Ch. 5 Employee Net Pay and Pay Methods
Court ordered garnishments can be for
child support. student loans. alimony.
Information on local (city or county) taxes can be found through
county revenue department. city revenue department.
In addition to tracking hours and accurately compensating employees based on their marital status and withholdings, the employer must keep the employee's BLANK number in a BLANK file.
paycard, secure
Payroll software packages use the BLANK method to compute income tax amounts.
percentage
Post-tax deductions
reduce employee net pay.
Until 2006, BLANK BLANK applied to funds on deposit in an FDIC-insured institution but has since been extended to paycards.
regulation e
Charitable contributions are
reported on the employee's itemized tax return. deducted post-tax.
The difference between income tax withholding amounts using wage-brack and percentage methods occurs because of BLANK during the computation process.
rounding
Employees may be subject to
state disability taxes. state income taxes.
In 2021, Social Security taxes have a maximum wage base of
$142,800
During the first step of determining grossed-up pay, what computation must occur?
Compute the total percentage of mandatory taxes
What is a potential problem when using an electronic portal for employee access to pay records?
Computer hacking
What item(s) was/were new on the Form 2020 W-4? (Check all that apply).
Dependents under 17 Multiple jobs or spouse's employment
Which controls would improve accountability in cash payroll systems?
Signed receipts
What are advantages of paying employees by check?
Simplicity of accounting records Improved traceability
Old Age Surviver Disability Insurance (OASDI) is another name for:
Social Security tax
The percentage method calculates withholding amounts based upon
tiered income level.
Unlike the use of paper checks or direct deposit for payroll disbursement, paycards do not require employees to have a BLANK BLANK
bank account
Employers withhold state taxes Based on all wages earned
based on all wages earned within their state.
Which of the following are potential indicators of payroll fraud (select all that apply)?
Absence of the bank's or the recipient's address Changes in font type Handwritten additions to the paycheck
The purpose for using grossed-up pay is to
Achieve a predetermined net pay Satisfy tax liabilities
Highly compensated employees are subject to an additional 0.9% Medicare tax because of the BLANK BLANK Act.
Affordable Care
BLANK is a type of cryptocurrency that has gained popularity.
Bitcon
Put the list in the correct processing order Instructions
Determine gross pay Determine pre-tax tax deduction Determine federal withholding taxes Determine post-tax deductions
Timing of the employee repayment of an advance is determined by:
Employee agreement
Who would be subject to additional Medicare taxes?
Employees earning more than $200,000
True or False: The wage-bracket method is useful for manual payroll preparation because the process of federal tax withholding is an absolute amount that will match the year-end tax forms.
False
Which of the following are disadvantages of paying employees by check?
Increased risk of lost pay check Increased reconciliation process
When would a company use paycards for the payment of employees?
Large number of employees that do not have bank accounts If they have traveling workers
Define escheatment.
Leaving a check uncashed
The BLANK BLANK may be liable for payroll check fraud until such activity is proven.
check issuer
FICA taxes are imposed on
eligible wages
When using the wage-bracket method the payroll accountant needs to know
exemptions. marital status.
Under the percentage method, place the items in calculation order
gross pay federal taxable wages withholding allowance deduction tiered tax rate
If a firm operates in multiple states, state BLANK BLANK requirements may become more complex.
income tax
Occupational privilege taxes may be imposed by
local governments.
Employers issuing paper checks to employees should
maintain an unclaimed property account. use a dedicated payroll account. ensure sufficient funds are in the bank account.
Employees who travel for work could find paycards
more convenient than checks. a viable option to direct deposit.
When using direct deposit, a best practice is to grant employees access to an BLANK BLANK to view their pay advice.
online portal
The repayment by an employee of an advance is treated as a BLANK-tax deduction
post
To determine taxes to withhold using the BLANK BLANK method, the payroll clerk may use Publication 15-T.
wage bracket
An employee earns $4,000 per week and contributes $150 to their 401(k) plan and $75 to United Way. What amount of employee's wages are subject to federal income taxes?
$3,850
The combined rate for Social Security taxes in 2020 is
12.4%
The combined maximum Medicare tax rate for an individual earning more than $200,000 annually would be
2.35%.
George had gross wages of $1,000, 401(k) deduction equal to 15% of gross wages and health insurance of $50. George's taxable income is $
800
True or false: Disposable income limits apply to union dues.
False
Which of the following is true about the Social Security wage base?
It usually changes annually The tax rate is 6.2% of eligible wages
Daniel is a new employee looking at contributing to a 401(k) offered through the company. How will his contributions affect his tax liability?
Lower federal income tax No change to FICA tax liability
Which of the following are types of taxes employers would match?
Medicare taxes Social Security taxes
Mandatory tax deductions for all employees include the following:
Medicare taxes federal income taxes Social Security taxes
When an employer pays with cash, what information should the pay advice contain?
Net pay Deductions Gross pay
Which of the following are NOT determinates of federal withholding taxes on Form W-4 from 2019 or prior years?
Net pay Job classification
FICA taxes comprise which of the following:
Social Security taxes. Medicare taxes.
The following is true about state taxes on employees earnings:
States tax rates may vary by wage levels. States may apply a variety of additional taxes. State taxes follow similar guidelines as federal taxes.
What are some reasons that employers may pay their employee's wages in cash?
Temporary workers High liquidity for employees
Select the specific types of employee pay that are subject to garnishments for consumer credit.
Termination pay Commissions Sign-on bonuses
An employer must withhold state income taxes when
The state in which they operate has a state income tax.
Internet technologies allow the transfer of funds for cryptocurrencies by:
Transfers between wallets International payment without exchange rates
Employees may chose to use direct deposit to
decrease wait time for access to their payroll. avoid going to the bank. avoid losing the paycheck.
The concept of BLANK BLANK is the general guideline for amounts subject to consumer credit garnishment.
personal service
After computing employee gross pay, the next step is to
subtract pre-tax deductions.
Once the employer has computed the employee's gross pay, the next step is
to deducted mandatory, voluntary, and mandated amounts.
Employee deductions for union dues are considered
voluntary
Post-tax deductions are comprised of
voluntary withholdings. mandated withholdings.
Publication 15 provides employers information on the amount of BLANK to be withheld
taxes
Social Security and Medicare can be higher than federal taxable income because of retirement contributions.
True
True or False: The new Form W-4 removes the withholding allowances and focuses on marital status, annual income, and dependents.
True
True or false: Paycards may be accessed anywhere that credit cards are accepted.
True
The employee completes which form to identify the withholding information for federal income taxes?
W-4
The wage based for the additional Medicare tax is determined by the information on the employee's
W-4
When would an employee want to have additional taxes withheld by their employer?
When the employee has additional income for which no income tax is withheld. When the employee has more than one job.
Obtaining the employee's BLANK and BLANK averts problems associated with timely cash payments.
signature, date
The employer's role in federal income taxes is: (Select all that apply).
depositor. collector. reporter.
The maximum garnishment for an employee is determined on
disposable income.
Social Security taxes were designed to cover people for:
old age disability illness retirement
Charitable contributions are
paid by the employee and remitted by the employer.
