ALL Modules 0404

Calculate an employee's net pay based on the following information. *Paid biweekly* (Hourly rate = $18.00) *Nonexempt employee* (Hours worked week 1 = 45) (Hours worked week 2 = 50) 2021 W-4 information = Head of Household, Step 3 = $2,000 (1 qualified child under age 17) *YTD Wages = $27,000.00* *401(k) contribution = 1% of wages* (Use the Percentage Method (Worksheet 4 in Publication 15-T)) - $1,533.54 - $1,640.83 - $1,657.06 - $1,674.27

- $1,640.83 When calculating an employee's net pay, determine if the employee is exempt or nonexempt to calculate any overtime. Reduce the gross wages by the 401(k) deferral before calculating income tax, but do not reduce the wages by the 401(k) when calculating social security and Medicare taxes. For FITW, use Worksheet 4 from Publication 15-T.

Which of the following journal entries is posted as a debit? - $55,000.00 payroll tax liability, posted to the liability account - $15,000.00 withheld taxes, posted to the liability account - $5,000.00 paycheck, posted to the cash account - $10,000.00 employer 401(k) plan contributions, posted to an expense account

- $10,000.00 employer 401(k) plan contributions, posted to an expense account In a journal entry, debits increase expenses (such as employer contributions to a 401(k) plan). In a journal entry, credits increase liabilities (such as taxes withheld but not deposited) and decrease assets (such as the payroll checking account).

Which of the following journal entries is posted as a credit? - $250,000.00 gross pay, posted to an expense account - $13,000.00 state income tax withheld, posted to the liability account - $500.00 stationery purchases, posted to an expense account - $1,000.00 lease payment for payroll software, posted to the expense account

- $13,000.00 state income tax withheld, posted to the liability account In a journal entry, credits increase liabilities (such as outstanding taxes). In a journal entry, debits increase expense account (such as wage expense, lease expenses, and the purchase of supplies).

Based on the following information, calculate the total cost of payroll: Gross wages: $1,100.00 401(k) contribution: $110.00 Cafeteria Plan: $150.00 Federal income tax: $175.00 Social security tax: $58.90 Medicare tax: $13.78 State income tax: $50.00 Charitable contribution: $35.00 Employee stock purchase: $50.00 Net pay: $457.32 401(k) employer match: $55.00 FUTA: $6.60 SUI: $33.00 - $457.32 - $1,100.00 - $1,194.60 - $1,267.28

- $1,267.28 The total cost of payroll is not only gross wages, but also includes employer taxes (social security, Medicare, federal and state unemployment), plus employer contributions to retirement plans, such as 401(k).

Which of the following journal entries is posted as a debit? - $15,000.00 withheld taxes, posted to the liability account - $15,000.00 deposit of taxes, posted to liability account - $45,000.00 payroll checks issued to employees, posted to the payroll checking account - $1,000.00 state income tax withheld, posted to the liability account

- $15,000.00 deposit of taxes, posted to liability account In a journal entry, debits decrease liabilities (such as when withheld payroll taxes are paid). In a journal entry, credits increase liabilities (such as taxes withheld from employee's wages) and decrease assets (such as the payroll checking account)

Under the FLSA, calculate the overtime premium pay for a nonexempt employee who is paid $10.00 per hour and works 45 hours in the workweek. - $25.00 - $75.00 - $450.00 - $475.00

- $25.00 Under the FLSA, when calculating an employee's overtime premium pay, multiply one-half of the regular rate of pay by the number of hours over 40 in a workweek.

What is the 2021 annual compensation limit for defined benefit and contribution plans? - $58,000.00 - $130,000.00 - $200,000.00 - $290,000.00

- $290,000.00 The annual compensation limit for defined benefit and contribution plans is $290,000.00 in 2021. $58,000.00 is the maximum contribution to a defined contribution plan for employees who have not reached age 50 by December 31, 2021. $130,000.00 is the compensation level defining highly compensated employees. $200,000.00 is the threshold for beginning the deduction of the Additional Medicare Tax.

Which of the following journal entries is posted as a credit? - $500.00 stationery purchases, posted to an expense account - $1,000.00 lease payment for payroll software, posted to the expense account - $55,000.00 payroll tax liability, posted to the liability account - $5,000.00 purchase of calculators, posted to the asset equipment account

- $55,000.00 payroll tax liability, posted to the liability account In a journal entry, credits increase liabilities (such as payroll taxes withheld but not deposited). In a journal entry, debits increase assets (such as the asset equipment account) and increase expenses (such as lease payments and office supplies).

An employee with YTD taxable wages of $141,600.00 is being paid $6,500 for the last pay period of 2021. How much social security tax must be withheld from the payment? - $17.40 - $62.00 - $74.40 - $91.80

- $74.40 Social security tax is withheld at a rate of 6.2% from an employee's social security taxable wages only up to the applicable social security wage base ($142,800.00 in 2021).

Which of the following journal entries is posted as a debit? - $8,000.00 purchase of W-2 forms, posted to expense account - $6,000.00 deducted for medical insurance premiums, posted to the liability account - $1,000.00 state income tax withheld, posted to the liability account - $15,000.00 withheld taxes, posted to the liability account

- $8,000.00 purchase of W-2 forms, posted to expense account In a journal entry, debits increase expense accounts (such as payroll supplies). In a journal entry, credits increase liabilities (such as premiums due for employee benefits and taxes withheld).

An exempt employee paid biweekly has regular wages of $1,100.00 and a holiday bonus of $40.00. The employee's year-to-date wages are $63,000.00 and is claiming single and 3 allowances on a 2019 Form W-4. Using the Wage Bracket method and Worksheet 3, calculate the employee's net pay with the following deductions: §125 pre-tax medical: $35.00 ** §401(k) contribution: $75.00 ** Charitable contribution: $11.00 ** - $896.47 - $907.47 - $942.47 - $1,017.47

- $896.47 Make sure you are using the Wage Bracket Method withholding table, Worksheet 3 from Publication 15-T, for single persons with a biweekly payroll cycle and the taxable wages are in the row where the wages are at least the lower amount, but less than the higher amount. The taxable wages for federal income tax should be the regular wages of $1,100.00, plus the holiday bonus of $40.00, less the Plan 125 deduction of $35.00, and the 401(k) contribution of $75.00, but not less the charitable contribution of $11.00. The social security and Medicare wages are reduced by the Sec. 125 deduction, but not the 401(k) contribution or the charitable contribution. The net pay is the gross pay of $1,140.00, less total tax of $122.53, less all of the voluntary deductions of $35.00, $75.00, and $11.00, which should be $896.47.

Payments from a qualified pension plan are reported on Form: - W-2. - 1099-MISC. - 1099-NEC - 1099-R.

- 1099-R. Payments from a qualified pension plan are reported on Form 1099-R. Form W-2 is used to report an employee's wages and taxes. Form 1099-MISC is used to report payments to independent contractors except for nonemployee compensation which is reported on Form 1099-NEC.

Under the concentration test, a cafeteria plan is not discriminatory if benefits provided to key employees do not exceed: - 10%. - 25%. - 50%. - 75%.

- 25%. The concentration test for cafeteria plans determines if the nontaxable benefits given to key employees do not exceed 25% of such benefits given to all employees participating in the plan.

Under National Medical Support Notice rules, a plan administrator must tell the state child support agency whether coverage is available for a child within: - 7 business days. - 14 business days. - 21 business days. - 40 business days.

- 40 business days. The plan administrator has 40 business days from the date of the receipt of the National Medical Support Notice to tell the state agency whether coverage is available for the child and, if so, whether the child is already covered under the plan or what the custodial parent has to do to initiate coverage.

Which of the following items are included in the aggregate reportable cost reported on Form W-2, Box 12, using Code DD? - Cost of an independent dental plan - Amounts contributed to an HSA - Self-insured plans not covered by COBRA - An increase in health insurance cost during the year

- An increase in health insurance cost during the year The aggregate reportable cost (employer and employee) is reported on Form W-2 in Box 12, with Code DD including changes in health insurance premiums during the calendar year. Other related health costs including HSA contributions, independent vision and dental plans, self-insured plans not covered by COBRA, and hospital indemnity costs are not included in the aggregate reportable cost

How frequently must an employer recognize the value of noncash fringe benefits as income? - At least quarterly - With every payroll - Along with its regular tax deposit - At least once a year, no later than December 31

- At least once a year, no later than December 31 Under IRS rules, employers must recognize the value of taxable noncash fringe benefits as income at least once a year, no later than December 31 to ensure the taxable value and taxes withheld are reported correctly on Form W-2.

The social security tax reported on Form 941 represents what taxes? - Employee's share of social security only - Employer's share of social security only - Tax on tips only - Both employee's and employer's share of social security

- Both employee's and employer's share of social security The social security tax reported on Form 941 represents both employee's (6.2%) and employer's (6.2%) share of social security. Social security tax on tips is reported separately on Form 941 in Line 5b, Column 2.

Information about Multiple Worksite Reporting is used by what government agency? - Bureau of Labor Statistics - Bureau of the U.S. Census - Bureau of Industry and Security - Bureau of Land Management

- Bureau of Labor Statistics Employers who have more than one worksite must provide quarterly employment and wage information reports pertaining for all their worksites to be used by the federal Bureau of Labor Statistics.

After an employer receives an IRS penalty notice for an employee's failure to provide a correct name and SSN, when must the employer request the employee to complete Form W-4? - By December 31st of that year - Each quarter thereafter - Each month thereafter - Each pay period thereafter

- By December 31st of that year After an employer receives an IRS penalty notice for an employee's failure to provide a correct name and SSN, the employer must request the employee to complete a Form W-4 by December 31st.

IRC §125 Cafeteria plans are generally funded by all of the following - mechanisms EXCEPT: - flex dollars. - after-tax employee contributions. - salary reduction. - COBRA.

- COBRA. Cafeteria plans and other flexible benefit plans are generally funded by either of the following mechanisms: flex dollars or flex credits, salary reduction, or after tax contributions.

An employee has a creditor garnishment in effect when the employer receives a child support order for the employee. Which order must be satisfied first? - Child support order - Creditor garnishment - Whichever one the employer chooses - Whichever one the employee chooses

- Child support order The general priority for involuntary deductions is as follows: child support orders, bankruptcy orders, federal tax levies, federal administrative garnishments, student loan garnishments, state tax levies, local tax levies, and creditor garnishments.

Which of the following items is an expense? - Company cost of employee benefit programs - Furniture owned by the company - Leasing contract for payroll hardware - Taxes withheld but not yet deposited

- Company cost of employee benefit programs Expenses are the costs incurred to produce the company's products or services (such as the company cost of employee benefit programs). Furniture is an asset of a company. Taxes withheld but not deposited and the leasing contract for payroll hardware are liabilities.

Which of the following statements is true about 401(k) plans? - A 401(k) plan is designed primarily for employees of tax-exempt organizations. - Contributions to a Roth 401(k) plan are subject to federal income tax when deferred. - Employers must match employee contributions to a 401(k) plan. - Employee contributions to a 401(k) plan are not subject to social security and Medicare tax withholding.

