Question 1

Ralph has a $130,000 IRA with Red Investments.For personal reasons, he decides to move his funds to Blue Investments.He requests that his funds be distributed to him on August 20, 2018.
a.What amount will Ralph receive from Red Investment?
b.What is the last day Ralph can deposit the funds from Red Investments and avoid taxation in the current year?
c.If the funds were distributed from a qualified retirement plan (not an IRA), how much would Ralph receive?
d.Assuming the funds were distributed from a qualified retirement plan, not an IRA, how much will Ralph have to contribute to Blue Investments to avoid taxable income and any penalties?

Accepted Answer

The answer of Ralph has a $130,000 IRA with Red...

Question 2

For 2018, the Social Security portion of the FICA tax is imposed at a rate of (not including any additional tax for high-income earners):

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 3

Which of the following taxpayers are not required to make estimated payments?

Accepted Answer

A) A car mechanic who is self-employed and earns $50,000 a year. 
B) A wealthy individual whose earnings are from corporate dividends. 
C) An employee who works at a local department store with appropriate withholding and no other income. 
D) All of the above must make estimated payments.

Question 4

Ursula, an employee of Ficus Corporation, is 35 years old and plans to retire in 20 years.The corporation has a qualified retirement plan and contributes $2,000 during 2018 for Ursula.In 2018, how should Ursula treat the $2,000 contribution made on her behalf by the corporation?

Accepted Answer

A) The $2,000 and any earnings thereon must be included in Ursula's 2018 gross income. 
B) Only the earnings on the $2,000 contribution must be included in Ursula's 2018 gross income. 
C) Ursula is not required to include either the $2,000 contribution or the earnings thereon in her 2018 gross income. 
D) Ursula must include only $100 (1/20 of the $2,000 contribution) in her gross income for 2018, but the same amount must be included in gross income for the following 19 years. 
E) None of the above.

Question 5

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 6

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 7

Paul earns $55,000 during the current year.His employer contributes $3,000 during the year to a qualified retirement plan on behalf of Paul.The amount of the contribution for the year is based on Paul's desire to have a monthly retirement benefit of $3,500.What type of retirement plan is this?

Accepted Answer

A) Defined benefit plan 
B) Defined contribution plan 
C) Employee earnings plan 
D) Profit sharing plan 
E) None of the above

Question 8

Form 1099-DIV is an information return used to show the payment of:

Accepted Answer

A) Distributions from a partnership. 
B) Interest. 
C) Dividends. 
D) Unemployment compensation. 
E) None of the above.

Question 9

Which of the following forms should be used by a company to report a payment of $1,500 to a computer consultant who is not an employee of the company?

Accepted Answer

A) Form 1099-INT 
B) Form W-4 
C) Form W-2 
D) Form 1099-DIV 
E) Form 1099-MISC

Question 10

Elwin worked at three jobs during 2018.He earned $30,000, $27,000, and $9,000, respectively, from the jobs.What amount can Elwin apply as a credit against his 2018 income tax liability for overpayment of FICA taxes?

Accepted Answer

A) $0 
B) $2,754.00 
C) $5,049.0045.90 
D) $130.50 
E) None of the above

Question 11

Which of the following statements is true with regard to the reimbursement of employee business expenses?

Accepted Answer

A) Reimbursements of ordinary and necessary expenses are subject to federal income tax withholding. 
B) Excess reimbursements of ordinary and necessary expenses are never subject to withholding. 
C) Reimbursements received by an employee under a plan which contains a requirement to return excess amounts, and the employee does so on a timely basis, are excluded from the definition of wages subject to withholding. 
D) Provided that reimbursements are received by an employee under a plan which requires the employee to substantiate the expenses to his employer, the amounts are excluded from the definition of wages subject to withholding, without regard to whether the employee actually substantiates the expenditures. 
E) All of the above are true statements.

Question 12

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?

Accepted Answer

The answer of Penny, age 52, takes a distribution of...

