Exam 9: Payroll, Estimated Payments and Retirement Plans

In 2019, Lew, who is single, earned wages of $386,724. a. What is the amount of Social Security tax withheld from his salary? b. What is the amount of Medicare tax (including additional 0.9% tax if any) withheld from his salary?

Individual quarterly estimated tax payments are filed with Form 1040-ES.

Steve is a single man who lives by himself. He has one job as a computer technician. How many withholding allowances must he claim?

Employers must provide employees with their Form W-2 by February 15 of the year following the calendar year of payment of the wages.

Mark has two jobs during 2019. One employer withheld and paid FICA taxes on $81,200 of Mark's salary and the other employer withheld and paid FICA taxes on $52,800 in salary paid to Mark. Calculate the amount of Mark's credit for the overpayment of Social Security taxes that he should claim on his 2019 Form 1040.

If an individual taxpayer's quarterly estimated tax payments equal or exceed 70 percent of the tax due for the current year, the taxpayer will not be subject to the penalty for underpayment of estimated tax.

If taxpayers fail to provide their bank with a taxpayer identification number, they are subject to backup withholding on interest payments.

For 2019, Randy, an unmarried taxpayer, has wages of $45,000. He has a significant amount of income from dividends and interest and therefore expects to have a federal income tax liability of $18,000. His total federal income tax withholding for the year is $9,500. Randy had $100,000 of adjusted gross income and a federal tax liability of $11,000 on his 2018 return. To avoid a penalty for underpayment of estimated taxes, what is the minimum amount of total estimated tax that Randy must pay in 2019? Assume the payments are made on a timely basis.

Redford's salary was $134,000 in 2019. What would his total combined FICA tax (Social Security & Medicare) withheld from his salary be for the year?

The two most common methods of determining federal income tax withholding are the percentage method and the wage bracket method.

An individual who expects to receive more than $500 of income from sources other than wages meets the requirements for having to file quarterly estimated tax payments.

Which of the following statements is true of a distribution rollover (not a trustee-to-trustee transfer) from a retirement plan?

Penny, age 52, takes a distribution of $30,000 from her Traditional IRA account. She plans to deposit it in an IRA with a different bank. Shortly after the distribution she drives her car through the front window of her credit union in a freak accident, and uses the funds to pay for the damages. What income and/or penalties related to the failure to rollover the IRA must she show on her tax return?

The Wash Your Paws Self-Service Dog Wash, a California business, had two employees during the year. Lindsey worked from January through March 15 and earned $2,750. Avery worked for the whole year and earned $20,000. The State of California assesses unemployment tax at the rate of 5.4 percent. Calculate the total FUTA tax after the credit for the state unemployment tax.

Mark the incorrect answer. Estimated income tax payments:

The FUTA tax is a voluntary unemployment tax which an employer may or may not wish to contribute toward.

Elwin worked at three jobs during 2019. He earned $30,000, $27,000, and $9,000, respectively, from the jobs. What is the total amount of FICA tax that would have been withheld from Elwin's wages?

Which one of the following payroll tax deposit schedules is not a rule that applies for a class of employers?

The original copy of all Forms W-2 and Form W-3 must be filed with the Social Security Administration by January 31 of the year following the calendar year in which the wages were paid, regardless of the tax year of the employer.

Elwin worked at three jobs during 2019. He earned $30,000, $27,000, and $9,000, respectively, from the jobs. What amount can Elwin apply as a credit against his 2019 income tax liability for overpayment of FICA taxes?