- Contributions to a Roth 401(k) plan are subject to federal income tax when deferred. Under IRS rules, employee contributions to a Roth 401(k) plan are subject to income tax at the time of contribution and are subject to social security (6.2%) and Medicare (1.45%) taxes. 403(b) plans are designed for employees of tax-exempt organizations, 457(b) plans are designed for employees of state and local government employees, and employers are not required to match employee contributions to a 401(k) plan.

Which of the following statements is true about 401(k) plans? - Contributions to a Roth 401(k) plan are subject to social security and Medicare taxes when deferred. - A 401(k) plan is designed primarily for employees of tax-exempt organizations. - A 401(k) plan must allow eligible employees to contribute up to 15% of their wages. - A 401(k) plan is a deferred compensation plan primarily for employees of state and local governments.

- Contributions to a Roth 401(k) plan are subject to social security and Medicare taxes when deferred. Under IRS rules, employee contributions to a Roth 401(k) plan are subject to income tax at the time of contribution and are subject to social security (6.2%) and Medicare (1.45%) taxes. The IRC limits an employee's deferral to a 401(k) plan to the lesser of the plans limit or $19,500.00. If the employee's age at the end of the year is 50 or older, the employee can defer an additional $6,500.00. 403(b) plans are designed for employees of tax-exempt organizations, 457(b) plans are designed for employees of state and local government employees, and employers are not required to match employee contributions to a 401(k) plan.

Who has the responsibility to verify the eligibility to work in the U.S.? - U.S. Citizenship and Immigration Services - Department of Labor - Employer - Employee

- Employer The employer is responsible for verifying an employee's eligibility to work in the U.S. under The Immigration Reform and Control Act of 1986 (IRCA).

Which of the following statements is true about 401(k) plans? - A 401(k) plan is a deferred compensation plan primarily for employees of state and local governments. - Employers must match employee contributions to a 401(k) plan. - Employer contributions to a 401(k) plan are not subject to federal income tax when deferred. - A 401(k) plan is designed primarily for employees of tax-exempt organizations.

- Employer contributions to a 401(k) plan are not subject to federal income tax when deferred. Under IRS rules, employee contributions to a 401(k) plan are not subject to income tax but are subject to social security (6.2%) and Medicare (1.45%) taxes. 403(b) plans are designed for employees of tax-exempt organizations, 457(b) plans are designed for employees of state and local government employees and employers are not required to match employee contributions to a 401(k) plan.

Which form is used by a local government employer when withholding only Medicare tax? - Form 941 - Form 943 - Form 944 - Form 945

- Form 941 Form 941 is used by all employers even governmental employers only withholding Medicare tax.

A charitable contribution is substantiated with which two documents? - Pay stub and company I.D. card - Form W-2 and pledge card - Forms W-2 and 941 - Driver's license and social security card

- Form W-2 and pledge card The IRS requires a charitable contribution to be substantiated on a pay statement or Form W-2 and a pledge card in order for individuals to take a deduction on their personal tax return for a charitable contribution deducted by payroll.

All of the following items are taxable compensation EXCEPT: - Health Savings Account if used to reimburse qualified medical expenses. - employer-paid transit passes in excess of $270.00 a month. - company-provided group-term life insurance in excess of $50,000.00. - severance pay.

- Health Savings Account if used to reimburse qualified medical expenses. IRC Sec. 223 excludes employer contributions to Health Savings Accounts and distributions from Health Savings accounts for eligible medical expenses from income. The IRC requires all compensation for services be included in an employee's income except when specifically excluded by law. There are no exclusions for cash payments, such as qualified transportation fringe benefits, such as transit passes, in excess of $270.00 per month, GTL in excess of $50,000, and severance pay.

Which of the following statements is true regarding 401(k) plans? - 401(k) plans must allow eligible employees to defer up to 15% of their wages. - Employers must match employee 401(k) deferrals. - In 2021, the maximum 401(k) deferral for employees under 50 years of age to a 401(k) plan is $19,500.00. - Employee deferrals to a 401(k) plan are not subject to social security and Medicare taxes.

- In 2021, the maximum 401(k) deferral for employees under 50 years of age to a 401(k) plan is $19,500.00. Under IRS rules, a 401(k) plan may allow an employee age 50 or older to make an additional $6,500.00 contribution beyond the $19,500.00 deferral limit. Under IRS rules, employee contributions to a 401(k) plan are not subject to income tax but are subject to social security (6.2%) and Medicare (1.45%) taxes. Employers are not required to match an employee's 401(k) contribution.

The value of an employee's personal use of a company-provided car during November 2021 was $112.00. The company uses the special accounting rule beginning November 1 for reporting personal use of the company provided cars. The $112.00 is reported on Form W-2 for what due date? - December 31, 2021 - January 31, 2022 - January 31, 2023 - It is not reported.

- January 31, 2023 When using the IRS special accounting rule, an employer will include the value of benefits received in November and December on the next tax year's Form W-2. For example, the benefits received in November and December 2021, will be reported on the 2022 Form W-2 received by the employee no later than January 31, 2023.

What document is matched correctly with its use? - Financial statements - Journal and general ledger - Cash flow statement - Report of company's net income - Income statement - Record of company's assets, liabilities, and net worth - Journal - First posting of data about a transaction

- Journal - First posting of data about a transaction The journal is where financial transactions are first recorded. The journal records transactions by date. The income statement shows the company's net income or loss for an accounting period. The financial statements include the balance sheet, income statement, cash flow statement of, footnotes, and the report of the independent auditor. The cash flow statement reports the change in the organization's cash from one accounting period to the next accounting period by showing the cash inflows and outflows.

An employee was an average performer until he was put in charge of a task force analyzing state workers' compensation programs. Since then, his performance has improved remarkably. What was the motivator for this employee? - Accomplishment - Recognition - Leadership - Affiliation

- Leadership People who excel when put in charge are motivated by leadership. For some people, leadership, the desire to lead others, give direction, and having more control drives them to excel.

What action must an employer take when receiving a child support order? - Terminate the employee because of the deduction. - Discipline the employee because of the deduction. - Take no deduction from the employee. - Make the deduction as required.

- Make the deduction as required. Under the CCPA, an employer must withhold the lesser of the amount on the child support order (IWO) or the allowed percentage of the employee's disposable earnings to satisfy the child support order.

When is Form 1042-S required to be provided to the IRS? - January 31 - February 28 - March 15 - March 31

- March 15 Forms 1042-S are filed with the IRS and furnished to the recipient no later than March 15 of the year following the year the payments were made that are reported on Form 1042-S.

Between Forms W-2 and Forms 941, the IRS and SSA reconcile: - nonqualified deferred compensation. - dependent care benefits. - deferred compensation. - Medicare tax withholding.

- Medicare tax withholding. The IRS and SSA require wages subject to federal income tax, federal income tax, social security and Medicare wages, and social security and Medicare taxes be in balance between Forms W-2 and 941.

Which of the following payroll issues is governed only by state agencies? - Exempt/nonexempt status - Overtime - Method of payment - Minimum wage

- Method of payment Method of pay is governed by state agencies only. Minimum wage, exempt/nonexempt status, and overtime are regulated by both federal and state laws.

Which of the following items is a liability? - Company cost of employee benefit programs - Furniture owned by the company - Mortgage on the company's building - Cost of employees' wages

- Mortgage on the company's building Liabilities are debts of the company or claims against the company and may be current or long-term, (such as the mortgage on the company's building). Assets are items of value to the company and may be current, property, or intangibles (such as the company's furniture. Expenses are the costs incurred to produce the company's products or services, (such as the cost of the employee's wages and benefits).

The Bureau of Labor Statistics may require employers to file a: - Quarterly State Unemployment Insurance Return. - Form W-2. - Form 940. - Multiple Worksite Report.

- Multiple Worksite Report. Employers in certain states are required to file wage reports quarterly by the employer's worksites (Multiple Worksite Report) with the state unemployment insurance agency that shares the data with the Bureau of Labor Statistics (BLS).

What taxes, if any, must be withheld from payments to an independent contractor? - Federal income tax only - Social security and Medicare taxes only - No federal employment taxes are required to be withheld - Federal income, social security, and Medicare taxes only

- No federal employment taxes are required to be withheld Independent contractors not providing the company with a TIN are subject to backup withholding (FIT).

Qualified transportation fringe benefits are subject to which taxes? - No federal taxes - Federal income tax only - Social security and Medicare taxes only - Federal income, social security, and Medicare taxes

- No federal taxes Under IRS rules, qualified transportation fringe benefits provided by an employer are not taxable if less than $270.00 per month. However, amounts in excess of $270.00 per month are subject to income, social security and Medicare tax withholding.

Which of the following plans can discriminate in favor of highly compensated employees? - Nonqualified deferred compensation plans - Defined contribution plans - Sec. 125 benefit plans - 401(k) plans

- Nonqualified deferred compensation plans Under IRS rules, qualified retirement plans such as 401(k), 403(b), defined benefit, and defined contribution plans and cafeteria plans are required to meet certain discrimination rules.

Totalization agreements alleviate the burden of double taxation for which of the following taxes? - Federal income tax - Federal unemployment tax - Social security and Medicare - State unemployment tax

- Social security and Medicare To alleviate the burden of double social security and Medicare taxation, the U.S. has entered into totalization agreements with 26 countries.

Under the FLSA, which of the following documents is NOT required to be retained for at least three years? - Record of employee's hours worked each week - Substantiation of additions to wages - Record of withheld taxes - Record of the amount of employee's wage payments

- Substantiation of additions to wages FLSA requires documents such as an employee's record of hours worked, amounts paid, dates of payments, and amounts withheld for deductions, be retained for at least three years. Records substantiating additions to and deductions from wages only need to be retained for two years.

Which of the following items is a liability? - Purchase of computer supplies - Company cost of employee benefit programs - Taxes withheld but not yet deposited - Salaries paid to employees

- Taxes withheld but not yet deposited Liabilities are debts of the company or claims against the company and may be current or long-term. Taxes withheld but not yet deposited are liabilities. The cost of employee benefit programs, purchase of computer supplies, and salaries paid to employees are expenses.

In addition to the FLSA, the following federal laws regulate minimum wages and overtime pay to employees working for employers who are federal government contractors EXCEPT: - The Davis-Bacon Act - The Small Business Act - The McNamara-O'Hara Act - The Contract Work Hours and Safety Standards Act

- The Small Business Act In addition to the FLSA, federal government contractors are subject to the requirements of the Davis-Bacon Act, the McNamara-O'Hara Act Service Contract Act, Copeland Anti-Kickback Act, the Contract Work Hours and Safety Standards Act, and Walsh-Healey Public Contracts Act.

Which of the following documents must be retained for a maximum of four years? - Work time schedules - The amount and date of an employee's wage payments - Billing records - Wage rate tables

- The amount and date of an employee's wage payments Tax related documents, such as the tax returns and amount and date of an employee's wage payments, be retained for at least four years.

Which of the following statements is true about Sec. 125 plans? - Employees working 30 hours a week or more must be included in the company's Sec. 125 plan. - At the end of the plan year, employees receive cash payments for amounts remaining. - Benefits in the plan include group-term life insurance, medical/dental coverage, employee discounts, and scholarship grants. - The benefit menu may include both cash and qualified nontaxable benefits.

