Chapter 5 Flashcards
To determine if an employer is a monthly or semiweekly depositor
for 2022, the lookback period is:
❑ a. January 1 - December 31, 2021
❑ b. October 1, 2020 - September 30, 2021
❑ c. July 1, 2020 - June 30, 2021
❑ d. January 1 - December 31, 2020
c. The lookback period for 2022 is July 1, 2020, through June 30,
2021.
If the employer’s total tax liability for the quarter is less than
$2,500, when must the taxes be paid?
❑ a. By the due date of Form 941
❑ b. By the 15th of the month after the withholding
❑ c. By Wednesday or Friday under the semiweekly rules
❑ d. By the next business day
a. A quarterly depositor has a total tax liability for the quarter that
is less than or equal to $2,500 must pay the taxes by the due date of Form 941.
If the employer’s total tax liability for the lookback period is
$48,000, when must a tax liability of less than $100,000.00 be
deposited?
❑ a. By the due date of Form 941
❑ b. By the 15th of the month after the withholding
❑ c. By Wednesday or Friday under the semiweekly rules
❑ d. By the next banking day
b. A monthly depositor had a tax liability of $50,000 or less during
the lookback period and deposits employer taxes by the 15th of the
next month.
If the employer’s total tax liability for the lookback period is
$75,000, when must tax liability of less than $100,000.00 be deposited?
❑ a. By the due date of Form 941
❑ b. By the 15th of the month after the withholding
❑ c. By Wednesday or Friday under the semiweekly rules
❑ d. By the next business day
c. A semiweekly depositor has a tax liability greater than $50,000
during the lookback period and makes tax deposits by the Wednesday
or Friday after the end of the deposit period.
If the employer’s total tax liability for a payday is $150,000, when
must the taxes be deposited?
❑ a. By the due date of Form 941
❑ b. By the 15th of the month after the withholding
❑ c. By Wednesday or Friday under the semiweekly rules
❑ d. By the next business day
d. A tax liability of $100,000 or more must be deposited on the next
business day.
A company pays semimonthly on the 15th and the last day of the
month. The company reported $40,000 of federal taxes during the
lookback period. This month, one payday occurs on Wednesday,
January 15th. When is the company required to make a tax deposit?
❑ a. Within three business days of the 15th
❑ b. On or before the following Wednesday
❑ c. With its quarterly Form 941
❑ d. On or before the 15th of the following month
d. The company is a monthly depositor because the aggregate
amount of employment taxes for the lookback period was $50,000
or less and must deposit the taxes by the 15th of the following
month.
The company (see Question 6) paid only 98% of its tax liability on
the due date (February 15). Which of the following is true?
❑ a. It faces a stiff penalty for failure to pay its obligation.
❑ b. The remaining 2% must be paid by March 15.
❑ c. The remaining 2% must be paid by the due date of its first
quarter Form 941.
❑ d. The remaining 2% must be paid by December 31.
c. The safe-harbor rule allows depositors to avoid penalties as
long as they deposit 98% of their tax liability by the due date. All
monthly depositors must deposit the full amount by the due date
of their first quarter Form 941 (April 30).
A company is a semiweekly depositor. On its weekly Friday payday,
it has a deposit liability of $50,000.00. When must the company
deposit its payroll taxes?
❑ a. By the following Wednesday.
❑ b. By the following Friday.
❑ c. By the following Monday.
❑ d. By the 15th of the following month.
a. Under the semiweekly rule, tax liabilities on payments made on
Wednesday, Thursday, and/or Friday must be deposited by the following
Wednesday. Tax liabilities on payments made on Saturday, Sunday,
Monday, and/or Tuesday must be deposited by the following Friday.
An employer’s tax deposit status always remains the same for the
entire year.
❑ True
❑ False
False. A monthly depositor with a liability in excess of $100,000 in
a deposit period becomes a semiweekly depositor.
A semiweekly depositor has a Friday payroll with a tax liability of
$85,000. The next Monday is a holiday. When must the employer
deposit the taxes to avoid penalties?
❑ a. The next Monday
❑ b. The next Wednesday
❑ c. The next Thursday
❑ d. The next Friday
c. Semiweekly depositors always have three business days to make
their deposits after the deposit period ends.
A company is a semiweekly depositor. Its next deposit is due on
Wednesday, which falls on a federal holiday. To be considered
timely, the company’s deposit of federal payroll taxes must be
made on or before the close of business on:
❑ a. Tuesday.
❑ b. Thursday.
❑ c. Monday.
❑ d. Friday.
b. Because Wednesday is a holiday, the company has until Thursday
to deposit its payroll taxes.
A semiweekly depositor has accumulated a liability of $95,000 on
Friday. On Saturday, it accumulates a $10,000 liability. Does the
one-day rule apply?
