Question 1

Mary is self-employed for 2014. Mary estimates her required annual estimated tax payment for 2014 to be $4,000. Mary had a $500 overpayment of last year's taxes which she will apply against her first quarter estimated payment.
a.How much should Mary pay with her first quarter estimated tax voucher?
b.When is the payment due?

Accepted Answer

The answer of Mary is self-employed for 2014. Mary estimates...

Question 2

Mike is a single taxpayer. For the payroll period of November 2014, he is paid wages of $3,400, monthly. Mike claims three allowances on his Form W-4.
a.Use the percentage method to calculate the amount of Mike's withholding for a monthly pay period.
b.Use the withholding tables to determine the amount of Mike's withholding for the same period.

Accepted Answer

The answer of Mike is a single taxpayer. For the...

Question 3

Reimbursements of moving expenses are always subject to withholding.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Richard is employed by a major defense contractor and earns $156,000 in 2014. Calculate:
a. The amount of Social Security tax withheld from his income
b. The amount of Medicare tax withheld from his income
c. The amount of FUTA withheld from his income

Accepted Answer

The answer of Richard is employed by a major defense...

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

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 8

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 9

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.

Accepted Answer

The answer of The Wash Your Paws Self-Service Dog Wash,...

Question 10

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 11

Sally is an employer with one employee, Sara. Sara earned $12,000 from January 1, 2014 through June 30, 2014, and the state unemployment tax rate is 5.4 percent. Calculate the following amount for Sally.
a.FUTA tax after the state tax credit
b.What form should Sally use to report her FUTA tax liability for 2014?

Accepted Answer

The answer of Sally is an employer with one employee,...

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

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 14

Payors are not required to use backup withholding if:

Accepted Answer

A) The taxpayer did not give the payor his or her taxpayer identification number. 
B) The taxpayer certifies that he or she is not subject to backup withholding. 
C) The IRS informs the payor that the taxpayer gave an incorrect identification number. 
D) The IRS informs the payor to start withholding because the taxpayer has not reported the income on his or her tax return.

Question 15

Lucinda is a self-employed veterinarian in 2014. Her Schedule C net earnings are $86,000 for the year. Calculate the total amount of Lucinda's self-employment tax liability for 2014.

Accepted Answer

The answer of Lucinda is a self-employed veterinarian in 2014....

Question 16

Which of the following amounts paid by an employer to an employee is not subject to withholding?

Accepted Answer

A) Commissions 
B) Travel expense reimbursements from an accountable plan 
C) Salary 
D) Bonus 
E) All of the above are subject to withholding

Question 17

For 2014, 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 2013 return. To avoid a penalty for underpayment of estimated taxes, what is the minimum amount of total estimated tax that Randy must pay in 2014? Assume the payments are made on a timely basis.

Accepted Answer

The answer of For 2014, Randy, an unmarried taxpayer, has...

Question 18

Dividend income is not subject to the self-employment tax.

Accepted Answer

A) True 
 B)False

Question 19

The FUTA tax for 2014 is based on 6.2 percent of each employee's wages up to $10,000.

Accepted Answer

A) True 
 B)False

Question 20

Elwin worked at three jobs during 2014. 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

Exam 9: Withholding, Estimated Payments, and Payroll Taxes

Reimbursements of moving expenses are always subject to withholding.

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

Richard is employed by a major defense contractor and earns $156,000 in 2014. Calculate: a. The amount of Social Security tax withheld from his income b. The amount of Medicare tax withheld from his income c. The amount of FUTA withheld from his income

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

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

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

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.

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

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

Payors are not required to use backup withholding if:

Lucinda is a self-employed veterinarian in 2014. Her Schedule C net earnings are $86,000 for the year. Calculate the total amount of Lucinda's self-employment tax liability for 2014.

Which of the following amounts paid by an employer to an employee is not subject to withholding?

Dividend income is not subject to the self-employment tax.

The FUTA tax for 2014 is based on 6.2 percent of each employee's wages up to $10,000.

Elwin worked at three jobs during 2014. 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?