Federal Tax Law (Overview)

Question 1

What Federal Form do employers have new employees complete in order for the employer to determine the correct amount of federal income tax to withhold from the employee’s paycheck?

a: W-2
b: W-4
c: 1040
d: 1065

Answer 1

b: W-4

Question 2

What is used by the federal government to identify the tax accounts of employers?

a: EIN number
b: FILA number
c: FUTA number
d: None of the above

Answer 2

a: EIN number

Question 3

What federal act provides for the lawful deduction of an employee’s wages to pay for old age, survivors, disability and hospital insurance?

a: Social Security Act
b: Federal Insurance Contributions Act (FICA)
c: Medicare Act
d: Retirement Act

Answer 3

b: Federal Insurance Contributions Act (FICA)

Question 4

Employers are required to match the contribution paid by employees for:

a: Social Security Tax
b: Medicare Tax
c: Federal Income tax
d: Both a & b

Answer 4

d: Both a & b

Question 5

Employers are subject to provide both State unemployment insurance and Federal unemployment insurance for their employees when:

a: They have at least one employee in 20 different calendar weeks during a calendar year.
b: They have a payroll of at least $1,500 in any calendar year
c: From the first day of employment
d: Both a & b

Answer 5

d: Both a & b

Question 6

True or False. Both employers and employees pay federal unemployment taxes.

Answer 6

False

Question 7

What Federal tax form would a corporation file for annual return of income?

a: 1065
b: 1040
c: 1120
d: W-2

Answer 7

c: 1120

Question 8

Federal law generally requires that sole proprietors, partners, and S-Corporations make estimated tax payments if they expect to owe at least _______ in taxes for the current year.

a: $1,000
b: $1,500
c: $2,000
d: $5,000

Answer 8

a: $1,000

Question 9

You must pay self-employment taxes if your net earnings were ________ or more.

a: $400
b: $500
c: $1,000
d: $1,500

Answer 9

a: $400

Question 10

As an employer, you are responsible for filing which of the following employment taxes?

a: Federal unemployment tax
b: Federal income tax
c: Social security tax
d: All of the above

Answer 10

d: All of the above

Question 11

You must pay self employment tax by filing form 1040SE if your annual net earnings from self employment were ______ or more.

a: $250
b: $400
c: $1000
d: $2500

Answer 11

b: $400

Question 12

Employers who report less than $2500 per quarter from monies collected from federal payroll taxes can use form _______ Quarterly Employers Tax Return.

a: 941
b: 940
c: 1040
d: SS-4

Answer 12

a: 941

Question 13

What federal form is use to report “Employers Annual Federal Unemployment Tax Return”.

a: 940
b: 941
c: 965
d: 1180

Answer 13

a: 940

Question 14

Employers find the proper tax deductions for each employee based on the _______ form they filled out at the time they were hired.

a: 1099
b: W-2
c: W-4
d: I-9

Answer 14

c: W-4

Question 15

What IRS publication provides employers with tables providing the necessary information for appropriate federal tax deductions?

a: Circular-E
b: Form 1065
c: W-2
d: W-4

Answer 15

a: Circular-E

Question 16

True or False. The only payroll taxes that both the employer and the employee contribute to equally are, Social Security and Medicare.

Answer 16

True

Question 17

True or False. Workers Compensation is paid for by the employer, no monies are deducted from the employees pay check to help pay for this expense.

Answer 17

True

Question 18

Of the choices below, which choice is paid for wholly by the employer?

a: Medicare
b: Federal income tax
c: Social security tax
d: Unemployment

Answer 18

d: Unemployment

Question 19

Federal law generally requires that sole proprietors, partners, and S-Corporations make estimated tax payments if they expect to owe at least ________ in taxes for the current year.

a: $1000 or more
b: $1500 or more
c: $2000 or more
d: $2500 or more

Answer 19

a: $1000 or more

Question 20

What are withheld taxes considered to be?

Answer 20

Trust funds that do not belong to the business and cannot be used for any other purpose.

Question 21

Generally who are the monthly depositors for the first calendar year of their business?

Answer 21

All new employers, this means that payroll taxes need to be deposited by the 15th day of the month following the end of the payroll period.

Question 22

What happens if payroll taxes exceed $50,000 annually?

Answer 22

The employer is a semiweekly schedule depositor for a calendar year.

Question 23

if you report less than $2,500 for the quarter, you may use what form to make payments?

Answer 23

IRS Form 941

Question 24

When must you pay unemployment taxes?

Answer 24

• You paid wages of $1,500 or more to employees in any calendar quarter
• You had one or more employees for at least some part of a day during 20 or more weeks in a calendar year.

Question 25

True or False. Employees pay Federal Unemployment Tax and have it withheld from their pay.

Answer 25

False. they do not pay it and it isn’t withheld from their pay.

Question 26

List the schedule of deposits:

Answer 26

First Quarter (Ending 3-31) Due Date 4-30
Second Quarter (Ending 6-30) Due Date 7-31
Third Quarter (Ending 9-30) Due Date 10-31
Fourth Quarter (Ending 12-31) Due Date 1-31

Question 27

When are penalties received and how are they computed?

Answer 27

If you’re deposit is late you receive a penalty, they are computed by multiplying the amount of tax that is underpaid by a percentage rate based on how many days late you make the deposit.

Question 28

What is the 1099-MISC used for?

Answer 28

It is used by payers to report payments made in the course of a trade or business to others for services.
If you pay someone who is not your employee like a subcontractor, attorney, or accountant $600 or more for services provided during the year then you need to fill out a 1099-MISC