- The benefit menu may include both cash and qualified nontaxable benefits. Cafeteria plans provide an employee the ability to choose between taxable and nontaxable benefits such as cash.

When reporting the cost of employer-provided health coverage on Form W-2, all the following methods can be used for calculating the amount EXCEPT: - premium charged method. - modified COBRA premium method. - actual COBRA premium charged method. - COBRA applicable premium method.

- actual COBRA premium charged method. An employer is not required to use the same method for every plan but must use the same method with respect to a plan for every employee receiving coverage under that plan. The following methods are allowed to be used to calculate the cost of coverage: Premium charged method, COBRA applicable premium method (but does not include the 2% administrative fee), or Modified COBRA premium method.

When nonresident aliens complete a 2020 or later Form W-4, they must: - claim exempt from withholding in the space below Step 4(c). - check the Single or Married filing separately box in Step 1. - indicate their country of residence. - check the box in Step 2(c).

- check the Single or Married filing separately box in Step 1. There are special instructions nonresident aliens must follow when completing a 2020 or later Form W-4. They can only check single or married filing separately in Step 1(c), cannot claim dependents (Step 3) or deductions (Step 4(b)) (with some specific exceptions), must write Nonresident Alien or NRA in the blank space under Step 4(c), and cannot claim exempt status.

Under the FLSA, when a nonexempt employee is traveling, all of the following time is compensable EXCEPT: - commuting between work and home. - traveling from home to another city for a special assignment. - traveling from one job site to another during a workday.- when away from home overnight traveling during the employee's normal work hours.

- commuting between work and home. Generally, the time a nonexempt employee spends traveling from home to work and work to home is not worktime.

All of the following benefits are taxable wages EXCEPT: - de minimis fringe benefits. - overtime compensation. - commissions. - bonuses.

- de minimis fringe benefits. Under IRS rules, cash compensation paid for services performed, such as overtime, commissions, and bonuses, are taxable compensation. Under IRC Sec. 132, de minimis fringe benefits are not taxable.

A company accrues 105 days of vacation time for its employees valued at $9,665.00. When earned, it is accrued as a: - debit to an expense account. - debit to a cash account. - debit to a liability account. - credit to an expense account.

- debit to an expense account. The journal entry recording the liability for accrued vacation is recorded as a debit in a vacation accrued expense account and a credit to the accrued vacation liability account.

A company has accrued $23,665.00 of vacation pay to a liability account. When employees are paid the vacation amount due, the entries to the vacation liability account will be recorded as a: - debit to the expense account. - credit to the expense account. - debit to the liability account. - credit to the asset account.

- debit to the liability account. The journal entry recording the payment of accrued vacation is recorded as a debit in the accrued vacation payable liability account and a credit to the asset account cash.

All the following benefits can be offered in an IRC §125 plan EXCEPT: - group-term life insurance. - educational assistance. - elective vacation days. - dependent care.

- educational assistance.

An expatriate employee may qualify for the foreign earned income exclusion under: - the physical presence test only. - the bona fide residence test only. - the physical presence test and the bona fide residence test together. - either the physical presence test or the bona fide residence test.

- either the physical presence test or the bona fide residence test. Under IRC Section 911, an expatriate employee claiming the foreign earned income exclusion must meet either the physical presence test or the bona fide residence test.

Under the FLSA, all of the following types of compensation are included when determining if an employee meets the highly compensated definition for the white collar exemption EXCEPT: - employee benefits. - shift differentials. - nondiscretionary bonuses. - commissions.

- employee benefits. FLSA regulations do not allow board, lodging, medical insurance, life insurance, contributions to retirement plans and other fringe benefits to be included in the calculation of a highly compensated employee's annual earnings when determining the employee's exempt status.

For compliance purposes, requirements of the payroll system should include the production of all of the following reports EXCEPT: - state tax withholding. - federal tax withholding. - total compensation paid. - employee marital status.

- employee marital status. An employee's marital status from Form W-4 is not included on any reports from the payroll system.

The National Medical Support Notice consists of two parts that are given to the: - employee and the health plan administrator. - health plan administrator only. - employer and the health plan administrator. - employee and the payroll manager.

- employer and the health plan administrator. The National Medical Support Notice consists of two parts, one for the employer and one for the health plan administrator.

All of the following tasks are staffing concerns EXCEPT: - recruiting and selecting. - delegating tasks. - evaluating next year's staff budget. - training and coaching.

- evaluating next year's staff budget. Staffing is managing the payroll department's staff. It includes the three essential activities: hiring, delegating, and training.

Coaching is appropriate when: - handling stress and burnout. - dealing with personal problems. - an employee feels insecure about work performance. - explaining department policies.

- explaining department policies. Coaching helps improve the knowledge and skills employees need to perform their jobs, such as orientation of new employees, explaining policies, and teaching new skills. Counseling is appropriate when employees are insecure about their performance, have personal problems, or have difficulty dealing with stress.

Death benefits paid by a nonqualified deferred compensation plan are subject to: - Medicare tax ONLY. - social security tax ONLY. - federal income, social security, and Medicare taxes. - federal income tax ONLY.

- federal income tax ONLY. Death benefits paid by a nonqualified deferred compensation plan are subject to federal income tax but are not subject to federal income tax withholding. The benefits are not subject to social security or Medicare taxes.

The amount an employer adds to the wages of a nonresident alien is subject to: - federal income tax withholding only. - social security and Medicare taxes only. - social security, Medicare, and FUTA taxes. - no federal withholding taxes.

- federal income tax withholding only. Under IRS rules for nonresident aliens, an additional amount must be added to the taxable wages to calculate federal income tax withholding. The additional amount is NOT added to social security or Medicare wages when calculating social security or Medicare taxes and is not added to the wages reported in Box 1 on Form W-2. The additional amount is also NOT subject to FUTA taxes.

U.S. citizens working for U.S. companies abroad are generally subject to: - federal income taxes only. - Medicare taxes only. - federal income tax, social security, and Medicare taxes, unless specific exclusions exist. - social security and Medicare taxes only.

- federal income tax, social security, and Medicare taxes, unless specific exclusions exist. U.S. citizens and resident aliens working for U.S. companies outside the U.S. are generally subject to federal income tax, social security and Medicare taxes, unless specific exclusions exist. Exclusions for U.S. citizens working abroad include the foreign earned income and foreign housing cost exclusions.

In order to ensure an expatriate employee will not be overburdened by foreign taxes, an employer might offer any of the following tax plans EXCEPT: - hypothetical tax. - foreign tax exemption. - tax equalization. - tax protection.

- foreign tax exemption. The foreign tax exemption allows an expatriate employee who is subject to U.S. and the foreign country's income tax to credit the foreign country's income tax against U.S. federal income tax withholding. Most employers with expatriate employees (U.S. citizens and resident aliens) will have plans that reduce the income tax burden the employee faces. The plans an employer may have include tax protection, tax equalization, and hypothetical tax plans.

A Zero Balance Account is unique in that: - funds are transferred to the account when items are presented for payment. - it prevents fraudulent payments. - reconciliations of these accounts are not necessary. - it is only used for payroll checking accounts.

- funds are transferred to the account when items are presented for payment. A Zero Balance Account is unique in that funds are transferred to the account when items are presented for payment to facilitate banking relationships.

The taxation of employer-provided health insurance through a third-party insurance company: - may not discriminate in favor of highly compensated employees. - requires the full value to be taxable to the employee. - may not be tailored for highly compensated employees. - has no nondiscrimination requirements.

- has no nondiscrimination requirements. Under IRS rules, health insurance plans provided through an insurance carrier tailored to favor highly compensated employees do not lose the ability to exclude the benefits from the employee's income.

IRS regulations define all of the following payments as supplemental payments EXCEPT: - hourly pay. - tips. - overtime pay. - severance.

- hourly pay. The IRS defines supplemental wages as amounts paid for a pay period at an hourly, daily, or other periodic rate or predetermined fixed amount that are not regular wages.

Coaching is appropriate when: - an employee feels insecure about work performance. - salaries have been frozen. - a corporate reorganization occurs. - improving an employee's skills.

- improving an employee's skills. Coaching helps improve the knowledge and skills employees need to perform their jobs, such as orientation of new employees, explaining policies, and teaching new skills or procedures. Counseling is appropriate during a reorganization, when salaries are frozen, and when employees feel insecure about their job performance.

The IRS safe-harbor regulations provide that health insurance is affordable when the employee's cost does not exceed 9.83% of the following amounts EXCEPT: - in Box 1 of Form W-2. - in Box 3 of Form W-2. - rate of pay at the beginning of the coverage period. - federal poverty level.

- in Box 3 of Form W-2. The IRS safe-harbor rules allow employers the ability to determine if a health insurance plan is affordable if the lowest employee contribution is no more than 9.83% of the employee's wages as reported in Box 1 of Form W-2, is no more than 9.83% of the employee's rate of pay at the beginning of the coverage period, or does not exceed 9.83% of the federal poverty line for a single individual for the applicable calendar year.

Coaching is appropriate when: - handling stress and burnout. - a corporate reorganization occurs. - an employee is unhappy. - introducing a new procedure.

- introducing a new procedure. Coaching helps improve the knowledge and skills employees need to perform their jobs, such as orientation of new employees, explaining policies, and teaching new skills or procedures. Counseling is appropriate during a reorganization, employees who are stressed, or are unhappy.

Counseling is appropriate when: -following up after a training session. - helping an employee master a new challenge. - layoffs occur. - conducting performance reviews.

- layoffs occur. Counseling is used by managers to help an employee resolve a personal problem affecting performance such as after a reorganization, layoffs, or when promotional opportunities are limited. Coaching is appropriate after a training session, during performance reviews, or helping an employee master a new challenge.

The Immigration Reform and Control Act of 1986: - makes it illegal for an employer to hire an unauthorized worker. - requires new hires to show two forms of identification when hired. - suggests employees retain a copy of Form I-9 for at least 3 years from date of hire. - recommends employers complete section 2 of Form I-9 within five days of hire.

- makes it illegal for an employer to hire an unauthorized worker. The Immigration Reform and Control Act of 1986 (IRCA) makes it illegal for an employer to hire an unauthorized worker and requires verify the identity and right to work of all employees hired after November 6, 1986.

An individual receiving a taxable periodic distribution from a qualified pension plan does not file Form W-4P. With no Form W-4P on file, what marital status and number of allowances are used to calculate federal income tax withholding? - single with 0 allowances. - single with 1 allowance. - married with 2 allowances. - married with 3 allowances.

- married with 3 allowances. If an individual receiving a taxable periodic distribution from a qualified pension plan does not file Form W-4P, Withholding Certificate for Pension or Annuity Payments, the payers and plan administrators must withhold as if the individual claimed married and three allowances on Form W-4P.

When an employer receives an out-of-state child support order, the employer uses the employee's work state when applying the following rules EXCEPT: - medical support implementation. - administrative fee deductions. - time period to implement the withholding order. - maximum deduction amount permitted.

- medical support implementation When receiving an out-of-state Income Withholding Order, employers follow the rules of the employee's work state when determining the employer's administrative fee, the maximum amount permitted to be withheld, the priority for withholding and allocating income for multiple withholding orders, and the time period to implement. Otherwise, follow the rules as stated on the order.

