Question 1

For 2015, the Social Security portion of the FICA tax is imposed at a rate of:

Accepted Answer

A) 6.2 percent for the employee and 7.65 percent for the employer. 
B) 6.2 percent for only the employer. 
C) 6.2 percent for only the employee. 
D) 6.2 percent for the employee and 6.2 percent for the employer. 
E) None of the above.

Question 2

George has four employees who earned $75,000, $27,000, $2,100, and $6,200 during 2015, respectively. He paid 5.4 percent for state unemployment tax. How much FUTA tax will George owe for the four employees?

Accepted Answer

A) $133.80 
B) $882.40 
C) $321.60 
D) $224.00 
E) $163.70

Question 3

An employee is reimbursed for travel and other ordinary and necessary expenses. Under what circumstances would income tax be withheld from the employee on these amounts?

Accepted Answer

The answer of An employee is reimbursed for travel and...

Question 4

Karen is single with no dependents and earns $18,000 a year. She gives her employer a Form W-4 on which she claims 17 allowances. What is her employer required to do about the Form W-4? Explain.

Accepted Answer

The answer of Karen is single with no dependents and...

Question 5

For 2015, 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 2014 return. To avoid a penalty for underpayment of estimated taxes, what is the minimum amount of total estimated tax that Randy must pay in 2015? Assume the payments are made on a timely basis.

Accepted Answer

The answer of For 2015, Randy, an unmarried taxpayer, has...

Question 6

Which of the following forms is used by an employer to report quarterly wages and federal payroll tax withholdings and deposits?

Accepted Answer

A) Form 940 
B) Form 941 
C) Form 1099 
D) Form W-2 
E) None of the above

Question 7

If a husband and wife both work, they must divide their withholding allowances equally on their W-4 Forms.

Accepted Answer

A) True 
 B)False

Question 8

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.

Accepted Answer

A) True 
 B)False

Question 9

Lucinda is a self-employed veterinarian in 2015. Her Schedule C net earnings are $86,000 for the year. Calculate the total amount of Lucinda's self-employment tax liability for 2015.

Accepted Answer

The answer of Lucinda is a self-employed veterinarian in 2015....

Question 10

Household employers are not required to pay FICA taxes on part-time household employees.

Accepted Answer

A) True 
 B)False

Question 11

A taxpayer would be required to pay Social Security and Medicare taxes for a domestic employee in all but one of the following situations. In which situation would this not be required?

Accepted Answer

A) A nanny who earns $22,000 a year 
B) A baby-sitter who earns $1,300 a year 
C) A cook who is paid $35,000 a year 
D) A cleaning lady who is paid $8,000 a year 
E) The taxpayer would not have to pay Social Security and Medicare taxes in any of the above situations

Question 12

Tom had net earnings of $80,000 from the plant nursery he owns. What is his liability for FICA taxes on his earnings?

Accepted Answer

The answer of Tom had net earnings of $80,000 from...

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Which of the following types of income is subject to the self-employment tax?

Accepted Answer

A) Interest income 
B) Gain on sale of real estate 
C) Income from a sole proprietor's law practice 
D) Dividends from stock 
E) None of the above

Question 15

Mark the incorrect answer. In completing W-4s, employees may claim extra allowances:

Accepted Answer

A) If they are paying alimony. 
B) If they have tax credits. 
C) If they expect to have large amounts of itemized deductions. 
D) If they have high levels of interest and dividend income.

Question 16

When taxpayers overpay FICA taxes, the excess taxes may be claimed as a credit against their income tax liability.

Accepted Answer

A) True 
 B)False

Question 17

Ellen uses the head of household filing status and has a dependent daughter. Ellen has self-employment income of $310,000 as an architect and $10,000 of self-employment losses from a jewelry making business.
a.What is Ellen's 0.9% additional Medicare tax for 2015?
b.Is Ellen allowed to include a portion of the additional Medicare tax in computing the deduction for self-employment taxes reported as an adjustment for AGI on the front page of her income tax return?

Accepted Answer

The answer of Ellen uses the head of household filing...

Question 18

What percentage of gross food and beverage sales is used in determining the amount of tips that an employer must report as allocated to employees?

Accepted Answer

A) 8 percent 
B) 10 percent 
C) 12 percent 
D) 15 percent 
E) None of the above

Question 19

Reimbursements of moving expenses are always subject to withholding.

Accepted Answer

A) True 
 B)False

Question 20

In 2015, Lew 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 withheld from his salary?

Accepted Answer

The answer of In 2015, Lew earned wages of $386,724.
a.What...

Exam 9: Withholding, Estimated Payments, and Payroll Taxes

For 2015, the Social Security portion of the FICA tax is imposed at a rate of:

George has four employees who earned $75,000, $27,000, $2,100, and $6,200 during 2015, respectively. He paid 5.4 percent for state unemployment tax. How much FUTA tax will George owe for the four employees?

An employee is reimbursed for travel and other ordinary and necessary expenses. Under what circumstances would income tax be withheld from the employee on these amounts?

Karen is single with no dependents and earns $18,000 a year. She gives her employer a Form W-4 on which she claims 17 allowances. What is her employer required to do about the Form W-4? Explain.

Which of the following forms is used by an employer to report quarterly wages and federal payroll tax withholdings and deposits?

If a husband and wife both work, they must divide their withholding allowances equally on their W-4 Forms.

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.

Lucinda is a self-employed veterinarian in 2015. Her Schedule C net earnings are $86,000 for the year. Calculate the total amount of Lucinda's self-employment tax liability for 2015.

Household employers are not required to pay FICA taxes on part-time household employees.

A taxpayer would be required to pay Social Security and Medicare taxes for a domestic employee in all but one of the following situations. In which situation would this not be required?

Tom had net earnings of $80,000 from the plant nursery he owns. What is his liability for FICA taxes on his earnings?

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

Which of the following types of income is subject to the self-employment tax?

Mark the incorrect answer. In completing W-4s, employees may claim extra allowances:

When taxpayers overpay FICA taxes, the excess taxes may be claimed as a credit against their income tax liability.

What percentage of gross food and beverage sales is used in determining the amount of tips that an employer must report as allocated to employees?

Reimbursements of moving expenses are always subject to withholding.

In 2015, Lew 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 withheld from his salary?