Post Test 0411 68%

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: a) 20%. b) 40%. c) 75%. d) 100%.

c) 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.

Which of the following workers is classified as a nonexempt employee? - A trainee soliciting orders for the company's products - A salesperson soliciting orders at the clients' locations - A corporate attorney litigating damage suits - An executive assistant earning $864.00 a week exercising discretion while performing duties

- A trainee soliciting orders for the company's products An exempt employee must meet the FLSA's duties and salary requirements.

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

- 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.

Which of the following items can pension recipients specify on Form W-4P to determine their federal income tax withholding? - Only allowances - Only additional amounts to withhold - Neither allowances nor additional amounts to withhold - Both allowances and additional amounts to withhold

- Both allowances and additional amounts to withhold Pension recipients can specify marital status, allowances, and additional amounts to withhold on Form W-4P, Withholding Certificate for Pension or Annuity Payments, to determine their federal income tax withholding.

An employee's disposable pay is $750.00. Deductions include orders received in the following order: $175.00 federal tax levy, a $125.00 levy for unpaid local property taxes, $75.00 for a state tax levy, and a $50.00 for a creditor garnishment. Which wage attachment has priority? - Property tax levy - Federal tax levy - Creditor garnishment - State tax levy

- Federal tax levy 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.

A semiweekly depositor having a payroll tax liability of $50,000.00 from a Monday payroll must deposit the liability by: - Tuesday. - Wednesday. - Thursday. - Friday.

- Friday. Semiweekly depositors incurring a liability less than $100,000.00 during Saturday, Sunday, Monday, and/or Tuesday must deposit the liability by the next Friday (three business days after the end of the deposit period).

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. - 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. -At the end of the plan year, employees must be paid any remaining unreimbursed amount.

- 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.

Training to improve subordinates' skills and knowledge of payroll practices is part of what management skill? - Staffing - Directing - Controlling - Organizing

- Staffing Training, hiring, and delegating are components of staffing.

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

- 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.

What does the perjury statement on Form W-4 indicate? - The employer has verified the data on the form - The employee disputes the data entered on the form - The employee agrees with all the statements on the form - The employee attests to the accuracy of the data

- The employee attests to the accuracy of the data The perjury statement on Form W-4 indicates the employee attests to the accuracy of the data on the form.

An employee drove a company car 6,000 miles for business, 5,000 miles for commuting, and 4,000 miles for other personal use. The car is valued at $54,750.00. What are the tax implications of the employee's use of the car? - The employer must withhold federal income tax on the personal use of the vehicle. - As the employee drove more personal than business miles, the car cannot be considered a company vehicle. - The employer must withhold social security and Medicare taxes on the value of the personal use of the vehicle. - Using the cents-per-mile method, the personal use of the vehicle is valued at $1,500.00.

- The employer must withhold social security and Medicare taxes on the value of the personal use of the vehicle. Under IRS rules, the value of the personal use of a company vehicle is subject to social security and Medicare tax withholding. It is the employer's option whether to withhold income tax. 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 does not matter if the employee drives more personal than business miles in the company-vehicles when determining the taxation of the personal use of the vehicle.

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.

All of the following types of compensation are taxable EXCEPT: - a $5,000.00 check to a marketing representative for sales efforts. - a trip for two to Las Vegas given to an outside salesperson for exceeding sales goals by 150%. - a gold watch (costing $300.00) awarded to an employee for 30 years of service with the company. - a $1,000.00 gift certificate awarded to a payroll supervisor for cost-cutting suggestions.

- a gold watch (costing $300.00) awarded to an employee for 30 years of service with the company. The IRC generally excludes the value of tangible personal property provided in a length of service or safety award program up to $400. Length of service or safety awards valued in excess of $400 will have the excess amount included in income. All other awards provided to employees are included in the employee's income, reported on Form W-2.

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

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

- 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.

All of the following deductions are voluntary EXCEPT: - 401(k) contributions. - credit union payments. - creditor garnishments. - charitable contributions.