Resident aliens working outside the U.S. are eligible for: - the same tax exemptions as U.S. citizens working abroad. - no special tax exemptions. - special tax exemptions not available to U.S. citizens. - tax exemptions only when working in their home country.

- no special tax exemptions. Under IRS rules, resident aliens working outside the U.S. are not eligible for the special tax exemptions that U.S. citizens may be eligible to receive.

Under the FLSA, the primary duties of an exempt computer professional employee include the following duties EXCEPT: - design of computer programs. - non-manual work related to management. - application of systems analysis techniques. - design of computer systems.

- non-manual work related to management. An exempt computer professional employee's duties include the systems analysis, programming or design of computer programs.

A third-party sick pay provider transfers the reporting liability to an employer by: - notifying the employer of the payments and the withheld taxes by the deposit due date of the withheld taxes. - withholding federal income tax from the employee's payments. - notifying the employer of the annual sick pay payments by providing a summary by January 31. - charging the employer 102% of the payment.

- notifying the employer of the payments and the withheld taxes by the deposit due date of the withheld taxes. Under IRS rules, a third-party sick pay provider transfers the reporting liability to the employer by notifying the employer of the payments made and the withheld taxes by the deposit due date of the withheld taxes.

Employers may provide qualified transportation fringe benefits for: - reimbursed transit passes without substantiation of the cost of the transit passes. - parking not to exceed $270.00 per month. - employer-provided cash advances for subway passes. - monthly commuter passes valued at $330.00.

- parking not to exceed $270.00 per month. Under IRS qualified transportation fringe benefit rules, transit passes, transportation in a commuter highway vehicle, and parking in excess of $270.00 per month are taxable. In addition, the IRS requires advances to be substantiated by the employee for qualified transportation fringe benefits.

A company deposited $100,000.00 in payroll taxes four days after the due date. The company is subject to: - penalties for late deposit. - nothing, since the error was not due to fraud. - penalties for late reporting of the liability. - nothing, since the error was corrected within five days.

- penalties for late deposit. Late deposit penalties are assessed when the deposit is made after the due date. The penalty is 2% of the deposit not made on time when the deposit is made within five days of the due date.

If payroll professionals are empathetic, they: - show they care and treat all employees as individuals. - have good time management skills. - arrive at work on time. - share confidential information with the employees when they request it.

- show they care and treat all employees as individuals. Empathy, one of the five principles of customer service, is demonstrated by showing care and treating all employees as individuals.

To correct a direct deposit payment made in error, within five banking days the employer must generate a: - single-entry reversal. - debit authorization. - double-entry reversal. - credit authorization.

- single-entry reversal. When a direct deposit payment is made in error, the employer must generate a single-entry reversal within five banking days of the payment. When an overpayment is identified more than five banking days after the deposit, the employer may issue a debit to the account if the employee has authorized the employer to debit the account. A credit authorization is the authorization to make direct deposit.

Employer-paid meals or lodging are taxable when: - staying in the company's guest quarters for three months after transferring while a new house is under construction. - submitting a documented hotel bill when away from home for a company-sponsored conference. - substantiated meals while traveling away from home on business are reimbursed. - employees are required to stay in the company's on-site quarters when working in the field locations.

- staying in the company's guest quarters for three months after transferring while a new house is under construction. Under IRS rules, payments in an accountable plan for an employee temporarily traveling away from home overnight are not taxable. Temporary living quarters after a move are moving expenses and are included in the employee's income.

All of the following practices demonstrate internal controls EXCEPT: - rotation of personnel. - segregation of duties. - account reconciliation. - system interfacing.

- system interfacing. Internal controls are designed to safeguard a company's assets and ensure that the financial statements are not materially misstated. Internal controls include edits, balancing and reconciling, documentation, data auditing and validity, security, segregation of job duties, check processing, rotation of personal. Interfaces between systems are not internal controls.

Two factors of situational leadership are: - motivation and decision making. - responsibility and accountability. - tasks and relationships. - authority and delegation.

- tasks and relationships. Two factors of situational leadership are task behavior (guidance) and relationship behavior (support).

A company's cafeteria plan provides each employee with $200.00 per month to pay for chosen benefits. After selecting benefits, one employee has $50.00 per month left and requests a payment of $50.00 per month. This $50.00 is: - nontaxable compensation. - taxable compensation for all federal taxes. - taxable compensation for social security and Medicare only. - taxable compensation for federal income tax only.

- taxable compensation for all federal taxes. Under Section 125 Cafeteria Plan rules, the use of contributions to purchase eligible benefits is nontaxable. However, benefits provided in cash are taxable.

When calculating an employee's net pay, all of the following amounts are subtracted from gross earnings EXCEPT: - taxable wages. - cafeteria plan contributions. - federal income tax. - 401(k) contributions.

- taxable wages. Net pay is the amount remaining after all taxes, involuntary deductions, and voluntary deductions have been subtracted from gross earnings.

The minimum salary requirement does not apply to exempt professional employees who are: - creative professionals performing work requiring originality. - teachers working in an educational institution. - licensed funeral directors or embalmers. - registered or certified medical technologists.

- teachers working in an educational institution. The FLSA minimum salary for exempt employees does not apply to attorneys, physicians, and teachers.

If an employer's total tax liability for the lookback period is $48,000.00, the withheld taxes must be deposited no later than: - the next business day. - Wednesday or Friday under the semiweekly rules. - the due date of Form 941. - the 15th day of the following month.

- the 15th day of the following month. An employer with a tax liability of $50,000.00 or less during the lookback period is a monthly depositor for the next calendar year. Monthly depositors must deposit the tax liability for the month by the 15th of the following month.

An Applicable Large Employer (ALE) may be liable for an Employer Shared Responsibility (ESR) payment in all of the following situations EXCEPT: - a full-time employee is offered coverage and does not receives a premium tax credit. - the ALE does not offer health coverage to its full-time employees. - the ALE offers unaffordable coverage to all full-time employees. - the ALE offers affordable minimum essential coverage that provides minimum value to all full-time employees, spouses, and dependents.

- the ALE offers affordable minimum essential coverage that provides minimum value to all full-time employees, spouses, and dependents. An ALE not offering all its full-time employees affordable, minimum essential health insurance coverage that provides minimum value may be liable for an ESR payment.

Electronic filing of IRS Forms 1042-S, 1099, W2-G, and 8027 is accomplished by using: - EFTPS. - the Fire system. - the AIR system. - the Employment Tax e-file system

- the Fire system. The IRS Filing Information Returns Electronically (FIRE) system is used to report certain forms electronically with the IRS. Such forms include 1042-S, 1099, 1098, 3921, 3922, W-2G, and 8027. Forms 940 and 941 can be filed electronically using the IRS Employment Tax e-file System. Forms 1099 can be filed electronically using the FIRE system. Form 1095-C can be filed electronically using the AIR system. EFTPS is used to make electronic tax deposits.

When an employee is subject to a federal tax levy, the deductions allowed when determining the amount due to the IRS include: - federal income, social security, Medicare, state income taxes, deduction for dependent health insurance, and child support deduction only. - all deductions in effect on the date the levy is received. - federal income, social security, Medicare, and state income taxes only. - federal income, social security, Medicare, state income taxes, and child support deduction only.

- all deductions in effect on the date the levy is received. Under IRS rules when calculating the amount of a tax levy, subtract the applicable exempt amount found in IRS Publication 1494 from the employee's take home pay. The employee's take home pay is the employee's gross pay less all deductions in effect before the levy was received.

The following characteristics are advantages of a Zero Balance Payroll Bank Account EXCEPT: - all payment types are automatically combined into one bank account. - no funds are in the bank account until items are presented for payment. - the bank account's beginning and ending balances every day should be zero. - money is transferred to the bank account in the exact amount needed.

- all payment types are automatically combined into one bank account. Many companies use a Zero Balance Bank Account (ZBA) for their payroll checking account and a separate bank account for electronic payments (direct deposit and payroll cards). No funds are transferred into the account until items are presented, in the exact amount needed. The beginning and ending balances every day should always be zero

Schedule R (Form 941) is used to: - report daily tax liabilities on Form 941 for semiweekly depositors. - report daily tax deposits reported on Form 941 by semiweekly depositors. - allocate discrepancies caused by acquisitions, statutory mergers, or consolidations. - allocate the aggregate information reported on Form 941 by an agent to each client.

- allocate the aggregate information reported on Form 941 by an agent to each client. Schedule R (Form 941) is used to allocate the aggregate information reported on Form 941 by an agent to each client. Schedule D is used to report discrepancies caused by acquisitions, statutory mergers, or consolidations. Schedule B (Form 941) records an employer's payroll tax liability by day, not the deposits.

Form 943 is the: - quarterly employer's tax return. - annual employer's tax return. - annual employer's tax return for agricultural employers. - annual tax return for nonpayroll federal taxes.

- annual employer's tax return for agricultural employers. Form 943 is used by agricultural employers to annually report wages and taxes. Form 944 can be used by employers with an annual tax liability of $1,000 or less. Form 941 is the quarterly employer's tax return. Form 945 is reports nonpayroll federal taxes.

Under the FLSA, a workweek starts on: - Friday at 5 p.m. -Monday at midnight. - Sunday at midnight. - any day at any time.

- any day at any time The FLSA, does not define when a workweek starts. It may start on any day at any time based on the business' requirements. The workweek must include seven consecutive 24-hour periods.

Statutory employees are workers who: - are employees under the reasonable basis test. - are not subject to federal income tax withholding. - are employees under the common law test. - receive a Form 1099-MISC for their wages earned.

- are not subject to federal income tax withholding. Statutory employees are workers who are not subject to federal income tax withholding but are subject to social security and Medicare taxes while having their wages reported on Form W-2.

An employer is required to transfer an employee's 401(k) deferral into the trust fund: - within 10 days after the deduction is taken from the employee's wages. - at the employer's discretion. - at the time the deduction is taken from the employee's wages. - as soon as it can reasonably segregate the funds from general assets.

- as soon as it can reasonably segregate the funds from general assets. Under DOL rules, an employer is required to transfer an employee's 401(k) deferral into the trust fund as soon as it can reasonably segregate the funds from its general assets.

What is the order of accounts that are listed on a typical balance sheet? - assets, equity, liabilities - assets, liabilities, equity - liabilities, assets, equity - equity, assets, liabilities

- assets, liabilities, equity Accounts are listed on a typical balance sheet beginning with assets, followed by liabilities, then equity (net worth).

A payroll staff member responds to an employee's request for information by saying that he does not know the answer but will look it up and get back to the employee. This is an example of the customer service principle of: - assurance. - reliability. - empathy. - responsiveness.

- assurance. Assurance, one of the five principles of customer service, demonstrates the knowledge and courtesy shown to customers along with the ability to convey trust, competence, and confidence.

For a nonqualified deferred compensation plan to exclude deferrals from income, distributions can be allowed: - at the end of the first quarter of the next year. - on the date of the employee's deferral election. - at the employee's election before termination of employment. - at the employee's death.

- at the employee's death. IRC Section 409A allows distributions after an employee's death. Distributions on the date of the employee's deferral election, at the end of the first quarter after the end of the next near, and at the employee's election before termination of employment violate IRC Section 409A and require immediate inclusion of the plan's value in the employee's income.

