% of the tax on her 2011 return because 2012 AGI was more than $100,000. B) 100% of the tax on her 2011 return regardless of 2012 AGI. C) 100% of the tax on the 2011 return because 2012 AGI was more than $100,000. D) 110% of the tax on the 2011 return because 2011 AGI was greater than 2011 AGI.
A) 110% of the tax on her 2011 return because 2012 AGI was more than $100,000.
If on any day during the month, an employer accumulates $100,000 or more in tax liability, the taxes must be deposited: A) By the next banking day. B) Before the close of the business day in which the liability occurs. C) By the last day of the week if the employer is a monthly depositor. D) By either the following Wednesday or Friday if the employer is a semiweekly schedule depositor.
A) By the next banking day
Hank received a bonus of $5,000 from his employer. How is the federal withholding tax on this payment calculated if he also earns biweekly wages of $2,000? A) If taxes have already been withheld from his wages separately, the bonus is taxed at a flat rate of 25%. B) If taxes have already been withheld from Hank's wages separately, the bonus is subject to a backup withholding rate of 28%. C) If taxes have not been already withheld from Hank's regular wage, the bonus is added to the wages and withheld at the rate of 25%. D) If taxes have already been withheld from Hank's wages separately, the bonus is added to the wages and federal taxes are withheld at this combined amount. Any excess taxes withheld this period will be refunded to Hank on his next paycheck.
A) If taxes have already been withheld from his wages separately, the bonus is taxed at a flat rate of 25%.
A semiweekly schedule depositor's payroll ends and is paid on Friday, July 20, 2012. The employer must deposit the federal taxes paid for this pay period on or before: A) The following Wednesday B) The following Monday C) The following Friday D) The last day of the month
A) The following Wednesday
An employee who works for multiple employers will likely be under-withheld for federal income tax purposes and can owe additional taxes when filing his/her return. A) True B) False
A) True
Form 4070 is used by employers to record employees' tips subject to tax withholding and FICA taxes. A) True B) False
A) True
Safe harbor is a term used to describe a provision in the Internal Revenue Code that protects taxpayers from penalty under certain situations. A) True B) False
A) True
The amount withheld from supplemental payments depends on whether the employer accounts for the payment separate from regular wages. A) True B) False
A) True
Wages subject to withholding and other employment taxes include all pay given to employees for services performed. A) True B) False
A) True
When calculating the FUTA tax due, an employer can qualify for a 5.4% maximum credit for state unemployment taxes paid. A) True B) False
A) True
Taxpayers who employ household workers must file a quarterly 941 return and an annual 940 return. A) True B) False
B) False
When calculating self-employment taxes from a taxpayer who also receives wages from a salaried job, the earnings from self-employment are considered first in calculating the ceiling amount for social security and Medicare. A) True B) False
B) False
When using the wage bracket method, withholding allowances are deducted before figuring the federal withholding amount. A) True B) False
B) False
Irene earned wages of $112,210 during 2012. What share of FICA tax is Irene's employer responsible for in 2012? A) $6,246.90. B) $6,251.25. C) $8,453.25. D) $8,584.06.
C) $8,453.25.
Ebony earned $86,760 during 2012. She is single, paid semimonthly, and claims one withholding allowance. How much will Ebony's employer withhold from her, in total for each pay period for FICA and federal withholding taxes? A) $795.38. B) $808.60. C) $880.60. D) $920.19.
C) $880.60.
An employer must send Copy A of Form W-2 with the W-3 transmittal form for each employee paid in 2012 to the Social Security Administration no later than: A) January 31, 2013 B) February 1, 2013 C) February 28, 2013 D) March 1, 2013
C) February 28, 2013
Angie earned $120,000 during 2012. She is single, claims two withholding allowances, and is paid monthly. How much will Angie's employer withhold in social security taxes for 2012? A) $4,485.60 B) $4,624.20 C) $4,662.00 D) $5,040.00
B) $4,624.20
Irene earned wages of $112,210 during 2012. How much will Irene's employer withhold in social security taxes for the year? A) $4.620.00. B) $4,624.20. C) $6,820.00. D) $6,826.20.
B) $4,624.20.
Employers are required to deposit FUTA taxes when their liability exceeds: A) $100 B) $500 C) $1,000 D) $2,500
B) $500
Lynita has two jobs and earned $89,316 from her first job and $25,000 from her second job. How much total FICA taxes will Lynita have withheld from her wages from working two jobs? A) $6,220.65. B) $6,458.86. C) $6,548.86. D) $7,627.50.
B) $6,458.86.
Jack is married, is paid $5,000 biweekly, and claims four allowances. What amount of federal income tax is withheld from his gross wages each pay period? A) $676.46 B) $720.50 C) $866.73 D) $961.63
B) $720.50
What is the maximum state unemployment credit allowed for FUTA purposes? A) None. B) 5.4% if all state unemployment taxes have been paid. C) 6.0% if all state unemployment taxes have been paid. D) 90% of the maximum rate allowed for state unemployment.
B) 5.4% if all state unemployment taxes have been paid.
A taxpayer with an AGI of $300,000 for 2012 pays estimated taxes. The taxpayer can avoid an underpayment penalty by paying: A) At least 90% of his/her 2012 tax liability if his/her 2011 adjusted gross income was less than $200,000 regardless of filing status. B) At least 90% of his/her 2012 tax liability ratably over four quarterly payments. C) At least 100% of his/her 2012 tax liability ratably over four quarterly payments. D) At least 110% of his/her 2011 tax liability ratably over four quarterly payments.
B) At least 90% of his/her 2012 tax liability ratably over four quarterly payments.