- creditor garnishments. Involuntary deductions include taxes, child support orders, bankruptcy orders, federal administrative garnishments, federal tax levies, student loan garnishments, state tax levies, local tax levies, and creditor garnishments. All other deductions made from an employee's wages are voluntary deductions.

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

- 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.

The Debt Collection Improvement Act (DCIA) authorizes federal agencies to: - collect no more than 10% of disposable earnings to satisfy a delinquent student loan. - garnish an employee's wages without a court order for delinquent nontax debt owed to the United States. - place restrictions on how the states may regulate creditor garnishments. - prioritize bankruptcy orders over federal and state tax levies received before the bankruptcy order.

- garnish an employee's wages without a court order for delinquent nontax debt owed to the United States. The Debt Collection Improvement Act of 1996 (DCIA) authorizes federal agencies to garnish, without a court order, the disposable pay of an individual to collect a delinquent nontax debt owed to the United States.

A payroll manager personally directs the work of her staff. A perfectionist with low tolerance for errors and great pride in the quality service award the department has won for three straight years, this payroll manager's situational leadership style would be described as: - low task, low relationship. - low task, high relationship. - high task, low relationship. - high task, high relationship.

- high task, low relationship. This payroll manager's situational leadership style would be described as directing (high task, low relationship) where the manager controls the job and procedures.

The minimum salary requirement does not apply to exempt professional employees who are: - medical interns or residents. - athletic trainers with accreditation. - licensed funeral directors or embalmers. - learned professionals with advanced knowledge in a field of science.

- medical interns or residents. The FLSA exempts attorneys, physicians and teachers from the white collar minimum salary requirement.

Employer health plan contributions are excluded from employment taxes (social security, Medicare, and FUTA) if the: - benefits are only for dependents. - payments are made under a plan. - collective bargaining agreement requires it. - fund is combined with the employer's salary account.

- payments are made under a plan. Under IRS rules, employer health plan contributions are excluded from employment taxes if the payments are made under a plan. The plan may cover not only employees but also dependents.

IRC §125 generally prohibits the deferral of compensation from one plan year to the next. The exception to this rule includes all of the following benefits EXCEPT for: - the carryover of up to $550 in a Medical FSA. - cash or deferred arrangements under IRC §401(k). - contributions to Health Savings Accounts (HSA). - purchased vacation days.

- purchased vacation days. While a cafeteria plan may offer employees the option of purchasing additional vacation leave with pre-tax dollars, the leave becomes taxable when taken and is subject to several restrictions related to the ban of deferred compensation including being carried over into the next plan year.

A company can lose control over its payroll system by: - having procedures that are documented and accessible. - rotating job assignments. - relying on verbal communication of policies and procedures. - having a confidentiality statement in the documentation.

- relying on verbal communication of policies and procedures. Documentation that includes a confidentiality statement is a key part of an organization's internal controls which include rotating job assignment, balancing and reconciliation, and edits.

When checking the general ledger periodically, the following procedures are used EXCEPT: - verify the correct amount of taxes are withheld, deposited, and reported on time. - ensure that employee paychecks are posted correctly. - reverse the payroll accrual entry. - compare general ledger accounts to the records for taxes withheld and paid.

- reverse the payroll accrual entry. The reconciliation of the general ledger checks the posting of payments to employees, verifies the withholding and depositing of taxes, and compares the account balances in the general ledger to the amount of taxes withheld.

When implementing internal controls in the payroll department, the payroll manager: - segregates job duties. - allows unlimited access to the system. - assigns payroll staff to reconcile the payroll bank account. - assigns job duties permanently.

- segregates job duties. 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, and rotation of personal.

Optimum customer service within the payroll department includes all of the following principles EXCEPT: - tangibles. - sympathy. - reliability. - assurance.

- sympathy. The five principles of optimum customer services are: reliability, responsibility, assurance, empathy, and tangibles.

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

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

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

All of the following benefits are taxable EXCEPT: - the personal use of a company car. - reimbursements for meal expenses incurred during a qualified relocation. - employer-paid premiums for $100,000.00 of employee group-term life insurance coverage. - the cost of moving household goods for a member of the Armed Forces.

