Question 1

Which one of the following payroll tax deposit schedules is not a rule that applies for a class of employers?

Accepted Answer

The eight-day deposit rule does not exist as a rule for payroll tax deposit schedules. Employers are generally required to follow either the monthly, semi-weekly, next-day, or yearly deposit schedules, depending on the amount of their tax liability and other specific criteria.

Question 2

Dividends paid to a shareholder by a corporation should be reported on which of the following forms?

Accepted Answer

Dividends paid to a shareholder by a corporation should be reported on Form 1099-DIV, which is specifically designed for reporting dividends and other distributions paid to shareholders. Form 1099-INT is used for reporting interest income, Form 1099-MISC is used for reporting non-employee compensation, and Form 1099-R is used for reporting distributions from retirement accounts. Therefore, choices A, C, and D are incorrect.

Question 3

The FUTA tax is paid by:

Accepted Answer

The FUTA tax is paid solely by employers and is used to provide funds for state unemployment agencies to pay unemployment benefits to eligible workers who have lost their jobs.

Question 4

A credit against the FUTA tax is available for state unemployment tax paid by the employer.

Accepted Answer

This is correct. Employers who are subject to both the FUTA tax and state unemployment taxes (SUTA) can claim a credit against their FUTA tax liability for the amounts paid in state unemployment tax, up to a maximum of 5.4%.

Question 5

Which of the following statements is true with regard to the reimbursement of employee business expenses?

Accepted Answer

Reimbursements of ordinary and necessary expenses are generally not subject to federal income tax withholding if they are made through an accountable plan. An accountable plan must have a business connection, require substantiation of expenses, and require the return of any excess reimbursements. Excess reimbursements are always subject to withholding. Therefore, option A is incorrect. Option B is incorrect as excess reimbursements are always subject to withholding. Option D is incorrect as substantiation is a requirement for an accountable plan and if the employee fails to substantiate, the reimbursement will be treated as wages subject to withholding. Therefore, the correct answer is C as reimbursements returned by an employee under an accountable plan are excluded from wages subject to withholding.

Question 6

The original copy of all Forms W-2 and Form W-3 must be filed with the Social Security Administration by January 31 of the year following the calendar year in which the wages were paid, regardless of the tax year of the employer.

Accepted Answer

The filing deadline for Forms W-2 and Form W-3 with the Social Security Administration is indeed January 31 of the year following the calendar year in which the wages were paid, regardless of the tax year of the employer.

Question 7

Which of the following forms should be used by a company to report a payment of $1,500 to a computer consultant who is not an employee of the company?

Accepted Answer

Form 1099-MISC is used to report payments of $600 or more to non-employees, such as independent contractors or consultants, for services rendered during the year. Since the payment to the computer consultant is $1,500, it exceeds the reporting threshold and requires a Form 1099-MISC to be filed. The other forms listed are for reporting different types of income or payments.

Question 8

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

Accepted Answer

Form 1099-DIV is specifically used to report dividends paid to investors by corporations or other entities. Therefore, the best choice for this question is C, dividends.

Question 9

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 10

The FUTA tax is a voluntary unemployment tax which an employer may or may not wish to contribute toward.

Accepted Answer

The FUTA tax is not voluntary. Employers are required to pay a percentage of their employees' wages, up to a certain amount, into the Federal Unemployment Trust Fund.

Question 11

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

Accepted Answer

The correct withholding depends on the amount of the winnings and other factors, such as whether the winner has provided a taxpayer identification number (TIN), and whether the winnings are subject to backup withholding.

Question 12

Which of the following forms is used by an employer to report quarterly wages and federal payroll tax withholdings and deposits?

Accepted Answer

Form 941, also known as the "Employer's Quarterly Federal Tax Return," is the form used by an employer to report quarterly wages and federal payroll tax withholdings and deposits. Form 940 is used to report federal unemployment taxes, Form 1099 is used to report income paid to non-employees, and Form W-2 is used to report wages and taxes withheld for each employee annually. Therefore, the correct answer is B.

Question 13

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 approved entity.

Question 14

In 2018, Willow Corporation had three employees.Two of the employees worked full-time and earned salaries of $25,000 each.The third employee worked part-time and earned $4,000.The employer timely paid state unemployment tax equal to 5.4 percent of each employee's wages up to $7,000.How much unemployment tax was paid to the state from Willow Corporation for 2018?

Accepted Answer

The answer of In 2018, Willow Corporation had three employees.Two...

Question 15

The Pear Corporation pays its employees every 2 weeks.During the look-back period, in each pay period the total withholding and FICA tax (employees' and employer's share)amounted to $750.How often must the Pear Corporation deposit payroll taxes?

Accepted Answer

The IRS requires that if the total payroll tax liability is less than $2,500 for the quarter, the employer can deposit monthly. Since $750 every two weeks results in $1,500 per month, Pear Corporation can deposit monthly.

Question 16

The FUTA tax for 2018 is based on 6.2 percent of each employee's wages up to $10,000.

Accepted Answer

The FUTA tax rate for 2018 was 6.0 percent on the first $7,000 of each employee's wages, not 6.2 percent on $10,000.

Question 17

Which one of the following forms must an employer provide to his employee by January 31 of the following year?

Accepted Answer

Employers must provide their employees with Form W-2, which reports the employees' wages and taxes withheld from their paychecks, by January 31 of the year following the tax year. Form W-3 is the transmittal summary form for all W-2 forms submitted to the Social Security Administration (SSA), Form W-4 is the form employees use to indicate their withholding allowances, Form 941 is the employer's quarterly payroll tax return, and Form 1040 is the individual income tax return that taxpayers file with the Internal Revenue Service (IRS).

Question 18

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 19

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 form...

Question 20

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

Accepted Answer

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

Quiz 9: Payroll, Estimated Payments, and Retirement Plans