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| 1 | |
Wages subject to withholding and other employment taxes include all pay given to employees for services performed. |
| | A) | True |
| | B) | False |
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| 2 | |
When using the wage bracket method, withholding allowances are deducted before figuring the federal withholding amount. |
| | A) | True |
| | B) | False |
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| 3 | |
Form 4070 is used by employers to record employees' tips subject to tax withholding and FICA taxes. |
| | A) | True |
| | B) | False |
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| 4 | |
A taxpayer who has overpaid the social security portion of the FICA tax because her or his combined taxable income from multiple jobs exceeds the annual wage base is entitled to receive the excess as a refund even if there is federal tax owed on the 1040 return. |
| | A) | True |
| | B) | False |
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| 5 | |
An employer who is a monthly schedule depositor and accumulates a $100,000 tax liability on any day must pay the tax on the next business day and is allowed by law to remain a monthly depositor until the next year when they will become a semiweekly depositor. |
| | A) | True |
| | B) | False |
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| 6 | |
When calculating the FUTA tax due, an employer can qualify for a 5.4% maximum credit for state unemployment taxes paid. |
| | A) | True |
| | B) | False |
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| 7 | |
Taxpayers who employ household workers must file a quarterly 941return and an annual 940 return. |
| | A) | True |
| | B) | False |
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| 8 | |
Copy A of the Form W2 is a red scannable form that is sent directly to the Internal Revenue Service to track all wages for federal income tax and social security purposes. |
| | A) | True |
| | B) | False |
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| 9 | |
Supplemental wages are only subject to FICA taxes and federal withholding taxes and are not subject to SUTA or FUTA taxes. |
| | A) | True |
| | B) | False |
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| 10 | |
Safe harbor is a term used to describe a provision in the Internal Revenue Code that protects taxpayers from penalty under certain situations. |
| | A) | True |
| | B) | False |
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| 11 | |
Juan is married, is paid $3,000 per week, and claims 2 withholding allowance. What is the amount of federal income tax withheld from Juan's gross wages for the week using the percentage method? |
| | A) | $552.35 |
| | B) | $570.65 |
| | C) | $588.96 |
| | D) | $679.58 |
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| 12 | |
Sharon is single and is paid 7,000 per week and claims 2 withholding allowances. What amount of federal income tax will be withheld from Sharon's gross wages for each payroll period? |
| | A) | $1,820.54 |
| | B) | $1,866.31 |
| | C) | $1,988.61 |
| | D) | $2,034.38 |
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| 13 | |
Irene earned wages of $110,000 during 2007. How much will Irene's employer withhold in social security taxes for the year? |
| | A) | $5,840.40 |
| | B) | $6,045.00 |
| | C) | $6,820.00 |
| | D) | $8,415.00 |
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| 14 | |
Irene earned wages of $110,000 during 2007. How much will Irene's employer withhold in Medicare taxes for the year? |
| | A) | $1,413.75 |
| | B) | $1,450.00 |
| | C) | $1,595.00 |
| | D) | $2,827.50 |
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| 15 | |
Irene earned wages of $110,000 during 2007. What share of FICA tax is Irene's employer responsible for in 2007? |
| | A) | $7,254.15 |
| | B) | $7,435.40 |
| | C) | $7,495.00 |
| | D) | $ 7,640.00 |
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| 16 | |
Harry has two jobs. He earns $100,000 from his first job and $10,000 from his second job. How much total FICA withholding will Harry have withheld from his wages from working two jobs? |
| | A) | $7,495.00 |
| | B) | $8,223.75 |
| | C) | $8,260.00 |
| | D) | $8,415.00 |
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| 17 | |
Esmeralda is single and is paid $700 per week claiming 2 allowances. What is the amount of federal income tax withheld on Esmeralda's gross wages for the week? Use the wage bracket table in Appendix A at the end of the chapter. |
| | A) | $71 |
| | B) | $72 |
| | C) | $97 |
| | D) | $100 |
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| 18 | |
Matthew earned $67,859 during 2007. How much will Matthew's employer withhold from him, in total, for FICA taxes? |
| | A) | $4,207.26 |
| | B) | $5,191.21 |
| | C) | $8,414.51 |
| | D) | $10,283.43 |
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| 19 | |
Lanny has two jobs and earned $85,000 from his first job and $20,000 from his second job. How much total FICA taxes will Lanny have withheld from his wages from working two jobs? |
| | A) | $6,502.50 |
| | B) | $7,206.30 |
| | C) | $7,362.90 |
| | D) | $8,032.50 |
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| 20 | |
Alexandra earned $200 in tips in June. When must she inform her employer of her tips on form 4070 for federal income tax and FICA withholding purposes: |
| | A) | June 30 |
| | B) | July 10 |
| | C) | July 31 |