A taxpayer who has overpaid the social security portion of the FICA tax because his or her combined taxable income from multiple jobs exceeds the annual wage base is entitled to receive the excess as a refund even if there is federal tax owed on the 1040 return. A) True B) False
B) False
An employer who is a monthly schedule depositor and accumulates a $100,000 tax liability on any day must pay the tax on the next business day and is allowed by law to remain a monthly schedule depositor until the next year when the employer will become a semiweekly schedule depositor. A) True B) False
B) False
Copy A of the Form W-2 is a red scannable form that is sent directly to the Internal Revenue Service to track all wages for federal income tax and social security purposes. A) True B) False
B) False
Form 1040-ES is filed along with the Form 1040 when a taxpayer makes estimated payments during the year. A) True B) False
B) False
Generally, an employer must withhold 28% of certain taxable payments if the payee fails to furnish the employer with a correct taxpayer identification number. A) True B) False
B) False
Kathy received a commission of $12,000 from her employer. How is federal withholding tax calculated on this payment if she also earns semimonthly wages of $2,500? A) If taxes have already been withheld from Kathy's wages separately, the commission is added to the wages and federal taxes are withheld at this combined amount. Any excess taxes withheld this pay period will be refunded to Kathy on her next paycheck. B) If taxes have already been withheld from Kathy's wages, the commission is taxed at a flat rate of 25% C) If taxes have not already been withheld from Kathy's regular wage, the commission is added to the wages and withheld at the rate of 25% regardless of her withholding allowances. D) If taxes have already been withheld from Kathy's wages separately, the commission is subject to backup withholding of 28%.
B) If taxes have already been withheld from Kathy's wages, the commission is taxed at a flat rate of 25%
Alexandra earned $200 in tips in June. When must she inform her employer of her tips on Form 4070 for federal income tax and FICA withholding purposes? A) June 30. B) July 10. C) July 31. D) Alexandra is not under any obligation to inform her employer of her tips earned in any one month.
B) July 10.
Angie earned $120,000 during 2012. She is single, claims two withholding allowances, and is paid monthly. How much federal withholding tax will Angie's employer withhold for 2012? A) $18,135.00 B) $19,085.00 C) $24,330.50 D) $25,394.50
C) $24,330.50
Daniel is a computer technical support representative earning $85,000 per year and also has a sole proprietor consulting business where he earned $28,000 for 2012. How much of his total earnings are subject to self-employment tax for 2012? A) $11,544. B) $12,500. C) $25,858. D) $28,000.
C) $25,858.
Failure to furnish a correct TIN to a requester (payer) can result in a penalty for the payee of: A) $0, it is the responsibility of the payer (requester) to have the correct information. B) $25 for each failure to complete a W-9. C) $50 for each failure to complete a W-9. D) $500 maximum for failure to complete any W-9 forms as required.
C) $50 for each failure to complete a W-9.
Harry has two jobs. He earns $111,000 from his first job and $10,000 from his second job. How much total FICA withholding will Harry have withheld from his wages from working two jobs? A) $6,233.70. B) $6,378,70. C) $6,798.70. D) $6,836.50.
C) $6,798.70.
Sharon is single and is paid $3,782 biweekly and claims one withholding allowance. What amount of federal income tax will be withheld from Sharon's gross wages for each payroll period? A) $525.69. B) $718.10. C) $743.36. D) $784.29.
C) $743.36.
The payroll period for a monthly schedule depositor ends and is paid on a Friday. The employer must deposit the federal taxes withheld for this pay period on or before: A) The last day of the month. B) The following Friday. C) The following Wednesday. D) The following Monday.
C) The following Wednesday.
Irene earned wages of $112,210 during 2012. How much will Irene's employer withhold in Medicare taxes for the year? A) $1,548.60. B) $1,596.45. C) $1,626.90. D) $1,627.05.
D) $1,627.05.
Angie earned $120,000 during 2012. She is single, claims two withholding allowances, and is paid monthly. How much will Angie's employer withhold in Medicare taxes for 2012? A) $1,596.45 B) $1,596.60 C) $1,609.50 D) $1,740.00
D) $1,740.00
Angie earned $120,000 during 2012. She is single, claims two withholding allowances, and is paid monthly. How much FICA tax must Angie's employer remit to the federal government in 2012? A) $12,441.30 B) $12,728.40 C) $14,643.30 D) $14,930.40
D) $14,930.40
If a taxpayer works for more than one employer during the year, how much in FUTA taxes is remitted in the name of the taxpayer? A) Only the first employer is required to remit FUTA taxes on the wages earned. B) If the employee earns more than $7,000 at the first job, all other employers are exempt from paying FUTA taxes for this employee during the year. C) If the employee earns less than $7,000 at the first job, the next employer must remit FUTA taxes until the employee has earned a total of $7,000. D) Both employers must remit FUTA taxes they pay to the employee on the first $7,000 of wages earned by the employee at each job.
D) Both employers must remit FUTA taxes they pay to the employee on the first $7,000 of wages earned by the employee at each job.
If, on any day during the month, an employer accumulates $100,000 or more in tax liability, the taxes must be deposited: A) Before the close of the business day in which the liability occurs. B) By the last day of the month if the employer is a monthly schedule depositor. C) By either the following Wednesday or Friday if the employer is a semiweekly schedule depositor. D) By the next banking day.
D) By the next banking day.
How many times can an employee adjust his or her federal withholding allowances per year on a W-4? A) once per calendar year. B) twice per calendar year. C) every quarter during the year. D) as often as the employee deems is necessary to correctly reflect changing life events.
D) as often as the employee deems is necessary to correctly reflect changing life events.