❑ a. Yes
❑ b. No
No. For purposes of the $100,000 rule, do not continue to accumulate
employment tax liability after the end of the semiweekly
deposit period. The company’s deposit period ended on Friday.
Between paydays, an employer must issue a off-cycle check to a terminating
employee. The employer can hold the tax liability until
the next regular payday to make the tax deposit.
❑ True
❑ False
False. The IRS requires semiweekly depositors to deposit the tax
liability at the end of each deposit period.
Which form is used by an employer to report federal income tax,
social security tax and Medicare tax withheld?
❑ a. Form 941
❑ b. Form 943
❑ c. Form 944
❑ d. Form 945
a. The employer must withhold federal income tax, social security
tax and Medicare tax from employees wages and report it on Form
941.
All of the following items are reported on Form 941 EXCEPT:
❑ a. wages, tips and other compensation.
❑ b. federal income tax withheld.
❑ c. social security tax.
❑ d. social security numbers.
d. The employee’s social security number is not reported on Form
941.
Which form is used to report taxes on agricultural employees’ wages?
❑ a. Form 941
❑ b. Form 943
❑ c. Form 944
❑ d. Form 945
b. Report total taxes on agricultural employees on Form 943.
Where is Form 941 filed?
❑ a. With the local IRS office
❑ b. With EFTPS
❑ c. At the IRS designated address
❑ d. With the IRS National Office
c. Tax returns are sent to the IRS address found in each form’s
instructions.
A company has consistently deposited 100% of its tax liability on
time. What is the last date it can file its first quarter Form 941?
❑ a. April 15
❑ b. April 30
❑ c. May 10
❑ d. May 15
c. Employers who make timely deposits of the full amount of employment
taxes can get a 10-day filing extension. The filing deadline
for the first quarter (January 1 to March 31) is normally April
30. The deadline can be extended to May 10.
Form 941 is filed monthly.
❑ True
❑ False
False. Form 941 is filed quarterly.
An employer is required to file a Form W-2 in all of the following
situations EXCEPT:
❑ a. A part-time employee in shipping who claimed exempt from
withholding on his Form W-4
❑ b. A freelance writer who was paid $5,200.00 to prepare ad
copy for the employer
❑ c. A salesperson who retired in May
❑ d. A student who is exempt from social security tax
b. Send W-2s to all employees, current or not, who received wages
(even if you didn’t withhold taxes). Report earnings of independent
contractors, such as the freelance writer, on Form 1099-NEC.
An employee quit his position on April 10. Generally, when must
the company send the former employee copies of his W-2?
❑ a. By May 10
❑ b. By May 30
❑ c. By December 31
❑ d. By January 31
d. Unless the former employee has asked to get his W-2 earlier, you
can send it along with all employees’ wage and tax statements. If
he does ask in writing to get the W-2 earlier, you have 30 days to
send it to him.
Your firm made a mistake in reporting an employee’s taxable wages
on his Form W-2. Which form is used to correct this error?
❑ a. W-2
❑ b. W-2c
❑ c. W-3
❑ d. W-3c
b. Correct the error on Form W-2c; transmit the corrected form to
the SSA with Form W-3c.
The payroll department staff made a series of errors on 100 of the
350 Forms W-2 for 2022 that were sent to the Social Security Administration
electronically before January 31, 2023. Shortly after filing,
they realized their errors and corrected the returns by February 15,
2023. What is the penalty for these mistakes?
❑ a. $3,000.00
❑ b. $4,500.00
❑ c. $6,000.00
❑ d. $10,000.00
b.
The due date for filing 2022 Forms W-2 with the Social Security
Administration was January 31, 2023, and the forms were corrected
within 30 days of the due date, so a $50 penalty is applicable:
100 mistakes x $50 = $5,000
In addition, employers are not penalized for timely filed returns
with incorrect or incomplete information that are corrected before
August 1, up to 10 returns or 0.50% of the total number of information
returns the employer must file during the year, whichever is
greater. This de minimis relief applies here.
0.50% of 350 returns = 1.75
10 is greater than 1.75 so 10 of the incorrect returns will not be
penalized:
100 – 10 = 90
Accordingly, only 90 returns will be penalized at $50 for a total
penalty of $4,500 (90 x $50 = $4,500).
An employer’s accumulated employment taxes were $53,000.00 in
federal income tax, $27,868.41 in social security tax, and $7,771.00
in Medicare tax. On the due date, it deposited $80,000.00 through
EFTPS. Five days later, it deposited an additional $8,639.41. What is
the penalty, if any, for this action?
❑ a. $137.33
❑ b. $172.79
❑ c. $186.00
❑ d. No penalty
a. The employer was required to deposit 98% of its accumulated
tax liability of $88,639.41, or $86,866.62. It underdeposited by
$6,866.62. The penalty is 2% of the underpayment since the employer
deposited the correct amount within five days. So, the penalty
would be $137.33 (2% x $6,866.62).
