Question 1

The IRA format of the SIMPLE plan allows employees to make tax-free contributions of up to $12,000.

Accepted Answer

A) True 
 B)False  True

Question 2

Of the two main methods of withholding, only the wage-bracket method distinguishes unmarried persons from married persons.

Accepted Answer

A) True 
 B)False  False

Question 3

In the IRA form of the Simple Retirement Account, employers must match the employee's contribution, dollar-for-dollar, up to 3% of the employee's compensation.

Accepted Answer

A) True 
 B)False  True

Question 4

There is no limit to the amount of educational assistance that is exempt from federal income tax withholdings.

Accepted Answer

A) True 
 B)False

Question 5

Form W-3 is filed with the Social Security Administration when transmitting information returns on Forms W-2.

Accepted Answer

A) True 
 B)False

Question 6

An employer must file an information return under all of the following conditions except:

Accepted Answer

A)  to report $1,000 of compensation paid to an individual who is not an employee. 
B)  to report the wages totaling $600 paid to an independent contractor during the calendar year. 
C)  to report dividends totaling $600 paid to an individual during the calendar year. 
D)  to report commissions of $500 paid to a self-employed salesman. 
E)  An information return must be filed under each of the above conditions. 
A)  to report $1,000 of compensation paid to an individual who is not an employee. 
B)  to report the wages totaling $600 paid to an independent contractor during the calendar year. 
C)  to report dividends totaling $600 paid to an individual during the calendar year. 
D)  to report commissions of $500 paid to a self-employed salesman. 
E)  An information return must be filed under each of the above conditions.

Question 7

By completing Form W-4P, a person can elect to have no income tax withheld from the annuity amounts the person receives.

Accepted Answer

A) True 
 B)False

Question 8

There is no limit to the amount that an employer can contribute in an employee's SIMPLE retirement account.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements correctly describes the withholding of federal income taxes and social security taxes on tips?

Accepted Answer

A)  Tips amounting to $10 or more in a calendar month must be re- ported by tipped employees to their employers. 
B)  The withholding of federal income taxes on employees' reported tip income is made from the amount of tips reported by employees. 
C)  When employees report taxable tips in connection with employment in which they also receive regular wages, the amount of tax to be withheld on the tips is computed as if the tips were a supplemental wage payment. 
D)  Employers do not withhold FICA taxes on the tipped employees' reported tip income. 
E)  None of the above statements is correct. 
A)  Tips amounting to $10 or more in a calendar month must be re- ported by tipped employees to their employers. 
B)  The withholding of federal income taxes on employees' reported tip income is made from the amount of tips reported by employees. 
C)  When employees report taxable tips in connection with employment in which they also receive regular wages, the amount of tax to be withheld on the tips is computed as if the tips were a supplemental wage payment. 
D)  Employers do not withhold FICA taxes on the tipped employees' reported tip income. 
E)  None of the above statements is correct.

Question 10

After completion of Form W-4, an employer must copy the employee's social security card and place it in the employee's employment file.

Accepted Answer

A) True 
 B)False

Question 11

An employee submits an invalid Form W-4 to the employer and does not replace it with a valid form. The employer should withhold federal income taxes at the rate for a single person claiming no exemptions.

Accepted Answer

A) True 
 B)False

Question 12

Evers, who works for two employers, is entitled to three personal allowances. Evers must claim the three allowances with each of the two employers during the entire calendar year.

