Question 1

Emily is a self-employed attorney during 2014.
a.​Assuming that Emily earns $20,000 from her practice, calculate the total amount of her self-employment tax liability for 2014.
b.​Assuming that Emily earns $135,000 from her practice, calculate the total amount of her self-employment tax liability for 2014.

Accepted Answer

The answer of Emily is a self-employed attorney during 2014.
a.​Assuming...

Question 2

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 3

Provide answers to the following questions:
a. What form does an employer use to report wages to an employee?
b. When must the employer give this form to the employee?
c. What form does an employer use to report wages to the Social Security Administration?
d. When must the employer file the form with the Social Security Administration?

Accepted Answer

The answer of Provide answers to the following questions:
a. What...

Question 4

In 2014, 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 2014, Lew earned wages of $386,724.
a....

Question 5

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 2014?
b. Is Ellen allowed to deduct a portion of this with her other Medicare taxes 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 6

Janet is single and claims two allowances on her Form W-4. Her salary is $1,800 per month.
a.Use the percentage method to calculate the amount of Janet's withholding for a monthly pay period.
b.Use the withholding tables to determine the amount of Janet's withholding for a monthly pay period.

Accepted Answer

The answer of Janet is single and claims two allowances...

Question 7

Peter and Joan are married and Joan has self-employment income of $240,000. Peter is retired. How much additional 0.9% Medicare surtax will Peter and Joan owe with their 2014 income tax return? ​

Accepted Answer

The 0.9% Medicare surtax applies only to wages, self-employment income, and railroad retirement tier 1 income. Since Peter is retired and has no wages or self-employment income, he is not subject to the surtax.

Question 8

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 9

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 10

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 11

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 12

The Foemina Corporation has two employees, Nancy and Penny.
a.If Nancy earns wages of $17,000 for 2014, calculate the total amount of the FICA tax that must be paid:by Nancyby Foemina CorporationTotal
b.If Penny earns wages of $120,000 for 2014, calculate the total amount of the FICA tax that must be paid:by Pennyby Foemina CorporationTotal

Accepted Answer

The answer of The Foemina Corporation has two employees, Nancy...

Question 13

Melody and Todd are married and have employee wages of $250,000 each in 2014. They have no other income. How much additional 0.9% Medicare surtax will Melody and Todd have to pay or receive as a refund when they file their 2014 income tax return? ​

Accepted Answer

Melody and Todd's combined wages are $500,000. The additional 0.9% Medicare surtax applies to wages above $250,000 for married taxpayers filing jointly.

Their total wages above the threshold is $250,000 ($500,000 - $250,000).

So, the surtax amount is $250,000 x 0.9% = $2,250.

Since the surtax is withheld from the employees' wages throughout the year, it's likely that Melody and Todd had some of this amount already paid through their employer withholding. The question doesn't specify how much was already withheld, so we can't determine the exact amount due or refunded.

However, we know that at least some amount will be due with their return, so the only option that reflects this is A.

Question 14

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 15

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 16

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 17

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 18

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 19

Mark has two jobs during 2014. One employer withheld and paid FICA taxes on $70,200 of Mark's salary and the other employer withheld and paid FICA taxes on $47,400 in salary paid to Mark. Calculate the amount of Mark's credit for the overpayment of FICA taxes that he should claim on his 2014 Form 1040.

Accepted Answer

The answer of Mark has two jobs during 2014. One...

Question 20

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...

Quiz 9: Withholding, Estimated Payments, and Payroll Taxes

In 2014, 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?

Janet is single and claims two allowances on her Form W-4. Her salary is $1,800 per month. a.Use the percentage method to calculate the amount of Janet's withholding for a monthly pay period. b.Use the withholding tables to determine the amount of Janet's withholding for a monthly pay period.

Peter and Joan are married and Joan has self-employment income of $240,000. Peter is retired. How much additional 0.9% Medicare surtax will Peter and Joan owe with their 2014 income tax return? ​

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

Melody and Todd are married and have employee wages of $250,000 each in 2014. They have no other income. How much additional 0.9% Medicare surtax will Melody and Todd have to pay or receive as a refund when they file their 2014 income tax return? ​

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.

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

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.

Peter and Joan are married and Joan has self-employment income of $240,000. Peter is retired. How much additional 0.9% Medicare surtax will Peter and Joan owe with their 2014 income tax return?

Melody and Todd are married and have employee wages of $250,000 each in 2014. They have no other income. How much additional 0.9% Medicare surtax will Melody and Todd have to pay or receive as a refund when they file their 2014 income tax return?