| | D) | Alexandra is not under any obligation to inform her employer of her tips earned in any one month. |
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| 21 | |
The payroll period for a monthly depositor ends on a Friday. The employer must deposit the federal taxes withheld for this pay period on or before: |
| | A) | The last day of the month |
| | B) | The following Friday |
| | C) | The following Wednesday |
| | D) | The following Monday |
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| 22 | |
If on any day during the month, an employer accumulates $100,000 or more in tax liability, the taxes must be deposited: |
| | A) | By the next banking day |
| | B) | Before the close of the business day in which the liability occurs. |
| | C) | By the last day of the week if the employer is a monthly depositor. |
| | D) | By either the following Wednesday or Friday if the employer is a semiweekly depositor. |
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| 23 | |
What is the maximum state unemployment credit allowed for FUTA purposes? |
| | A) | none |
| | B) | 5.4% if all state unemployment taxes have been paid |
| | C) | 6.2% if all state unemployment taxes have been paid |
| | D) | 90% of the maximum rate allowed for state unemployment |
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| 24 | |
If a taxpayer works for more than one employer during the year, how much in FUTA taxes is remitted in the name of the taxpayer? |
| | A) | Only the first employer is required to remit FUTA taxes on the wages earned. |
| | B) | If the employee earns more than $7,000 at the first job, all other employers are exempt from paying FUTA taxes for this employee during the year. |
| | C) | If the employee earns less than $7,000 at the first job, the next employer must remit FUTA taxes until the employee has earned a total of $7,000. |
| | D) | Both employers must remit FUTA taxes they pay to the employee on the first $7,000 of wages earned by the employee at each job. |
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| 25 | |
Brenda is a self-employed accountant. She has net self-employment earnings from her practice of $50,000. Her self-employment taxes for the year are: |
| | A) | $3,825. |
| | B) | $7,065 |
| | C) | $7,650 |
| | D) | $12,400 |
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| 26 | |
Daniel is a computer technical support representative earning $85,000 per year and also has a sole proprietor consulting business where he earned $28,000 for 2007. How much of his total earnings are subject to self-employment tax for 2007? |
| | A) | $11,544 |
| | B) | $12,500 |
| | C) | $25,858 |
| | D) | $28,000 |
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| 27 | |
How many times can an employee adjust his or her federal withholding allowances per year on a W4? |
| | A) | once per calendar year |
| | B) | twice per calendar year |
| | C) | every quarter during the year |
| | D) | as often as the employee deems is necessary to correctly reflect changing life events. |
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| 28 | |
A taxpayer with an AGI of $300,000 for 2007 pays estimated taxes. The taxpayer can avoid an underpayment penalty by paying: |
| | A) | At least 90% of their 2007 tax liability if their 2006 adjusted gross income was less than $200,000 regardless of filing status. |
| | B) | At least 90% of their 2007 tax liability ratably over four quarterly payments. |
| | C) | At least 100% of their 2007 tax liability ratably over four quarterly payments. |
| | D) | At least 110% of their 2006 tax liability ratably over four quarterly payments. |
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| 29 | |
Hank received a bonus of $5,000 from his employer. How is the federal withholding tax on this payment calculated if he also earns biweekly wages of $2,000? |
| | A) | If taxes have already been withheld from his wages separately, the bonus is taxed at a flat rate of 25%. |
| | B) | If taxes have already been withheld from Hank's wages separately, the bonus is subject to a backup withholding rate of 28%. |
| | C) | If taxes have not been already withheld from Hank's regular wage, the bonus is added to the wages and withheld at the rate of 25%. |
| | D) | If taxes have already been withheld from Hank's wages separately, the bonus is added to the wages and federal taxes are withheld at this combined amount. Any excess taxes withheld this period will be refunded to Hank on his next paycheck. |
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| 30 | |
Guido received a commission of $10,000 from his employer. How is the federal withholding tax on this payment calculated if he also earns biweekly wages of $3,000? |
| | A) | If taxes have already been withheld from Guido's wages separately, the commission is subject to backup withholding of 28% |
| | B) | If taxes have already been withheld from Guido's regular wages separately, the commission is added to the wages and federal taxes are withheld at this combined amount. Any excess taxes withheld this pay period will be refunded to Guido on his next paycheck. |
| | C) | If taxes have already been withheld from Guido's regular wage, the commission is added to the wages at the next biweekly pay period and taxes are withheld accordingly. |
| | D) | If taxes have already been withheld from Guido's regular wage, the commission is taxed at a flat rate of 25% |
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