To be eligible for a Health Savings Account, the employee must: - work for an employer with 50 or fewer employees. - be enrolled in a Sec. 125 plan. - have dependents under age 16. - be covered under a high-deductible health plan.

- be covered under a high-deductible health plan. Under IRS Health Savings Account rules, the individual participating in a HSA must be enrolled in high deductible health insurance plans. A HSA can be part of a Section 125 Cafeteria Plan but is not required to be part of a Section 125 Cafeteria Plan. HSAs do not have limitations on the age of the participants or the size of the employer providing the HSA.

Under the FLSA white-collar exemption rules, an exempt outside sales employee must meet all of the following requirements EXCEPT: - making sales as the employee's primary duty. - being paid a salary of at least $684.00 a week. - regularly working away from the employer's place of business. - obtaining orders as the employee's primary duty.

- being paid a salary of at least $684.00 a week. An exempt outside sales employee's duties include making sales and obtaining orders, and regularly working away from the employer's place of business. An exempt outside sales employee is not required to be paid the minimum weekly salary.

Eligible medical expenses under a qualified health care plan do NOT include: - beneficial over-the-counter dietary supplements. - over-the-counter medicines prescribed by a licensed physician. - insulin. - medicines prescribed by a licensed physician.

- beneficial over-the-counter dietary supplements. Under IRS rules, qualified medical expenses include insulin and medicines prescribed by a physician, including over-the-counter medications prescribed by a physician.

A company is a monthly depositor for 2021. On payday, the company accumulates a payroll tax liability of $100,000.00. The payroll tax deposit for this liability must be made: - by the next business day. - on or before the following Wednesday. - on or before the following Friday. - by the 15th day of the following month.

- by the next business day. Monthly depositors incurring a liability of $100,000.00 or more during the month are required to deposit the liability from the deposit period on the next business day. A monthly depositor incurring a liability of $100,000.00 or more becomes a semiweekly depositor for the remainder of the year and the next calendar year.

Adjustments of overwithheld federal income tax can be made at all the following times EXCEPT in the: - same month the error occurred. - same quarter the error occurred. - calendar year after the error occurred. - same calendar year the error occurred.

- calendar year after the error occurred. Collection of underwithheld or refund of overwithheld federal income tax can only be made during the calendar year of the over or under withholding. Social security and Medicare tax adjustments can be made until the period of limitations expires, generally three years after filing the last tax return reporting the wages or taxes.

An employee, paid $2,000 biweekly, has a marital status of Married, claiming 2 allowances on Line 5 of a 2019 Form W-4. $50 is entered in the box on Line 6. Using the Percentage Method for Manual Payroll Systems (Worksheet 5), calculate the federal income tax amount to be withheld for the pay period.

The Answer is: $178.80. Using Worksheet 5 from Publication 15-T: Step 1:Adjust the employee's wage amount by reducing the gross wages by any nontaxable wages. Multiply the number of allowances claimed on Form W-4 by the amount of one allowance found in Table 6 = $330 (2 x $165). Subtract $330 from $2,000 ($1,670). This is the Adjusted Wage Amount. Step 2: To calculate the Tentative Withholding Amount, find the row in the biweekly Percentage Method table containing $1,670. Subtract column A from the adjusted wages. Multiply the result by the % in Column D. Add the result to the amount in Column C. This is the Tentative Withholding Amount. Step 3: Add the amount entered in the box on Line 6 from the 2019 Form W-4 to the Tentative Withholding Amount. The result is the amount to withhold for federal income tax.

An employee earns $2,000.00 biweekly and claims Married Filing Jointly with 2 dependents under the age of 17 on a 2020 Form W-4 ($4,000 in Step 3). The employee has YTD wages of $35,000.00 and receives a $1,000.00 bonus paid with the biweekly pay, not separately identified on the employee's paystub. Using the Wage Bracket Method, calculate the employee's total federal income tax to be withheld.

The Answer is: $76.15. Using Worksheet 2 from Pub. 15-T: Step 1: Adjust all the employee's taxable earnings amounts by reducing the gross wages by any nontaxable wages. Since there are no entries in Steps 2 or 4 of Form W-4, this is the Adjusted Wage Amount. Step 2: Using Worksheet 2 from Publication 15-T, locate the Biweekly Payroll Period table. Locate the row which includes at least $3.000. Move to the column for Married filing jointly, Standard withholding to determine the Tentative Withholding Amount. Step 3: Divide the amount in Step 3 of Form W-4 by 26 ($4,000 ÷ 26 = $153.85) and subtract from the tentative withholding amount. The result is the amount of federal income tax to withhold. Step 4: Nothing was reported on Form W-4, Step 4(c), so skip Step 4 of the worksheet.

An employer receives a federal tax levy in the amount of $10,000.00 for an employee. The employee is paid $650.00 weekly. The employee's deductions in place when the levy is received are $123.73 for federal taxes and $30.00 for a creditor garnishment. The employee returns Part 3 of Form 668W indicating single with 0 dependent(s). Calculate the amount, if any, to be deducted per pay to satisfy the levy.

The correct answer is: $254.92 Under IRS rules, the deduction for a tax levy requires deducting the applicable exempt amount found in IRS Publication 1494 from the employee's take home pay. The employee's take home pay is the amount remaining after ALL deductions, voluntary and involuntary, are made from the gross earnings prior to the receipt of the tax levy.

An employer receives a federal tax levy in the amount of $10,000.00 for an employee. The employee is paid $650.00 weekly. The employee's deductions in place when the levy is received are $123.73 for federal taxes and $30.00 for a creditor garnishment. The employee returns Part 3 of Form 668W indicating single with 0 dependent(s). Calculate the amount, if any, to be deducted per pay to satisfy the levy.

The correct answer is: $254.92 Under IRS rules, the deduction for a tax levy requires deducting the applicable exempt amount found in IRS Publication 1494 from the employee's take home pay. The employee's take home pay is the amount remaining after ALL deductions, voluntary and involuntary, are made from the gross earnings prior to the receipt of the tax levy.

An employee, injured on the job two months ago, receives $500.00 from the state workers' compensation fund and $300.00 of supplemental workers' compensation from the employer each month. How much of the monthly $800.00 is subject to federal income tax withholding?

The correct answer is: $300.00 Workers' compensation payments paid under the state law are excluded from an employee's income for income, social security, and Medicare taxes. If an employer supplements the workers' comp payment by paying an amount greater than the state pays, the amount the employer pays is subject to income, social security, and Medicare taxes.

Using the Optional Flat Rate Method, calculate the federal income tax withholding based on an employee's supplemental wage payment of $200,000.00. The employee has received $500,000.00 in supplemental wages during the year.

The correct answer is: $44,000.00 When calculating federal income tax on supplemental wages when an employee's year-to-date supplemental wages are $1,000,000.00 or less, use the Optional Flat Rate Method percentage 22% multiplied times the taxable supplemental wages.

An employee earns $15.00 per hour, works a 40-hour workweek, and receives no other compensation. Calculate the social security and Medicare taxes withheld from the employee's weekly paycheck.

The correct answer is: $45.90 Calculate the social security and Medicare taxes by multiplying the social security and Medicare tax rates by the taxable wages. Calculate the taxable wages by multiplying the hours worked by the employee's pay rate. If the employee has worked more than 40 hours in the workweek, calculate the overtime premium using the employee's regular rate of pay.

An employee earning $9,900.00 per month defers $660.00 each month to a 403(b) plan. Calculate any federal taxes that must be withheld from the 403(b) deferral.

The correct answer is: $50.49 Under IRS rules, employee contributions to a 403(b) plan are not subject to income tax but are subject to social security (6.2%) and Medicare (1.45%) taxes.

An employee with year-to-date taxable compensation of $152,800.00 receives a $4,800.00 bonus. The employee's manager has requested that payroll gross-up the value of the bonus. There is no state or local tax withholding. Using the Optional Flat Rate Method, calculate the taxable income on the bonus.

The correct answer is: $6,270.41 When an employee receives a net amount, the calculation of taxable wages requires using the gross-up formula. When grossing-up an employee's net wages, divide the desired net by 100% less the total percentage of all the employee's tax rates. $4,800.00 bonus divided by (100% - 22% FIT - 1.45% Medicare) = taxable income on the bonus.

An employee receives a $4,800.00 net bonus at year-end. When receiving the bonus, the employee's year-to-date taxable compensation is $147,800.00. There is no state or local tax withholding. Using the Optional Flat Rate Method, calculate the taxable income of the bonus.

The correct answer is: $6,270.41 When an employee receives a net amount, the calculation of taxable wages requires using the gross-up formula. When grossing-up an employee's net wages, divide the net by 100% less the percentage of all the employee's tax rates. The general gross-up formula requires adjustments when the employee's year-to-date wages exceed the social security wage base ($142,800.00), the additional Medicare tax threshold ($200,000.00), and the mandatory flat rate tax threshold ($1,000,000.00) for supplemental wages.

Calculate the federal income tax withholding on an employee's supplemental wage payment of $200,000.00. The employee has received $1,100,000.00 in supplemental wages during the year.

The correct answer is: $74,000.00 Under IRS rules, when an employee's year-to-date supplemental wages are in excess of $1,000,000.00, the Mandatory Flat Rate Method must be used for calculating FITW.

An employee earns $927.00 semimonthly. The employee's deductions include $24.00 for federal income tax, $70.92 for social security and Medicare taxes, $102.00 for court-ordered child support payments, and $97.00 for a state tax levy. Calculate the employee's semimonthly disposable pay for the creditor garnishment.

The correct answer is: $832.08 Under the CCPA, disposable earnings are determined by subtracting all deductions required by law from an employee's gross earnings. Deductions required by law include federal income, state income, local income, social security and Medicare taxes.

An employee who is not supporting another family has semimonthly disposable earnings of $1,300.00 and is more than 12 weeks in arrears on child support payments. Calculate the maximum amount per pay that can be deducted from the employee's pay for child support.

The correct answer is: $845.00 Under the CCPA, an employer must withhold the lesser of the amount on the order or the allowed percentage of the employee's disposable earnings, based on the employee's family status and arrearages found on the Income Withholding Order, to satisfy the child support order.

An exempt employee earns $945.00 semimonthly plus a $100.00 production bonus. Deductions include $66.00 for federal income tax, $79.94 for social security and Medicare taxes, $125.00 for a court-ordered child support, and a $25.00 credit union payment. Calculate the employee's semimonthly disposable pay.

The correct answer is: $899.06 Under the CCPA, disposable earnings are determined by subtracting all deductions required by law from an employee's gross earnings. Deductions required by law include federal income, state income, local income, social security and Medicare taxes.

Which of the following statements is true regarding 401(k) plans? - 401(k) plans must allow eligible employees to contribute up to 15% of their wages. - Employee deferrals to 401(k) plans are not subject to social security and Medicare tax withholding. - 401(k) plan deferrals are not subject to federal income tax when deferred. - 401(k) plans are designed primarily for employees of tax-exempt organizations.

- 401(k) plan deferrals are not subject to federal income tax when deferred. Under IRS rules, employee contributions to a 401(k) plan are not subject to income tax but are subject to social security (6.2%) and Medicare (1.45%) taxes. Under IRS rules, a 401(k) plan may allow an employee age 50 or older to make an additional $6,500.00 contribution beyond the $19,500.00 deferral limit. 403(b) plans are designed for tax-exempt organizations.

