Payroll Exam II (Final)

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

False

Employers must submit Forms W-4 to the IRS for
a. those requested in writing by the IRS
b. all Forms W-4
c. all Forms W-4 claiming exemption
d. those requesting additional amounts to be withheld
e. those claiming more than 10 allowances

a. those requested in writing by the IRS

Which of the following fringe benefits is taxable?
a. qualified employee discounts
b. job-placement assistance
c. reduced tuition for education
d. membership in a country club
e. use of on premise athletic facility

e. use of on premise athletic facility

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

a. True

A company must withhold federal income taxes from payments made to independent contractors in which of the following cases?
a. When there is a signed contract between the parties.
b. When the contractor has not provided a taxpayer identification number and the contract is $600 or more.
c. When the contractor is paid more than $10,000.
d. All of these choices are correct.
e. When the contractor is a corporation

b. When the contractor has not provided a taxpayer identification number and the contract is $600 or more.

All of the following persons are classified as employees under the federal income tax withholding law with the exception of
a. an officer of the federal government
b. an elected official in the state government
c. the president of a corporation
d. a partner
e. a first-line supervisor

d. a partner

An employer must withhold federal income taxes on both the tips reported by tipped employees and the tips that the employer allocates to the employees.
a. True
b. False

b. False

Ron Case, married with four dependents, failed to complete and file Form W-4 with his employer. The employer should
a. take none of the above actions
b. withhold federal income taxes as if Case were married and claimed no allowances
c. withhold federal income taxes as if Case were single and claimed six allowances
d. withhold federal income taxes at a rate of 25% of Case’s wages
e. refuse to pay Case until his Form W-4 is filed

a. take none of the above actions

Which of the following statements correctly describes the withholding of federal income taxes and social security taxes on tips?
a. The withholding of federal income taxes on employees’ reported tip income is made from the amount of tips reported by employees.
b. None of these statements are correct.
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. Tips amounting to $10 or more in a calendar month must be reported by tipped employees to their employers.
e. Employers do not withhold FICA taxes on the tipped employees’ reported tip income

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.

Wolf Company is giving a net bonus check of $500 to all of its employees. If each of the payments are subject to FIT (25% supplemental rate) and FICA taxes, but no state taxes, the gross amount of each bonus check would be
a. $656.00
b. $742.39
c. $662.75
d. None of these choices are correct. e. $663.75

b. $742.39

An aspect of the interstate reciprocal arrangement concerns:
a. the determination of an employer’s experience rating.
b. None of these choices.
c. the transfer of an employee from one state to another during the year. d. the taxability of dismissal payments. e. the status of Americans working overseas.

c. the transfer of an employee from one state to another during the year.

For FUTA purposes, an employer can be any one of the following except:
a. All of these choices can be employers.
b. a partnership.
c. a trust.
d. a corporation.
e. an individual.

a. All of these choices can be employers.

There is a uniform rate of unemployment benefits payable by all states.
a. True
b. False

b. False

Included under the definition of employees for FUTA purposes are:
a. insurance agents paid solely on commission.
b. independent contractors.
c. members of partnerships.
d. officers of a corporation.
e. student nurses.

d. officers of a corporation.

Which of the following is not a factor considered in determining coverage of interstate employees?
a. Location of employee’s residence
b. Place where work is localized
c. Location of place from which operations are controlled
d. Location of company’s payroll department
e. Location of base of operations

d. Location of company’s payroll department

An employer must pay the quarterly FUTA tax liability if the liability is more than:
a. $500
b. $1,000
c. $1
d. $100
e. $3,000

a. $500

Which of the following payments are taxable payments for federal unemployment tax?
a. Workers’ compensation payments
b. Christmas gifts, excluding noncash gifts of nominal value
c. Caddy fees
d. Courtesy discounts to employees and their families
e. Value of meals and lodging furnished employees for the convenience of the employer

b. Christmas gifts, excluding noncash gifts of nominal value

Which of the following types of payments are not taxable wages for federal unemployment tax?
a. Retirement pay
b. Dismissal pay
c. Cash prizes and awards for doing outstanding work
d. Bonuses as remuneration for services
e. Payment under a guaranteed annual wage plan

a. Retirement pay

If the employer is tardy in paying the state contributions, the credit against the federal tax is limited to what percent of the late payments that would have been allowed as a credit if the contributions had been paid on time?
a. 5.13%
b. 90%
c. 6.2%
d. 20%
e. 0%

b. 90%

A federal unemployment tax is levied on:
a. employers only.
b. both employers and employees.
c. employees only.
d. government employers only.
e. no one.

a. employers only.