Question 13

Marty earned $5,000 in interest income from the Honey Springs Bank.She failed to notify the bank that she was not subject to backup withholding.​
a.If Marty's taxable income puts her in the 25 percent bracket, how much would Honey Springs Bank withhold on the $5,000 of interest earnings?
b.If Marty's taxable income puts her in the 15 percent bracket, how much would Honey Springs Bank withhold on the $5,000 of interest earnings?

Accepted Answer

The answer of Marty earned $5,000 in interest income from...

Question 14

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.

Accepted Answer

A) True 
 B)False

Question 15

Oliver has two employees who earned the following amounts during 2018: $$\begin{array} { l r } 
\text { June } & \$ 17,000 \
\text { Eric } & \$ 5,000
\end{array}$$ If Oliver timely pays 5.4 percent for state unemployment tax, what is the amount of his 2018 FUTA after the state tax credit?

Accepted Answer

A) $0 
B) $72 
C) $112 
D) $176 
E) None of the above

Question 16

Dividends paid to a shareholder by a corporation should be reported on which of the following forms?

Accepted Answer

A) 1099-INT 
B) 1099-DIV 
C) 1099-MISC 
D) 1099-R 
E) None of the above

Question 17

Gordon is 60 years old and Mary is 55 years old.They are married with three dependent children over age 17, and Gordon has one job that pays wages of about $73,000.Assuming that Mary is unemployed, how many allowances should Gordon claim on his 2018 Form W-4, assuming no extra allowances for deductions or adjustments?

Accepted Answer

A) Five 
B) Six 
C) Seven 
D) Eight 
E) Nine

Question 18

For each of the following payments, indicate the form (Form W-2, W-4, W-2G, 1099-B, 1099-DIV, 1099-INT, 1099-MISC, or 1099-R)that should be used to report the payment.​
a.Dividends from a mutual fund
b.Las Vegas gambling winnings
c.Interest paid by a bank
d.Payment of salary and commissions to an employee
e.Distribution from an IRA account

Accepted Answer

The answer of For each of the following payments, indicate...

Question 19

Elwin worked at three jobs during 2018.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?

Accepted Answer

A) $4,054.80 
B) $4,092.00 
C) $5,003.10 
D) $5,049.00 
E) None of the above

Question 20

In 2018, the maximum amount of wages subject to the Social Security portion of the FICA tax is $128,400.

Accepted Answer

A) True 
 B)False

Exam 9: Payroll, Estimated Payments, and Retirement Plans

For 2018, the Social Security portion of the FICA tax is imposed at a rate of (not including any additional tax for high-income earners) :

Which of the following taxpayers are not required to make estimated payments?

Ursula, an employee of Ficus Corporation, is 35 years old and plans to retire in 20 years.The corporation has a qualified retirement plan and contributes $2,000 during 2018 for Ursula.In 2018, how should Ursula treat the $2,000 contribution made on her behalf by the corporation?

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

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.

Paul earns $55,000 during the current year.His employer contributes $3,000 during the year to a qualified retirement plan on behalf of Paul.The amount of the contribution for the year is based on Paul's desire to have a monthly retirement benefit of $3,500.What type of retirement plan is this?

Form 1099-DIV is an information return used to show the payment of:

Which of the following forms should be used by a company to report a payment of $1,500 to a computer consultant who is not an employee of the company?

Elwin worked at three jobs during 2018.He earned $30,000, $27,000, and $9,000, respectively, from the jobs.What amount can Elwin apply as a credit against his 2018 income tax liability for overpayment of FICA taxes?

Which of the following statements is true with regard to the reimbursement of employee business expenses?

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.

Oliver has two employees who earned the following amounts during 2018: $\begin{array} { l r } \text { June } & \$ 17,000 \\\text { Eric } & \$ 5,000\end{array}$ If Oliver timely pays 5.4 percent for state unemployment tax, what is the amount of his 2018 FUTA after the state tax credit?

Dividends paid to a shareholder by a corporation should be reported on which of the following forms?

Elwin worked at three jobs during 2018.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?

In 2018, the maximum amount of wages subject to the Social Security portion of the FICA tax is $128,400.