Tax-sheltered annuities are offered in a: - 401(k) plan. - 125 plan. - 457(b) plan. - 403(b) plan.

- 403(b) plan. Tax-sheltered annuities are found in a 403(b) plan provided by public schools and tax-exempt charitable, religious, and educational organizations.

Which type of plan allows special catch-up contributions beyond the deferred limit in the employee's final three years before normal retirement age? - Nonqualified plans - 403(b) - 401(k) - 457(b)

- 457(b) Under IRS rules, a 457(b) plan can allow special catch-up contributions in the three-years before the employee's normal retirement age. These plans allow employees the ability to make catch-up contributions that are twice the amount of the deferral limit (in 2021 - $19,500.00).

Catch-up contributions to a Health Savings Account can begin in the year the employee reaches age - 50. - 55. - 60. - 65.

- 55. Under IRS rules, catch-up contributions to a HSA can begin in the year the employee reaches age 55. However, contributions, including catch-up contributions, cannot be made once an individual is eligible for Medicare.

In addition to the accuracy-related penalty for underpayment of taxes, if the underpayment of taxes is due to fraud, the IRS may asses an additional penalty of: - 20%. - 40%. - 75%. - 100%.

- 75%. The IRS may assess an accuracy-related penalty for any underpayment of tax due to negligence or disregard of the rules. If the understatement of any underpayment of income or employment tax was due to fraud, a penalty of 75% of the underpayment may be assessed.

The foreign earned income exclusion is allowed under IRC Section: - 401. - 411. - 911. - 941.

- 911. IRC Section 911 defines the limitations and eligibility requirements for the foreign earned income or housing cost exclusions.

Which of the following types of compensation is taxable income? - Stand-by tickets for an airline employee - Qualified transportation fringe benefits - Job-related educational assistance - A $40 gift card to a department store

- A $40 gift card to a department store IRC Sec. 132 defines the following nontaxable fringe benefits: no-additional-cost services, qualified employee discounts, de minimis benefits, working condition fringe benefits, qualified transportation fringe benefits, and qualified retirement planning services. The IRC requires all compensation for services to be included in an employee's income except when specifically excluded by law. There are no exclusions for cash payments, such as gift cards.

When an employee has a legal name change, what does the IRS suggest the employer see before reporting the new name on Form W-2? - A corrected social security card - An amended Form I-9 - An amended Form W-4 - A court document

- A corrected social security card IRS instructions for Form W-2 states, "If the name has changed, the employee must get a corrected social security card from any SSA office. Use the name on the original card until you see the corrected card."

Which of the following workers is an independent contractor? - A lawyer retained on a project-by-project basis - A salaried salesperson calling on leads provided by a company - A clerk working evenings until the company can find a replacement - A former employee rehired after retirement to complete a task begun before retirement

- A lawyer retained on a project-by-project basis A company does not have the right to control an independent contractor's work.

In which of the following situations is a benefit nontaxable? - An employee was awarded $1,000.00 for prospecting new customers. - A $30.00 gift card was provided to all employees. - A payroll employee was sent to an APA Payroll Learning Center class out of town valued at $1,500.00. - An employee won a $500.00 savings bond in a company-sponsored contest for cost cutting.

- A payroll employee was sent to an APA Payroll Learning Center class out of town valued at $1,500.00. Under IRS rules, employer provided job-related education, such as attending a class at the Payroll Learning Center, is a working condition fringe benefit and excluded from the employee's income. An employees' cash or cash equivalent compensation, such as a savings bond, an award for new customers, and gift cards, is taxable compensation.

What type of records are impacted by the repayment of overpaid wages? - Accounting - Human resources - Timekeeping - Benefits

- Accounting An employee's repayment of overpaid wages impacts payroll records, accounting records, and tax reporting. Human resources, benefits, and timekeeping records generally are not impacted by an overpayment.

What is Form 944? - A quarterly employment tax return for employers with a history of quarterly tax liabilities less than $1,000.00 each quarter - An annual employment tax return for employers with a history of annual tax liabilities of less than $1,000.00 - A quarterly employment tax return for employers with a history of quarterly tax liabilities of $2,500.00 - An annual employment tax return for employers with a history of annual tax liabilities of $2,500.00

- An annual employment tax return for employers with a history of annual tax liabilities of less than $1,000.00 Form 944, Employer's Annual Federal Tax Return, is an annual employment tax return for employers with a history of annual tax liabilities of less than $1,000.00.

Which of the following workers is classified as an exempt employee? - A part-time dock worker operating fork lifts - An executive assistant earning $1,099.00 each week exercising discretion while performing duties - An assistant office manager with no subordinates earning $700.00 per week - A laboratory assistant responsible for duties which are reviewed by the supervisor

- An executive assistant earning $1,099.00 each week exercising discretion while performing duties An exempt employee must meet the FLSA duties and salary requirements.

An employee drove a company vehicle 5,000 miles for business and 6,000 miles for personal use. The car is valued at $54,150.00. Which of the following statements regarding the employee's use of this vehicle is true? - The employee drove more personal than business miles and cannot claim the vehicle as a company vehicle. - The employer must calculate the personal use of the vehicle using the cents-per-mile method. - Of the safe-harbor methods, the employer must use the annual lease value method to report the value of the employee's personal use of the vehicle. - The employer must withhold federal income tax on the personal use of the vehicle.

- Of the safe-harbor methods, the employer must use the annual lease value method to report the value of the employee's personal use of the vehicle. Under IRS rules, the value of the personal use of a company vehicle may be calculated using the annual lease value, commuting, or cents-per-mile methods. When using the cents-per-mile valuation method, the value of the vehicle cannot exceed the luxury vehicle value, ($51,100.00 in 2021). It is the employer's option whether to withhold income tax. It does not matter if the employee drives more personal than business miles in the company vehicle when determining the taxation of the personal use of the vehicle.v

An employee drove a company vehicle 5,000 miles for business, 3,000 for commuting, and 6,000 miles for personal use. The car is valued at $54,300.00. Which of the following statements regarding the employee's use of the vehicle is true? - Using the cents-per-mile method, the employee's personal use of the vehicle is valued at $3,360.00. - The employer must withhold federal income tax on the personal use of the vehicle. - The employee drove more personal than business miles, and the value of all miles are included in income. - Of the safe-harbor valuation methods, the employer must use the annual lease value method to report the value of the employee's personal use of the vehicle.

- Of the safe-harbor valuation methods, the employer must use the annual lease value method to report the value of the employee's personal use of the vehicle. When using the cents-per-mile valuation method, the taxable amount is calculated by multiplying the IRS' standard business mileage rate ($0.560 in 2021) by the personal miles driven. However, the cents-per-mile method cannot be used when the value of the vehicle exceeds the luxury vehicle value ($51,100.00 in 2021). The fact that an employee drives more miles for personal use than business uses has no bearing on the amount included in the employee's income. Employers have the option to withhold federal income tax on the value of personal use, but must withhold social security and Medicare taxes.

Under the FLSA, which of the following statements regarding overtime requirements is true? - A full-time employee of the state department of labor can accrue up to 480 hours of compensatory time off instead of overtime pay. - Police officers can accrue up to 480 hours of compensatory time off in lieu of receiving overtime pay. - Stock options must be included in the employee's regular rate of pay. - Employer matching contributions to a 401(k) plan must be included in the employee's regular rate of pay calculation.

- Police officers can accrue up to 480 hours of compensatory time off in lieu of receiving overtime pay. Police officers can accrue up to 480 hours of compensatory time off, for working 320 hours, in lieu of receiving overtime pay.

Which type of health plan provides a choice of a higher level of benefits and lower out-of-pocket costs if plan's participant uses providers who are in the network? - Health Maintenance Organizations - Preferred Provider Organizations - Traditional Health Insurance Plans - State Health Care Exchanges

- Preferred Provider Organizations A Preferred Provider Organization (PPO) is a health care delivery system that gives the plan's participants a choice of higher level of benefits and lower out-of-pocket costs if they use doctors who are part of the PPO network.

Which of the following documents must be retained for a maximum of four years? - Record of the regular rate of pay - Record of employee's amounts earned for straight time and overtime - Record of withheld taxes - Record of employee's hours worked each week

- Record of withheld taxes Tax related documents, such as the tax returns and amount and date of an employee's wage payments, be retained for at least four years.

An employee received a paycheck on Friday and died on Saturday prior to cashing the paycheck. What, if anything, should the payroll department do? - Reissue the check to the employee's estate/beneficiary. - Reissue the check without the federal income tax withholding. - Reissue the check with no tax withholding. - Nothing, the check was received by the employee.

- Reissue the check to the employee's estate/beneficiary. A deceased employee's uncashed check needs to be reissued to the employee's beneficiary defined by the probate laws in the employee's state of residence. As the check was constructively received by the employee there is no change to the taxation or reporting.

If a payroll department staff member does not reply to a voice mail message from an employee about her paycheck, which customer service principle is being violated? - Empathy - Tangibles - Responsiveness - Compliance

- Responsiveness Responsiveness, one of the five principles of customer service principle, demonstrates the willingness to help customers promptly.

The E-Verify program checks which databases to verify employment authorization of newly hired employees? - SSA and DHS - SSA and IRS - IRS and ICE - IRS and DHS

- SSA and DHS The E-Verify program checks SSA (Social Security Administration) and DHS (Department of Homeland Security) databases to verify employment authorization of newly hired employees.

Which of the following statements is true regarding Sec. 125 plans? - Employees working ten hours a week or less must be included in the company's Sec. 125 plan. - At the end of the plan year, employees must be paid any remaining unreimbursed amount. - Benefits received in cash are not taxed. - Salary reduction elections can be changed during the plan year when there is a qualified change in status.

- Salary reduction elections can be changed during the plan year when there is a qualified change in status. Under IRS rules for Section 125 Cafeteria Plans, salary reduction elections can be changed during the plan year when there is a qualified change in status or cost. IRS rules require Section 125 plan benefits received in cash to be included in an employee's income. Cafeteria plan rules require the loss of contributions at the end of the plan year when the employee has not incurred eligible expenses. The IRS Cafeteria Plan rules do not require employees working a specified number of hours each week to be eligible to participate in the cafeteria plan.

An employee has elected to have $200.00 per month contributed to a medical flexible spending account. At the end of the plan year's grace period, $100.00 remains in the account. What happens to the $100.00? - The amount becomes taxable income. - The amount can be received in cash without taxation. - The employer can use the amount to offset any administrative expenses in connection with the program. - The amount can be carried over to the next plan year without amending the plan.

- The employer can use the amount to offset any administrative expenses in connection with the program. Any amount in a health FSA that remains unused at the end of the plan year generally is forfeited by the employee. When an employee loses contributions at the end of the grace period due to the failure to incur eligible expenses, the employer may use the lost amounts to cover administrative expenses or allocate it on a uniform basis to eligible employees for the next plan year. When using the $550 carryover provision for unused amounts, the cafeteria plan must be amended. If the unused amount is paid to the employee, it is included in the employee's income.

