Achievement Test 4

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Question #1

Both the percentage method and the wage-bracket method of withholding have each of the following characteristics except

A employees are given the full benefit of the allowances they claim

B unmarried persons are distinguished from married persons

C a table of allowances values is used

D the standard deduction is taken into account

E tables and wage-bracket charts are used to determine the amount withheld

Question #2

Wolf Company is giving a net bonus check of $500 to all of its employees. If each of the payments are subject to FIT (22% supplemental rate) and FICA taxes, but no state taxes, the gross amount of each bonus check would be

A None of these choices are correct.

B $710.73

C $663.75

D $662.75

E $656.00

Question #3

Which of the following forms is not completed by the employer?

A Form 941

B W-4

C Form 1099-MISC

D W-2

E W-3

Question #4

A publisher is preparing information returns to report the royalties paid to authors (nonemployees) during the prior calendar year. The proper information return to be completed is

A Any of these forms are correct.

B Form W-2

C Form 1099-MISC

D Form W-3

E Form 1099-DIV

Question #5

The withholding on vacation wage payments is

A tax-free

B taxed as though it were a regular payment for the periods occurring during the vacation period

C a flat 15%

D based on the total amount of the wage payment plus the vacation pay

E a flat 22%

Question #6

Employers must submit Forms W-4 to the IRS for

A those requesting additional amounts to be withheld

B those requested in writing by the IRS

C those claiming deductions

D all Forms W-4

E all Forms W-4 claiming exemption

Question #7

Ron Case, married filing jointly, failed to complete and file Form W-4 with his employer. The employer should

A withhold federal income taxes as if Case were married filing jointly and claimed no other adjustments

B refuse to pay Case until his Form W-4 is filed

C withhold federal income taxes as if Case were single and claimed no other adjustments

D withhold federal income taxes at a rate of 22% of Case’s wages

E take none of the above actions

Question #8

If an employee files an amended W-4, the employer must make the W-4 effective no later than the

A first pay in the next year

B first pay in the next quarter

C 10th day from the W-4 receipt date

D start of the first payroll period ending on or after the 30th day from the W-4 receipt date

E next payday

Question #9

All of the following persons are classified as employees under the federal income tax withholding law with the exception of

A the president of a corporation

B a partner

C an elected official in the state government

D a first-line supervisor

E an officer of the federal government

Question #10

Which of the following fringe benefits is taxable?

A membership in a country club

B use of on-premise athletic facility

C reduced tuition for education

D qualified employee discounts

E job-placement assistance

Question #11

An employee filed a Form W-4 and claimed 22 withholding allowances. The employer should withhold 22% of the worker’s gross earnings for federal income taxes until the form W-4 is approved by the IRS.

A FALSE

B TRUE

Question #12

The number of withholding allowances claimed by an employee is set forth on Form W-2.

A TRUE

B FALSE

Question #13

Contributions made by the employer into employees’ health savings accounts are excluded from the employee’s taxable income.

A TRUE

B FALSE

Question #14

To correct errors on previously filed Forms W-2, an employer must file Form W-3.

A TRUE

B FALSE

Question #15

Employers cannot send Forms W-2 to employees electronically.

A TRUE

B FALSE

Question #16

Form W-3 is filed with the Social Security Administration by employers as a transmittal of the information contained on Forms W-2.

A TRUE

B FALSE

Question #17

The maximum contribution that an employee (age 40) can make into a 401(k) plan that is not taxed for federal income tax withholding purposes is $25,000.

A FALSE

B TRUE

Question #18

If an employee who left the company requests a W-2 before the end of the year, it must be furnished within 30 days of the request or the final wage payment (whichever is later).

A FALSE

B TRUE

Question #19

The Wage and Tax Statement must be furnished to an employee on or before February 28 following the close of the calendar year.

A FALSE

B TRUE

Question #20

In the IRA form of a simple retirement account, employer’s can contribute as much as they want into the employee’s simple retirement account, even though the employee’s contribution is limited to $13,500.

A TRUE

B FALSE

Question #21

Vacation pay is to be paid at the same time as a regular wage payment. In this case, the vacation pay must be combined with the regular wage payment and federal income taxes calculated on the amount of the total payment.

A TRUE

B FALSE

Question #22

Unmarried persons are distinguished from married persons under both the percentage method and the wage-bracket method of withholding.

A TRUE

B FALSE

Question #23

Withholding certificates must be retained by employers for as long as the certificates are in effect and for four years thereafter.

A FALSE

B TRUE

Question #24

An employee who is first paid wages in 2020 and fails to furnish a Form W-4 will be treated as if they were single or married filing separately with standard withholding.

A TRUE

B FALSE

Question #25

Employee’s payroll deductions into their 401(K) plans are generally made on a pretax basis and reduce the amount of gross pay that is subject to federal income tax withholding.

A FALSE

B TRUE

Question #26

Employees who are receiving over $1 million dollars in supplemental wages for the year will have a 37% withholding rate apply to the supplemental payments in excess of $1 million dollars.

A FALSE

B TRUE

Question #27

Employees who regularly receive cash tips of $20 dollars or more in a calendar month are subject to federal income tax withholding on the tips.

A TRUE

B FALSE

Question #28

Cash tips of $20 dollars or more in a month must be reported to the employer by the tipped employee by the end of the following month.

A TRUE

B FALSE

Question #29

Not-for-profit corporations that are exempt from federal income taxes do not withhold federal income taxes from their employee’s pay.

A TRUE

B FALSE

Question #30

A sole proprietor with two employees is exempt from the requirements of the federal income tax withholding law.

A TRUE

B FALSE

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