Accepted Answer

A) True 
 B)False

Question 13

Arch gives you an amended Form W-4 dated March 13, 2014, on which he claims two additional withholding allowances. He asks you to refund the excess taxes that were deducted from January 1 to March 13 when Arch claimed only one withholding allowance. You should:

Accepted Answer

A)  repay the overwithheld taxes on Arch's next payday. 
B)  tell Arch that you will spread out a refund of the overwithheld taxes equally over the next six pays. 
C)  inform Arch that you are unable to repay the overwithheld taxes that were withheld before March 13 and that the adjustment will have to be made when he files his annual income tax return. 
D)  tell Arch to write the IRS immediately and ask for a refund of the overwithheld taxes. 
E)  inform Arch that you will appoint a committee to study his request. 
A)  repay the overwithheld taxes on Arch's next payday. 
B)  tell Arch that you will spread out a refund of the overwithheld taxes equally over the next six pays. 
C)  inform Arch that you are unable to repay the overwithheld taxes that were withheld before March 13 and that the adjustment will have to be made when he files his annual income tax return. 
D)  tell Arch to write the IRS immediately and ask for a refund of the overwithheld taxes. 
E)  inform Arch that you will appoint a committee to study his request.

Question 14

A company must withhold federal income taxes from payments made to independent contractors in which of the following cases?

Accepted Answer

A)  When there is a signed contract between the parties 
B)  When the contractor is paid more than $10,000 
C)  When the contractor is a corporation 
D)  When the contractor has not provided a taxpayer identification number and the contract is $600 or more 
E)  All of the above 
A)  When there is a signed contract between the parties 
B)  When the contractor is paid more than $10,000 
C)  When the contractor is a corporation 
D)  When the contractor has not provided a taxpayer identification number and the contract is $600 or more 
E)  All of the above

Question 15

For state income tax purposes, all states treat 401(k) plan payroll deductions as nontaxable.

Accepted Answer

A) True 
 B)False

Question 16

A person holding two jobs may have additional income tax withheld by increasing the number of withholding allowances claimed.

Accepted Answer

A) True 
 B)False

Question 17

Under the federal income tax withholding law, which of the following is not defined as an employee?

Accepted Answer

A)  Partner who draws compensation for services rendered the partnership 
B)  General manager, age 66 
C)  Payroll clerk hired one week ago 
D)  Governor of the state of Florida 
E)  Secretary employed by a not-for-profit corporation 
A)  Partner who draws compensation for services rendered the partnership 
B)  General manager, age 66 
C)  Payroll clerk hired one week ago 
D)  Governor of the state of Florida 
E)  Secretary employed by a not-for-profit corporation

Question 18

To curb the practice of employees filing false Forms W-4, the IRS requires that an employer submit to the agency a copy of each Form W-4:

Accepted Answer

A)  the IRS has requested in writing. 
B)  on which an employee, usually earning $180 each week at the time Form W-4 was filed, now claims to be exempt from withholding. 
C)  on which an employee claims to be single but has 9 withholding allowances. 
D)  on which a married employee claims no withholding allowances. 
E)  on which a recently divorced employee claims 5 withholding allowances and authorizes an additional $10 to be withheld each week. 
A)  the IRS has requested in writing. 
B)  on which an employee, usually earning $180 each week at the time Form W-4 was filed, now claims to be exempt from withholding. 
C)  on which an employee claims to be single but has 9 withholding allowances. 
D)  on which a married employee claims no withholding allowances. 
E)  on which a recently divorced employee claims 5 withholding allowances and authorizes an additional $10 to be withheld each week.

Question 19

If you, an employer, are filing 550 Forms W-2, you must use electronic filing rather than paper Forms W-2.

Accepted Answer

A) True 
 B)False

Question 20

The special withholding allowance may be claimed only by those employees who do not itemize deductions on their income tax returns.

Accepted Answer

A) True 
 B)False

The IRA format of the SIMPLE plan allows employees to make tax-free contributions of up to $12,000.

Of the two main methods of withholding, only the wage-bracket method distinguishes unmarried persons from married persons.

In the IRA form of the Simple Retirement Account, employers must match the employee's contribution, dollar-for-dollar, up to 3% of the employee's compensation.

There is no limit to the amount of educational assistance that is exempt from federal income tax withholdings.

Form W-3 is filed with the Social Security Administration when transmitting information returns on Forms W-2.

An employer must file an information return under all of the following conditions except:

By completing Form W-4P, a person can elect to have no income tax withheld from the annuity amounts the person receives.

