Question 1

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

Accepted Answer

Employees who have appropriate withholding and no other income are not required to make estimated payments. Option A is incorrect as a self-employed individual with a certain level of income is required to make estimated payments. Option B is incorrect as wealthy individuals who receive corporate dividends with no withholdings may need to make estimated payments.

Question 2

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 3

Redford's salary was $129,000 in 2018.What would his total combined FICA tax (Social Security & Medicare)withheld from his salary be for the year?

Accepted Answer

In 2018, the Social Security tax rate was 6.2% on income up to $128,400, and the Medicare tax rate was 1.45% on all income. Therefore, Social Security tax = 6.2% of $128,400 = $7,960.80, and Medicare tax = 1.45% of $129,000 = $1,870.50. Total FICA tax = $7,960.80 + $1,870.50 = $9,831.30.

Question 4

For 2018, the maximum base for the Social Security portion of the FICA tax is:

Accepted Answer

The maximum base for the Social Security portion of the FICA tax is calculated annually by the Social Security Administration. For 2018, the maximum base is $128,400. This means that any income earned above this amount is not subject to Social Security taxes.

Question 5

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

The Social Security portion of the FICA tax in 2018 is 6.2% for both the employee and the employer.

Question 6

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 7

Mary is self-employed for 2019.Mary estimates her required annual estimated tax payment for 2019 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 2019.Mary estimates her...

Question 8

The Foemina Corporation has two employees, Nancy and Penny.
a.If Nancy earns wages of $17,000 for 2018, calculate the total amount of the FICA tax that must be paid:​​​by Nancy​by Foemina Corporation​Total​​
b.If Penny earns wages of $130,000 for 2018, calculate the total amount of the FICA tax that must be paid:​​​by Penny​by Foemina Corporation​Total

Accepted Answer

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

Question 9

In 2018, Lew, who is single, 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 (including additional 0.9% tax if any) withheld from his salary?

Accepted Answer

The answer of In 2018, Lew, who is single, earned...

Question 10

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

Accepted Answer

By increasing the amount of withholding on their Form W-4, taxpayers can have more taxes withheld from their salary or wages and potentially avoid the need to make estimated tax payments.

Question 11

Mark the correct answer.FICA taxes are:

Accepted Answer

FICA taxes are paid by both the employee and employer. The current rate for FICA taxes is 7.65% on the first $137,700 of income for 2020. The rate is subject to cost of living adjustments each year.

Question 12

Richard is employed by a major defense contractor and earns $156,000 in 2018.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 13

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

The answer of Elwin worked at three jobs during 2018.He...

Question 14

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

Accepted Answer

Taxpayers can claim excess Social Security taxes as a credit against their income tax liability.

Question 15

Which of the following statements about the FICA tax is not true?

Accepted Answer

Self-employed individuals are required to pay self-employment taxes, which include both the employee and employer portions of FICA taxes. They cannot elect to pay only FICA taxes.

Question 16

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

Accepted Answer

This is true according to the Social Security Administration's website as of 2018.

Question 17

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

The answer of Elwin worked at three jobs during 2018.He...

Question 18

Mark has two jobs during 2018.One employer withheld and paid FICA taxes on $80,200 of Mark's salary and the other employer withheld and paid FICA taxes on $52,800 in salary paid to Mark.Calculate the amount of Mark's credit for the overpayment of Social Security taxes that he should claim on his 2018 Form 1040.

Accepted Answer

The answer of Mark has two jobs during 2018.One employer...

Question 19

Mark the incorrect answer.Estimated income tax payments:

Accepted Answer

Estimated income tax payments need to be filed if the estimated tax, after subtracting withholding, is expected to be more than $1,000, not the other way around.

Question 20

For 2018, 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 2017 return.To avoid a penalty for underpayment of estimated taxes, what is the minimum amount of total estimated tax that Randy must pay in 2018? Assume the payments are made on a timely basis.

Accepted Answer

The answer of For 2018, Randy, an unmarried taxpayer, has...

Quiz 9: Payroll, Estimated Payments, and Retirement Plans