If third-party sick pay is reported on Form W-2 under the name and EIN of the employer, who is responsible for filing Form 8922, Third-Party Sick Pay Recap? - The employee - The insurer - The employer - The form is not required to be filed

- The insurer The insurer is responsible for filing Form 8922, Third-Party Sick Pay Recap, when third-party sick pay is reported on Form W-2 under the name and EIN of the employer. Form 8922 provides the IRS the ability to reconcile the differences between Forms W-2 and 941 when the employer and third-party sick pay providers share the responsibilities for the reporting and depositing.

Residents of Canada or Mexico who work solely in the U.S. and commute to work from home may claim how many dependents in Step 3 of a 2020 or later Form W-4? - None - 1 only if single - 2 only if married - Their number of qualified dependents

- Their number of qualified dependents Generally, nonresident aliens may not use Step 3 of a 2020 or later Form W-4. An exception is provided for residents of Canada or Mexico who work solely in the U.S. and commute to work from home are able to claim the child tax credit or the credit for other dependents in Step 3.

An employee who is a full-time student is claimed as a dependent by her parents. What conditions must exist for the employee to claim exempt on Form W-4? - Only unearned income is less than $250.00. - Only total income is less than $900.00. - Total income is not more than $1,100.00 including unearned income of not less than $350.00. - There are no limits for students to claim exempt.

- Total income is not more than $1,100.00 including unearned income of not less than $350.00. c- Total income is not more than $1,100.00 including unearned income of not less than $350.00.

Which of the following deductions from an employee's pay is NOT an involuntary deduction? - Creditor garnishment - Child support - Union dues - Tax levy

- Union dues Employees may have a choice for paying union dues on their own or having it deducted from their wages by their employer as a voluntary procedure authorized by federal labor law.

Which of the following situations should be the highest priority to address? - Not urgent but important - Urgent but unimportant - Not urgent and not important - Urgent and important

- Urgent and important Urgent and important task, such as year-end processing or resolving a current processing issue, are tasks of highest priority.

Form W-2c filed on paper must be accompanied by Form: - W-2. - W-3c. - 843. - 941-X.

- W-3c. Form W-3c is used to transmit Forms W-2c correcting previously reported wages, taxes, and other information. When 250 or more Forms W-2c are submitted, they must be submitted electronically.

In order for an employee on disability to have federal income tax withheld from third-party disability payments, he must submit to the insurance company Form: - W-9. - W-4S. - W-4P. - W-8.

- W-4S. Under IRS rules, an employee must submit Form W-4S, Request for Federal Income Tax Withholding From Sick Pay, to the third-party insurance company to have federal income tax withheld from third-party sick pay.

An employee has contributed $300.00 YTD into a medical flexible spending account. In November, the employee was terminated with $100.00 remaining in the account after all qualified reimbursements had been made. When must the employer reimburse the employee's $100.00? - With the final paycheck - When additional qualified medical expenses are submitted - Within 30 days after termination - By January 31 along with Form W-2

- When additional qualified medical expenses are submitted Section 125 medical Flexible Spending Account rules allow a distribution of unused contributions after an employee's termination to reimburse eligible expenses incurred prior to the employee's termination.

In which situation is an employer required to revise an employee's Form W-4 withholding information? - When an employer receives an IRS lock-in letter indicating to do so - At the beginning of the calendar year - When the employer has received a tax levy on the employee - When the employer suspects the form as completed is not correct

- When an employer receives an IRS lock-in letter indicating to do so When the IRS issues a lock-in letter, the employer is required to comply with the direction to change an employee's withholding amount as indicated on the letter.

Under what condition is a Form 1042-T filed? - When Forms 1042-S are filed electronically with the IRS - When paper Forms 1042-S are filed with the IRS - When paper Forms 1042 are filed with the SSA - When Forms 1042-S are filed electronically with the SSA

- When paper Forms 1042-S are filed with the IRS Form 1042-T is the transmittal for paper Forms 1042-S filed with the IRS. Organizations can file less than 250 Forms 1042-S on paper with the IRS without penalty.

Voiding a check issued in error after all returns were filed will require all of the following procedures EXCEPT: - a refund by other taxing agencies. - a refund to the employee. - submission of Form W-2c. - a refund by the IRS.

- a refund to the employee. Voiding a check that was not constructively received in a subsequent year requires correcting wages and taxes reported using Forms W-2c, 941-X, and the appropriate state forms. Since the employee never received the monies, no refund is due.

Managers delegate to their subordinates all of the following items EXCEPT: - responsibility. - discipline. - authority. - accountability.

- accountability. Delegating managers can assign responsibility, discipline, and authority but must retain accountability for themselves.

Due to poor accounting procedures and negligence, a company underdeposited its 2021 payroll tax liability by $11,000.00. The error was corrected within five days of the due date. The company's total federal income, social security, and Medicare tax liability was $150,000.00. The company may be subject to: - nothing, since the error was corrected within five days. - penalties for late reporting of the liability. - nothing, since it falls under the "safe harbor" shortfall rule. - penalties for late deposit.

- penalties for late deposit. The failure to deposit employment taxes timely subjects an organization to penalties for late deposit. If the deposit is made within five days of the due date the penalty will be 2% of the amount deposited late. Late reporting penalties are applied when Forms 940 or 941 are filed late. When taxes are not withheld or paid the Trust Fund Recovery penalty may be assessed. In order for the "safe harbor" shortfall rule to apply, 98% of the total deposit must be made timely.

An example of a statutory nonemployee is a: - person engaged in directly selling consumer products in the home. - driver who picks up and delivers dry cleaning. - person who works at home on materials supplied by a company. - full-time life insurance agent selling annuity contacts.

- person engaged in directly selling consumer products in the home. A statutory nonemployee is a person engaged in directly selling consumer products in the home. Statutory nonemployees fall into two categories: qualified real estate agents and direct sellers.

When an employer receives a lock-in letter from the IRS, the employer's first action is to: - withhold federal income tax based on the lock-in letter 10 days after receipt of the letter. - provide a copy of the lock-in letter to the employee. - withhold federal income tax based on the lock-in letter immediately. - withhold federal income tax based on the lock-in letter 30 days after receipt of the letter.

- provide a copy of the lock-in letter to the employee. When an employer receives a lock-in letter from the IRS, the employer first must provide a copy of the lock-in letter to the employee within 10 business days of the lock-in letter's receipt.

An external audit: - allows investment in the company. - ensures that fraud has not occurred. - provides an assessment of the financial statements. - ensures that the finances have been handled correctly.

- provides an assessment of the financial statements. An independent annual audit provides an assessment of the financial statements of a business. The responsibility of the auditor is to determine whether or not a company's financial statements are without material misstatements. Independent auditors do not determine whether or not fraud has occurred or the finances have been managed correctly. The independent audit provides information to investors but does not determine if investment in the company can occur.

All the following types of records can be integrated with payroll data EXCEPT: - human resources. - benefits. - personnel. - purchasing.

- purchasing. Payroll, human resources, personnel, benefits, and time and attendance systems share many data elements and are ideally integrated.

All of the following qualified benefits can be offered under a Sec. 125 plan EXCEPT: - qualified transportation fringe benefits. - deferred compensation to a 401(k) plan. - a medical flexible spending account. - additional vacation days.

- qualified transportation fringe benefits. IRC Section 125 allows cafeteria plans the ability to provide nontaxable benefits, such as medical flexible spending accounts, additional vacation days, and contributions to 401(k) plans. In most cases, benefits that are excluded from income under other IRC provisions, such as qualified transportation fringe benefits, cannot be provided in a Section 125 Cafeteria Plan.

FUTA taxes over $500.00 must be deposited: - daily. - semiweekly. - monthly. - quarterly.

- quarterly. FUTA taxes over $500.00 must be deposited quarterly.

The primary duties of an exempt administrative employee may include all of the following EXCEPT: - administration of a school system. - office work related to management policies. - receiving shipments at the shipping dock. - office work related to general business operations.

- receiving shipments at the shipping dock. The primary duties of an exempt administrative employee must consist of performing non-manual or office work directly related to the management or general business operations of the employer or the employer's customers, or performing work directly related to academic instruction or training carried on in the administration of a school system or educational institution

A computerized payroll system can help a payroll department accomplish all of the following tasks EXCEPT: - produce timely, accurate paychecks. - recognize changes in laws and regulations. - maintain compliance with laws and regulations. - retain records.

- recognize changes in laws and regulations. A payroll system updated timely will assist ensuring a company's compliance when laws and regulations change, the timely production of an employee's pay, and the retention of records. It is up to payroll professionals to identify law and regulation changes that must be implemented in the payroll system

All of the following items are taxable compensation EXCEPT: - season tickets to the theater. - severance pay. - a reimbursement for temporary living expenses during relocation. - reimbursement for job-related courses.

- reimbursement for job-related courses. IRC Sec. 132 defines the following nontaxable fringe benefits: no-additional-cost services, qualified employee discounts, de minimis benefits, working condition fringe benefits, qualified transportation fringe benefits, qualified moving expenses (for military personnel only), and qualified retirement planning services. The IRC requires all compensation for services to be included in an employee's income except when specifically excluded by law. There are no exclusions for severance, temporary living expenses related to a move, and season tickets to the theater.

The customer service principle of being responsive means a payroll technician will: - respond to customers promptly. - be the first to leave the office. - strongly advocate employee empowerment. - be generous with praise to fellow employees.

- respond to customers promptly. Responsiveness, one of the five principles of customer service, means a payroll technician is willing to help customers promptly.

Counseling is appropriate when: - salaries have been frozen. - orienting new employees. - explaining tax law changes. - introducing a new procedure.

- salaries have been frozen Counseling is used by managers to help an employee resolve a personal problem affecting performance such as after a reorganization, layoffs, or when salaries have been frozen. Coaching is appropriate when orienting new employees, introducing new procedures, or explaining a tax law change.

In determining the source of income for services performed by a nonresident alien partly inside and partly outside the U.S., compensation may be determined based on any of the following procedures EXCEPT on: - the date the employee returned to full-time U.S. employment. - the ratio of full days worked in U.S. versus total number of days worked. - the performance of specific action. - a geographic basis.

- the date the employee returned to full-time U.S. employment. Under the regulations, employee compensation is generally sourced on a time basis. Although the time basis is generally determined by comparing the number of days worked within the U.S. to the total number of days worked by an employee, the regulations permit use of a unit of time that is less than a day where appropriate. The regulations carve out an exception to the time basis rule for certain employee fringe benefits, which should be sourced on a geographic basis. Where an employee's compensation is tied to the performance of specific actions rather than earned over a specific time period, an alternative basis for determining the source of the compensation might be more appropriate.

All of the following reasons are reasonable cause when requesting the IRS waive information return penalties EXCEPT: - the employer has a history of compliance. - the employer ignored the IRS instructions. - the events were beyond the employer's control. - this was the first time this information return was filed.

- the employer ignored the IRS instructions. The IRS will abate penalties when the employer can demonstrate they have reasonable cause for late filing or payment when the organization can demonstrate it exercised ordinary business care, has had a history of compliance, was filing the information return for the first time, or the events causing the late payment or filing were beyond the organization's control. Employers ignoring the IRS instructions do not have reasonable cause for the failure to pay the taxes timely or file returns timely.

