Question 1

Redford's salary was $129,000 in 2017.What would his total combined FICA tax (Social Security & Medicare)withheld from his salary be for the year?

Accepted Answer

The Social Security tax rate for employees is 6.2% and the Medicare tax rate is 1.45%, for a total FICA tax rate of 7.65%.
$129,000 * 0.0765 = $9,857.25
However, the Social Security tax is only applied to the first $127,200 of earnings, so the maximum Social Security tax for 2017 is:
$127,200 * 0.062 = $7,886.40
The Medicare tax rate has no cap, so the full rate applies to all earnings.
Therefore, the total combined FICA tax withheld from Redford's salary would be:
$7,886.40 + ($129,000 - $127,200) * 0.0145 = $9,757.11, which rounds up to answer D.

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

Mark has two jobs during 2017.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 2017 Form 1040.

Accepted Answer

The answer of Mark has two jobs during 2017.One employer...

Question 4

The Foemina Corporation has two employees,Nancy and Penny.
a.If Nancy earns wages of $17,000 for 2017,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 2017,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 and...

Question 5

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 a Form W-4, taxpayers with both self-employment income and Form W-2 wage income can potentially avoid having to make estimated tax payments.

Question 6

Mark the correct answer.FICA taxes are:

Accepted Answer

FICA taxes are Social Security and Medicare taxes that are deducted from an employee's paycheck. They are paid by both the employee and employer, totaling 7.65 percent of the employee's earned income up to a certain limit, which is $142,800 in 2021. FICA taxes are subject to cost of living adjustments each year.

Question 7

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 8

For 2017,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 2016 return.To avoid a penalty for underpayment of estimated taxes,what is the minimum amount of total estimated tax that Randy must pay in 2017? Assume the payments are made on a timely basis.

Accepted Answer

The answer of For 2017,Randy,an unmarried taxpayer,has wages of $45,000.He...

Question 9

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 10

In 2017,the maximum amount of wages subject to the Social Security portion of the FICA tax is $127,200.

Accepted Answer

This statement is true. In 2017, the maximum amount of wages subject to the Social Security portion of the FICA tax was $127,200.

Question 11

Elwin worked at three jobs during 2017.He earned $30,000,$27,000,and $9,000,respectively,from the jobs.What amount can Elwin apply as a credit against his 2017 income tax liability for overpayment of FICA taxes?

Accepted Answer

Elwin's total income is $30,000 + $27,000 + $9,000 = $66,000. The maximum amount of wages subject to FICA taxes in 2017 is $127,200. Since Elwin's total income is less than this amount, he did not overpay FICA taxes and cannot apply any amount as a credit against his 2017 income tax liability.

Question 12

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 13

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

Accepted Answer

An employee who works at a local department store with appropriate withholding and no other income is not required to make estimated payments. Option A and B both have income that is not subject to withholding, so they would need to make estimated payments.

Question 14

In 2017,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 (including additional 0.9% tax if any)withheld from his salary?

Accepted Answer

The answer of In 2017,Lew earned wages of $386,724.
a.What is...

Question 15

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

Accepted Answer

When taxpayers overpay Social Security taxes, they may claim the excess taxes as a credit against their income tax liability on their tax returns. This is known as the Additional Medicare Tax credit.

Question 16

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 are equivalent to both the employer and employee portions of FICA taxes. They do not have the option to pay FICA taxes instead.

Question 17

Elwin worked at three jobs during 2017.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 2017.He...

Question 18

Mary is self-employed for 2018.Mary estimates her required annual estimated tax payment for 2018 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 2018.Mary estimates her...

Question 19

For 2017,the maximum base for the Social Security portion of the FICA tax is:

Accepted Answer

In 2017, the maximum taxable earnings for the Social Security portion of the FICA tax was $127,200.

Question 20

For 2017,the Social Security portion of the FICA tax is imposed at a rate of:

Accepted Answer

In 2017, the Social Security portion of the FICA tax was 6.2% for both the employee and the employer.

Quiz 9: Withholding Estimated Payments and Payroll Taxes

Redford's salary was $129,000 in 2017.What would his total combined FICA tax (Social Security & Medicare) withheld from his salary be for the year?

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.

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.

Mark the correct answer.FICA taxes are:

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

Mark the incorrect answer.Estimated income tax payments:

In 2017,the maximum amount of wages subject to the Social Security portion of the FICA tax is $127,200.

Elwin worked at three jobs during 2017.He earned $30,000,$27,000,and $9,000,respectively,from the jobs.What amount can Elwin apply as a credit against his 2017 income tax liability for overpayment of FICA taxes?

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.

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

In 2017,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 (including additional 0.9% tax if any)withheld from his salary?

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

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

Elwin worked at three jobs during 2017.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?

For 2017,the maximum base for the Social Security portion of the FICA tax is:

For 2017,the Social Security portion of the FICA tax is imposed at a rate of: