Betty's CPP Section 6 and 7 Withholding Taxes Unemployment Flashcards
An ER must send an EE’s W4 to the IRS if the EE claims:
W4 must be submitted to the IRS when the IRS requests it
How long must the ER retain an EE’s W4?
4 years
What is the rate of backup withholding tax used for payments made to an independent contractor who neglects to give the ER a tax identification number (or a SS number)?
24%
What is the BEST explanation of the Constructive Receipt Doctrine?
an EE is considered to have been constructively paid when wages are made available to him/her without restriction
An EE is terminated with 3 workdays remaining in a month. The EE earned an annual salary of $24,000.00 and was paid semimonthly. What is the regular compensation due this EE for the final pay period?
a) $723.08 ; 24,000/2080 = 11.5385 * 24 = -276.96 less 1000 (24000/24)
An EE who works for more than one ER and has exceeded the SS wage base may:
receive tax credit on Form 1040
An EE retires and is collecting SS benefits. Her former ER asks her to return to work in a part-time position to train new EEs. The EE earns $200.00 per week. How much SS/Med. tax must her ER withhold from these wages?
$12.40 SS; $2.90 Med.
An EE leaves company A with YTD SS wages of $137,900. She goes to work for Company B and earns $1,250.00 in her first paycheck. How much SS will her new ER withhold from this payment?
c) $77.50
At what age would an EE stop paying SS taxes?
There is no age limit! If you are earning wages, you pay SS, even if you are collecting benefits due to retirement!
Employee Rose Bush changes her name after a marriage. Which of the following steps the Payroll Department should take?
Wait to make the change until a new social security card with Rose’s new name is presented
If an original valid W-4 cannot be provided by an employee…
The employer must withhold as if the employee were single with no withholding allowances
When should a W-4 be submitted?
On or before the first day of work
Employee Rhoda Denton, who is paid weekly, submitted an amended W-4 on Monday, December 23, 2022 with one less allowance for the New Year. Rhoda’s next payday is Friday, December 28, for the payroll period ending the previous Saturday. When must Rhoda’s employer put her amended W-4 into effect?
For the payroll period ending January 2023
Which of the following W-4s must be submitted to the IRS?
A A W-4 indicating a flat dollar amount of tax
B A W-4 claiming exempt from withholding
C A W-4 with alterations such as additions or striking through any of the language
D None of the above
None of the above
If a Form W-4P is not submitted for pension and annuity payments…
Tax is withheld as if the payee is single with no adjustments
Form W-4S differs from Form W-4 in that…
A The employee uses the form to tell a third-party insurer to withhold a flat dollar amount
B No federal income tax is withheld unless the employee requests it
C Forms W-4S cannot be filed electronically
D Both A and B
D Both A and B
What is the federal income tax withholding rule for eligible rollover distributions from a qualified deferred compensation plan?
20% unless directly rolled over to another qualified plan
Employee Kelly Greene has an account balance of $25,000 in her employer’s qualified deferred compensation plan and an outstanding loan from the plan of $5,000. Upon her resignation, Kelly elects to receive the remainder of her account balance. What is the federal withholding on Kelly’s distribution?
$5,000 no offset for loan for tax purposes
federal income tax is withheld on reportable payments subject to backup withholding at:
24%
Which of the following is exempt from social security and Medicare taxes?
A Elective deferrals to a qualified deferred compensation plan
B Work performed by a nonresident alien under an H-1B visa
C Disability benefits paid more than 6 calendar months after the employee’s last month worked
D All of the above
Disability benefits paid more than 6 calendar months after the employee’s last month worked
Which of the following entities would not be subject to FUTA tax?
A Nonfarm employers paying $20,000 or more in covered wages in any calendar quarter during the current or preceding calendar year
B Farm employers paying $20,000 or more in covered wages in any calendar quarter during the current or preceding calendar year
C Nonfarm employers employing at least one employee for at least part of one day in 20 different weeks during the current or preceding calendar year
D Federal, state, and local government employees
Federal, state, and local government employees
- Which of the following payments is specifically exempted from FUTA tax under the Internal Revenue Code?
Value of group term life insurance over $50,000
payments made under a deferred compensation plan, except elective deferrals to the plan
- The FUTA tax rate is
6%
- FUTA tax over $500
Must be deposited by the last day of the month following the end of the quarter
- The normal credit against FUTA tax liability includes which of the following?
All state unemployment taxes paid by the filing date for Form 940
- Employers in states with outstanding loans from the federal unemployment insurance fund
Can avoid a credit reduction by paying its state unemployment tax by November 10
- All of the following would appear on the federal Form 940 except
A Gross wages reported for state unemployment
B Qualified moving expenses
C Payments over $7,000 to each employee
D State experience rate
Qualified moving expenses
Unless there is reasonable cause, failure to pay FUTA tax results in an addition to tax up to a maximum of
25% of any unpaid tax
- Which factor used in determining the unemployment insurance state, if met, can eliminate the need to consider the other allocation factors?
Where the employee’s services are localized
- An employer’s experience rating is based on the employer’s unemployment benefit charges and
Average annual taxable payroll
- To increase the reserve ratio to the next higher bracket on the state’s unemployment tax rate table, some states allow
Voluntary contributions to unemployment tax accounts
- In states where multiple worksite reporting is mandatory, an employer must file a MWR if it
A Uses one unemployment insurance account number in that state for all its employees
B Has more than one worksite in the state
C Has a total of at least 10 employees at all its secondary worksites
D All of the above
All of the above
- FUTA requires that each state’s taxable wage base must be at least equal to the FUTA taxable wage base of what dollar amount?
c. $7,000
- The contribution rate is determined by the employer’s experience rating, which is based on what factors?
b. The employer’s unemployment benefit charges and average annual taxable payroll
c. The reserve
Each state requires employers to submit quarterly contribution and wage reports containing some or all of the following information.
a. Number of weeks worked by each employee
Employers covered by FUTA must report their liability annually on what form?
d. Form 940