- the cost of moving household goods for a member of the Armed Forces. Under IRS rules, expenses excluded from income during a qualified move (for military personnel only) are:1) Moving the household goods from the old home to the new home and2) The cost of moving the family from the old home to the new home (except meals).The personal use of a company-vehicle and employee's group-term life insurance that exceeds $50,000 are taxable.

A health care flexible spending account may allow a $550 carryover if: - an employee chooses carryover instead of grace period. - the plan does not have a grace period. - the employee forfeits the uniform coverage provision. - the plan is a non-calendar year plan.

- the plan does not have a grace period. Under Section 125, a cafeteria plan health care Flexible Spending Account may allow a $550 carryover from one plan year to the next plan year if the plan does not have a grace period. A medical flexible spending account can have either the carryover or grace period, but not both.

For a nonqualified deferred compensation plan to exclude deferrals from income, distributions can be allowed: - 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.

- 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.

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 $5,000.00 and report $5,000.00 in taxable compensation on Form W-2. - withhold federal income, 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 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 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.

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. For more information, refer to Module 2, Lesson 4

An employee works part-time, 3 hours a day, Monday through Friday, earns minimum wage, and is paid every Friday. The employee submitted a 2021 Form W-4 indicating a filing status of Married filing jointly and $20 in Step 4(c). Using the Wage Bracket Method, calculate the employee's federal income tax withholding for the week.

The Answer is: $20.00. Use Worksheet 2 from Publication 15-T: Step 1: Calculate the taxable wages: (3 hrs/day x 5 days) x $7.25 = $108.75. Using Worksheet 2 from Publication 15-T, skip to Step 2 as the employee did not report any amounts in Steps 4(a) or 4(b) of Form W-4. Step 2: Locate the Weekly Payroll Period table. Locate the row which includes $108.75. Locate the column for Married Filing Jointly, Standard withholding to determine the Tentative Wihholding Amount. Step 3:Skip. No entries in Step 3 of Form W-4. Step 4: Add the amount from Step 4(c) of Form W-4 to the Tentative Withholding Amount. The result is the amount of federal income tax to withhold.

Using the information below, calculate the employee's net pay. Regular pay $1,312.50 Overtime pay $25.50 Federal income tax $135.00 State income tax $45.00 Social security tax $82.96 Medicare tax $19.40

The correct answer is: $1,055.64. To calculate net pay, determine the employee's gross pay (regular pay plus overtime pay) then subtract the deductions withheld from the employee's pay.

The foreign base housing amount is what percentage of the foreign earned income exclusion?

The correct answer is: 16%. The base housing amount is 16% of the maximum foreign earned income exclusion, figured on a daily basis, multiplied by the number of days during the year the employee met the bona fide residence or physical presence test. The 2021 foreign earned income exclusion of $108,700.00 produces a base housing amount of $17,392.00.

What election do employees make when they choose to have the fair market value of stock included in income before the stock has been vested? a. 83(b) b. 125 c. 132(f) d. Special accounting rule

a. 83(b) Employees can make an 83(b) election which allows the employee the ability to elect to include income of the fair market value of the stock at the time of election.

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

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

A semiweekly depositor has a tax liability of $79,000.00 from Wednesday's pay day and a liability of $50,000.00 from Friday's pay day. The tax deposit is due: a. Monday. b. Wednesday. c. Friday. d. by the 15th day of the following month.

a. Monday. Semiweekly depositors incurring a liability of $100,000.00 or more on Wednesday, Thursday, and/or Friday must deposit the liability by the next business day after exceeding the $100,000.00 threshold. For all depositors, if the due date of the deposit is a Saturday, Sunday, or federal holiday, the deposit is due on the next business day.

Under the FLSA, when a nonexempt employee receives a retroactive pay increase, over what period of time, if any, will the new pay rate impact the employee's overtime premium? a. The entire period of the retroactive increase b. Only the current workweek c. Only the current pay period d. It does not have to be considered in the overtime premium

a. The entire period of the retroactive increase Under the FLSA, when a nonexempt employee receives a retroactive pay increase, the new pay rate impacts the employee's overtime premium for the entire period of the retroactive increase.