There is no limit to the amount that an employer can contribute in an employee's SIMPLE retirement account.

Which of the following statements correctly describes the withholding of federal income taxes and social security taxes on tips?

After completion of Form W-4, an employer must copy the employee's social security card and place it in the employee's employment file.

An employee submits an invalid Form W-4 to the employer and does not replace it with a valid form. The employer should withhold federal income taxes at the rate for a single person claiming no exemptions.

Evers, who works for two employers, is entitled to three personal allowances. Evers must claim the three allowances with each of the two employers during the entire calendar year.

Arch gives you an amended Form W-4 dated March 13, 2014, on which he claims two additional withholding allowances. He asks you to refund the excess taxes that were deducted from January 1 to March 13 when Arch claimed only one withholding allowance. You should:

A company must withhold federal income taxes from payments made to independent contractors in which of the following cases?

For state income tax purposes, all states treat 401(k) plan payroll deductions as nontaxable.

A person holding two jobs may have additional income tax withheld by increasing the number of withholding allowances claimed.

Under the federal income tax withholding law, which of the following is not defined as an employee?

To curb the practice of employees filing false Forms W-4, the IRS requires that an employer submit to the agency a copy of each Form W-4:

If you, an employer, are filing 550 Forms W-2, you must use electronic filing rather than paper Forms W-2.

The special withholding allowance may be claimed only by those employees who do not itemize deductions on their income tax returns.

The Need for Payroll and Personnel Records

Computing Wages and Salaries

Social Security Taxes

Unemployment Compensation Taxes

Analyzing and Journalizing Payroll Transactions

Filters

Exam 4: Income Tax Withholding

The IRA format of the SIMPLE plan allows employees to make tax-free contributions of up to $12,000.

Of the two main methods of withholding, only the wage-bracket method distinguishes unmarried persons from married persons.

In the IRA form of the Simple Retirement Account, employers must match the employee's contribution, dollar-for-dollar, up to 3% of the employee's compensation.

There is no limit to the amount of educational assistance that is exempt from federal income tax withholdings.

Form W-3 is filed with the Social Security Administration when transmitting information returns on Forms W-2.

An employer must file an information return under all of the following conditions except:

By completing Form W-4P, a person can elect to have no income tax withheld from the annuity amounts the person receives.

There is no limit to the amount that an employer can contribute in an employee's SIMPLE retirement account.

Which of the following statements correctly describes the withholding of federal income taxes and social security taxes on tips?

After completion of Form W-4, an employer must copy the employee's social security card and place it in the employee's employment file.

An employee submits an invalid Form W-4 to the employer and does not replace it with a valid form. The employer should withhold federal income taxes at the rate for a single person claiming no exemptions.

Evers, who works for two employers, is entitled to three personal allowances. Evers must claim the three allowances with each of the two employers during the entire calendar year.

Arch gives you an amended Form W-4 dated March 13, 2014, on which he claims two additional withholding allowances. He asks you to refund the excess taxes that were deducted from January 1 to March 13 when Arch claimed only one withholding allowance. You should:

A company must withhold federal income taxes from payments made to independent contractors in which of the following cases?

For state income tax purposes, all states treat 401(k) plan payroll deductions as nontaxable.

A person holding two jobs may have additional income tax withheld by increasing the number of withholding allowances claimed.

Under the federal income tax withholding law, which of the following is not defined as an employee?

To curb the practice of employees filing false Forms W-4, the IRS requires that an employer submit to the agency a copy of each Form W-4:

If you, an employer, are filing 550 Forms W-2, you must use electronic filing rather than paper Forms W-2.

The special withholding allowance may be claimed only by those employees who do not itemize deductions on their income tax returns.

The Need for Payroll and Personnel Records

Computing Wages and Salaries

Social Security Taxes

Unemployment Compensation Taxes

Analyzing and Journalizing Payroll Transactions

Filters