Employees submit Form W-4S to the: - IRS. - employer. - payroll department. - third-party sick pay provider.

- third-party sick pay provider. Employees submit Form W-4S, Request for Federal Income Tax Withholding From Sick Pay, to the third-party sick pay provider.

Under the FLSA, an employee's workday is defined as the: - employee's scheduled shift. - entire time the employee spends on the job site. - time the employee is performing principal activities. - time recorded on the employee's time sheet.

- time the employee is performing principal activities. Under the FLSA, an employee's workday is defined as the time the employee is performing principal activities.

A semiweekly depositor's shortfall make-up deposit is made: - using EFTPS. - with Form 941. - with Form 944. - using NACHA.

- using EFTPS. All tax deposits must be made using EFTPS. However, when an employer has a tax liability of less than $2,500.00 in the current or prior quarter, it can deposit the taxes with Form 941.

An individual with an introspective communication style is described as one who: - wants things arranged logically in beginning-to-end sequences. - enjoys speculating on possibilities before getting down to the facts. - prefers facts over speculation and insists on real-world proof. - is most interested in how an idea will affect other people.

- wants things arranged logically in beginning-to-end sequences. An individual with an introspective communication style prefers points to be arranged logically in beginning-to-end sequences and is interested in the principles involved and cost/benefit analysis.

For a nonqualified deferred compensation plan to exclude deferrals from income, distributions can be allowed: - when there is an occurrence of an unforeseen emergency. - when the employee's spouse dies. - when a natural disaster occurs. - at the employee's election before termination of employment.

- when there is an occurrence of an unforeseen emergency. IRC Section 409A allows distributions when there is an unforeseen emergency. Distributions when a natural disaster occurs, when the employee's spouse dies, and at the employee's election before termination violate IRC Section 409A and require immediate inclusion of the plan's value in the employee's income.

For each payday, an employer's federal tax liability is calculated by adding the total of all: - federal income, social security, and Medicare tax withheld. - withheld federal taxes plus the employer's share of social security and Medicare tax. - federal income, social security, Medicare, and FUTA taxes. - federal income tax withheld and the employer's share of social security and Medicare tax.

- withheld federal taxes plus the employer's share of social security and Medicare tax. When calculating the tax liability from each payroll, an employer must include the total of all federal income, social security, and Medicare taxes withheld from employees in addition to the employer's share of social security and Medicare taxes.

In January, a senior vice president of a company received a nonqualified stock option to buy up to 500 shares of stock at $20.00 per share. In April, when the company stock was trading at $30.00, the employee exercised the option and purchased 500 shares of stock. The payroll department must: - withhold federal income, social security, and Medicare taxes on $10,000.00. - withhold only social security and Medicare taxes on $10,000.00. - withhold federal income, social security, and Medicare taxes on $5,000.00 and report $5,000.00 in taxable compensation on Form 1099-MISC. - withhold federal income, social security, and Medicare taxes on $5,000.00 and report $5,000.00 in taxable compensation on Form W-2.

- withhold federal income, social security, and Medicare taxes on $5,000.00 and report $5,000.00 in taxable compensation on Form W-2. The payroll department must withhold federal income, social security, and Medicare taxes on $5,000.00 ((500 shares x ($30 - $20)) and report $5,000.00 in taxable compensation on Form W-2. When the option is exercised, the employee has income equal to the excess of the fair market value of the stock when the option is exercised over the price paid by the employee.

A company pays the membership fee to the American Payroll Association for an employee in the payroll department. The IRC defines this payment as: - de minimis fringes. - taxable compensation. - working condition fringes. - no-additional-cost services.

- working condition fringes. Company paid memberships in a professional association are defined in the IRC as a working condition fringes and excluded from income.

When would an employee have negative net pay? -Total deductions exceed gross wages - Involuntary deductions exceed voluntary deductions - Gross wages exceed total deductions - Taxes exceed other deductions

-Total deductions exceed gross wages An employee's total deductions may exceed gross wages, which results in negative net pay.

An employee earns $5,557.19 biweekly and claims Married Filing Jointly with 5 dependents under the age of 17 on a 2021 Form W-4 ($10,000 in Step 3). Using the Percentage Method Tables for Manual Payroll Systems (Worksheet 4), calculate the federal income tax withheld each pay period.

The answer is: $298.55 Using Worksheet 4 from Publication 15-T: Step 1: Adjust the employee's wage amount by reducing the gross wages by any nontaxable wages. There are no entries in Steps 4(a) or 4(b) and Step 2 box is not checked, so the taxable amount is the Adjusted Wage Amount. Step 2: To calculate the Tentative Withholding Amount, locate the row in the table utilizing the biweekly Standard Withholding Rate Schedules for Married filing jointly containing $5,557.19. Subtract column A from the annual adjusted wages. Multiply the result by the % in Column D. Add the result to the amount in Column C. Step 3: Divide the amount in Step 3 of Form W-4 by the number of pay periods. Subtract this amount from the Step 2, Tentative Withholding Amount. Step 4: Skip. No entries in Step 4(c) of Form W-4.

Four employees carpool to work in an employee's 8-passenger van that is only used to commute to and from work. The employer reimburses all of the commuting expenses. The monthly costs are $257.00. How much of the carpool reimbursement is taxable?

The correct answer is: $0.00 Under IRS rules, transportation to and from work in a commuter highway vehicle (an 8-passenger van qualifies) is not taxable when the fair-market value of the monthly benefit is less than $270.00 per month (in 2021).

Calculate an employee's disposable earnings. The employee earns $17.50 per hour and is paid biweekly. Last pay period, the employee worked 37.50 hours per week and had the following deductions: federal income tax $93.00, state income tax $63.00, social security tax $78.32, Medicare tax $18.32, pre-tax health insurance $49.32, and additional life insurance (after tax) $10.12.

The correct answer is: $1,059.86 Under the CCPA, disposable earnings are determined by subtracting all deductions required by law from an employee's gross earnings. Deductions required by law include federal income, state income, local income, social security and Medicare taxes.

An employer pays $281.00 per month for an employee's parking spot near the job site. Calculate the taxable amount of the monthly parking.

The correct answer is: $11.00 Under IRS qualified transportation fringe benefit rules, the fair market value of parking near the employee's job site or at a park and ride in excess of the monthly exclusion ($270.00 in 2021) is the monthly taxable value.

An employee earns $1,560.00 semimonthly and claims married with 0 allowance(s) on a 2018 Form W-4. Using the Wage-Bracket Method, calculate the employee's federal income tax to be withheld.

The correct answer is: $110.00 When determining federal income tax withholding using the wage-bracket method and a pre-2020 Form W-4, use the tax tables with Worksheet 3 from Publication 15-T. First find the appropriate tax table based on the pay frequency and the employee's W-4 filing status. The tax withholding will be the amount where the row with the employee's taxable wages (gross less pre-tax amounts) intersects with the column of the employee's allowances.

An employee claims single with no other adjustments on a 2020 Form W-4 and is paid a production bonus of $730.00. The employee's supplemental wages for the year are $1,460.00. Using the Optional Flat Rate Method, calculate the amount of federal income tax to be withheld from the employee's bonus.

The correct answer is: $160.60 When calculating federal income tax on an employee's supplemental wages when the employee's year-to-date supplemental wages are less than $1,000,000.00, use the Optional Flat Rate method and multiply the taxable supplemental wages by the Optional Flat Rate (22%).

Using the Optional Flat Rate Method, calculate the federal income tax withholding based on the following information: An employee earns a bonus of $900.00 and has total YTD wages of $20,000.00.

The correct answer is: $198.00 When calculating federal income tax withheld from supplemental wages when an employee's year-to-date supplemental wages are $1,000,000.00 or less, use the Optional Flat Rate method and multiply the taxable supplemental wages by the Optional Flat Rate (22%).

An employee earns $3,100.00 per month and contributes 1% to a 401(k) plan. The employee is paid semimonthly and claims single with no adjustments on Form W-4. Calculate the federal income, social security, and Medicare taxes to be withheld from the employee's 401(k) contribution each month.

The correct answer is: $2.37 Under IRS rules, employee contributions to a 401(k) plan are not subject to income tax, but are subject to social security (6.2%) and Medicare (1.45%) taxes.

An employee, age 52, is provided with $160,000.00 of group-term life insurance. Using IRS Table 1 Unform Premiums for GTL which is located in Tables and Rates on the toolbar, calculate the monthly taxable value of this coverage.

The correct answer is: $25.30 Under IRS rules, calculate the taxable value of excess GTL coverage with six steps: 1) Determine the GTL coverage; 2) Calculate the excess coverage (the amount over $50,000); 3) Divide the excess by $1,000; 4) Determine the employee's age on December 31; 5) Using IRS Table 1 Uniform Premium for one month, multiply the value for the employee's age by the amount from Step 3; 6) Subtract any after-tax GTL deductions from the employee's pay to determine the taxable amount.

Using the Optional Flat Rate Method and the Wage-Bracket Method, calculate an employee's federal income tax withholding based on the following information. The employee is paid $900.00 semimonthly and a $350.00 bonus included with this paycheck. The employee's total YTD wages are $25,000.00, and the employee claims single with 3 allowance(s) on his 2018 Form W-4.

The correct answer is: $95.00 To calculate FITW on regular and on supplemental wages, each has its own calculation. When determining the federal income tax withholding using the Wage Bracket Method on regular wages, find the appropriate table based on the employer's pay frequency and the employee's filing status from Form W-4. Then, find the row with the employee's taxable wages (gross less pre-tax amounts) and the column with the employee's allowances from a pre-2020 Form W-4 (use Worksheet 3 from Publication 15-T). The tax amount where the row and column intersect is the correct tax to withhold from regular wages. When calculating federal income tax withheld from supplemental wages when an employee's year-to-date supplemental wages are less than $1,000,000.00, use the Optional Flat Rate Method. Multiply the taxable supplemental wages by the Optional Flat Rate. When both amounts have been determined, add them together to figure the total federal income tax withholding. $95.00 = ($18.00 + $77.00) $77.00 = $350.00 * 22%

A nonexempt employee earns $19.00 per hour. The employee worked 47 hours during the week. Calculate the employee's gross pay for the week.

The correct answer is: $959.50 An employee who works more than 40 hours in a workweek has gross pay that includes pay for all hours worked plus the overtime premium for time worked in excess of 40 hours in the workweek.

An advertising department manager, supervising five full-time employees, is paid a monthly salary of $3,196.00. Last month, the employee worked 35 hours the first week, 55 hours week two, 40 hours week three, and 50 hours week four. Under the FLSA, how many hours of overtime, if any, must the employee be paid?

The correct answer is: 0 Under the FLSA, the advertising manager is an exempt executive employee and is not required to be paid overtime. Exempt executive employees must manage 2 or more full-time employees.

When using the Optional Flat Rate Method, by what percentage is a bonus divided when grossing up for employees with YTD wages less than $142,800.00 with no state or local withholding taxes?

The correct answer is: 70.35% When an employer agrees to pay the taxes on an employee's payment, the calculation of taxable wages requires using the gross-up formula. When grossing-up an employee's net wages, divide the desired net pay by 100% less all of the employee's tax rates.