When an employee has a single charitable contribution deducted from her pay, in order to take the deduction on her personal income tax return, she must have documentation from the employer and the charitable organization if the contribution is greater than: a. $50. b. $100. c. $250. d. any dollar amount.

c. $250. The Internal Revenue Code requires taxpayers who make charitable contributions of $250 or more through a payroll deduction obtain written acknowledgement of the gift before they file a personal income tax return for the year of the contribution. The written acknowledgement consists of a pledge card or other document prepared by the charitable organization and the employee's pay statement, Form W-2, or other document provided which shows the amount contributed.

Calculate an employee's net pay based on the following information: Paid biweekly Annual salary = $120,000 Exempt employee Hours worked week 1 = 45 Hours worked week 2 = 50 2021 W-4 information = Head of Household, Step 3: $6,000 (3 qualified children under 17) YTD Wages = $87,500 YTD 401(k) = $19,000 401(k) contribution = 20% of wages Employee's age = 46 Use the Percentage Method and Worksheet 4 from Publication 15-T a. $3,136.16 b. $3,399.11 c. $3,464.73 d. $3,627.12

c. $3,464.73 When calculating an employee's net pay, determine if the employee is exempt or nonexempt to calculate any overtime. Add any entries from Form W-4 Step 4(a) or 4(b) to Step 1 of Worksheet 4. For FITW, use Worksheet 4 from Publication 15-T.

The maximum amount that can be excluded from an employee's taxable income in a dependent care assistance plan is: a. $1,000.00. b. $2,750.00. c. $5,000.00. d. $7,000.00.

c. $5,000.00. Under IRS rules, the maximum amount for the year that can be excluded from income for a dependent care assistance plan is $5,000.00 ($2,500 for married individuals filing separately), or the employee's earned income, or the employee's spouse's earned income for the year, whichever is less.

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? a. $17.40 b. $62.00 c. $74.40 d. $91.80

c. $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)

Reporting the cost of employer-provided health coverage is fulfilled by completing Form W-2, Box 12 with Code: a. J. b. W. c. DD. d. GG.

c. DD. The cost of employer-provided health coverage is reported on Form W-2, Box 12, Code DD.

When is Form 1042-S required to be provided to the IRS? a. January 31 b. February 28 c. March 15 d. March 31

c. 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.

An employee will turn age 50 in March and works for an employer that allows catch-up contributions to its 403(b) plan. What is the maximum employee-elected deferral that is eligible to be contributed to the 403(b) plan in 2021? a. $19,500.00 b. $20,500.00 c. $22,500.00 d. $26,000.00

d. $26,000.00 Under IRS rules, when the employer's plan allows catch-up contributions, the maximum employee-elected deferral for an employee age 50 or older is $26,000.00 ($19,500.00 regular deferral and $6,500.00 catch-up contribution).

Under the FLSA, calculate the weekly compensation due to a nonexempt employee who is paid $10.00 per hour and works 45 hours in the workweek. a. $25.00 b. $75.00 c. $450.00 d. $475.00

d. $475.00 When calculating a nonexempt employee's wages, first determine the wages for all hours worked (regular pay), then calculate the employee's overtime premium using the regular rate of pay. Finally, add the regular pay and the overtime premium to determine the total pay.

In order for nonresident aliens to claim exemption from income tax and income tax withholding on the portion of their wages based on a tax treaty between their home country and the U.S., the employees must submit Form: a. 911. b. 1042-S. c. 2032. d. 8233.

d. 8233. Form 8233, Exemption on Withholding from Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual, is used by nonresident aliens receiving compensation for dependent or independent personal services performed in the United States wishing to claim exemption from income tax and income tax withholding on a portion of their wages based on an income tax treaty with their home country.

An employee makes a Form W-4 invalid EXCEPT when: a. altering the form. b. making an addition to the language of the form. c. deleting language from the form. d. changing marital status.

d. changing marital status. An employee's Form W-4 is invalid when there is any alteration, addition, or deletion to the language or format of the form.