Question 1

Taxpayers with large amounts of deductions may claim extra withholding allowances on their Form W-4s.

Accepted Answer

Taxpayers who have large deductions can claim extra withholding allowances on their Form W-4s to reduce the amount of tax taken out of their paychecks. This can help them avoid owing a large amount of tax at the end of the year.

Question 2

An individual who expects to receive more than $500 of income from sources other than wages meets the requirements for having to file quarterly estimated tax payments.

Accepted Answer

The requirement for filing quarterly estimated tax payments typically applies to individuals who expect to owe at least $1,000 in taxes for the year after subtracting their withholdings and credits, not just receiving more than $500 of income from non-wage sources.

Question 3

Reimbursements of moving expenses are always subject to withholding.

Accepted Answer

Reimbursements of moving expenses may be subject to withholding if they are considered taxable income, but not all reimbursements are taxable. If the employee can prove that the move was work-related and meets certain distance and time tests, the reimbursements may be excluded from income and not subject to withholding.

Question 4

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

The safe harbor rule for avoiding the underpayment penalty generally requires that the taxpayer's payments equal at least 90% of the tax owed for the current year or 100% (110% for higher income taxpayers) of the tax shown on the return for the prior year, whichever is smaller.

Question 5

Employer deposits of withheld taxes may be made to any bank.

Accepted Answer

Employer deposits of withheld taxes must be made to an authorized financial institution such as a bank or other institution designated by the government.

Question 6

If an employee does not complete a Form W-4,the employer must withhold tax as if the employee were single with no exemptions.

Accepted Answer

This is known as the default withholding status, and employers are required to use it if an employee does not provide a completed Form W-4.

Question 7

Employees with self-employment income who also have W-2 income may be able to avoid making estimated tax payments by filing a new Form W-4 and increasing the amount of their withholding.

Accepted Answer

By increasing the amount of withholding on their W-4 form, employees can potentially avoid having to make estimated tax payments.

Question 8

When required,gambling winnings are reported by the gambling establishment on Form 1099-MISC.

Accepted Answer

Gambling winnings are reported by the gambling establishment on Form W-2G, not Form 1099-MISC. Form W-2G is specifically used for reporting gambling winnings and any federal income tax withheld from those winnings.

Question 9

A nondeductible penalty is imposed on underpayments of estimated taxes.

Accepted Answer

This statement is true. If an individual or business does not pay enough estimated taxes throughout the year, a penalty is imposed, but it is nondeductible. This means that the penalty cannot be deducted from the individual or business's taxable income.

Question 10

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

Accepted Answer

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

Question 11

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

Accepted Answer

The husband and wife can choose to divide their withholding allowances however they prefer on their W-4 Forms, as long as the total allowances claimed on both forms do not exceed the actual number of allowances they are entitled to claim based on their tax situation.

Question 12

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

Accepted Answer

When taxpayers overpay FICA taxes, they can claim the excess taxes as a credit against their income tax liability. This credit is applied against the amount of income tax owed and can either reduce the tax owed or result in a refund if the credit exceeds the amount of income tax owed.

Question 13

The original copy of all W-2 Forms and Form W-3 must be filed with the Social Security Administration by February 28 of the year following the calendar year in which the wages were paid,regardless of the tax year of the employer.

Accepted Answer

The deadline for filing W-2 Forms and Form W-3 with the Social Security Administration is February 28 of the year following the calendar year in which the wages were paid. This deadline is the same for all employers, regardless of their tax year.

Question 14

In 2013,the maximum amount of wages subject to the Social Security portion of the FICA tax is
$113,700.

Accepted Answer

The maximum amount of wages subject to the Social Security portion of the FICA tax in 2013 was indeed $113,700.

Question 15

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

Accepted Answer

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

Question 16

Employers must provide employees with their Form W-2s by February 15th of the year following the calendar year of payment of the wages.

Accepted Answer

Employers must provide employees with their Form W-2s by January 31st of the year following the calendar year of payment of the wages.

Question 17

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

Accepted Answer

According to the IRS, if a taxpayer fails to provide their identification number to their bank, they may be subject to backup withholding on interest payments.

Question 18

If an individual taxpayer discovers that his or her original estimate for estimated tax payments was inaccurate,the taxpayer should continue to make payments based on the original estimate and pay any additional amount or request any refund when the tax return is filed.

Accepted Answer

If the taxpayer discovers that their original estimate for estimated tax payments was inaccurate, they should adjust their future estimated tax payments and make any necessary catch-up payments as soon as possible to avoid underpayment penalties. Continuing to make payments based on the original inaccurate estimate could result in significant underpayment penalties and interest.

Question 19

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

Accepted Answer

Dividend income is not considered earned income and therefore is not subject to the self-employment tax.

Question 20

Gambling winnings must be reported to the IRS,but withholding of taxes on winnings is never required.

Accepted Answer

Withholding of taxes on gambling winnings is actually required in certain situations, such as when the winnings exceed a certain amount or when the winnings are subject to backup withholding.

Quiz 9: Withholding, Estimated Payments, and Payroll Taxes

Taxpayers with large amounts of deductions may claim extra withholding allowances on their Form W-4s.

An individual who expects to receive more than $500 of income from sources other than wages meets the requirements for having to file quarterly estimated tax payments.

Reimbursements of moving expenses are always subject to withholding.

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.

Employer deposits of withheld taxes may be made to any bank.

If an employee does not complete a Form W-4,the employer must withhold tax as if the employee were single with no exemptions.

Employees with self-employment income who also have W-2 income may be able to avoid making estimated tax payments by filing a new Form W-4 and increasing the amount of their withholding.

When required,gambling winnings are reported by the gambling establishment on Form 1099-MISC.

A nondeductible penalty is imposed on underpayments of estimated taxes.

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

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

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

The original copy of all W-2 Forms and Form W-3 must be filed with the Social Security Administration by February 28 of the year following the calendar year in which the wages were paid,regardless of the tax year of the employer.

In 2013,the maximum amount of wages subject to the Social Security portion of the FICA tax is $113,700.

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

Employers must provide employees with their Form W-2s by February 15th of the year following the calendar year of payment of the wages.

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

If an individual taxpayer discovers that his or her original estimate for estimated tax payments was inaccurate,the taxpayer should continue to make payments based on the original estimate and pay any additional amount or request any refund when the tax return is filed.

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

Gambling winnings must be reported to the IRS,but withholding of taxes on winnings is never required.