Questions Flashcards
How long to keep I-9 Forms
Retain for 3 years form date of hire or 1 year from termination, whichever is LATER
When should an I-9 be filled out
Employee must complete section 1 by 1st day of work
With in 3 business days t, employer reviews and completes Section 2
When reverifying, employer completes Section 3
IRS Penalties for Noncompliance
Civil:
1st Offense- $573- 4,586
2nd Offense-$4,586 - 11,463
More than two - 6,878 - 22,927
Criminal:
Failure to comply with verification - $230 - 2,292
Pattern and practice of violating requirements - Up to 3,000 and/or 6 months in jail
Social Security % and Limits
6.20% on all income up to $137,000.
The most you can pay in Social Security taxes for 2020 is $8,537.40.
What are taxes included in FICA?
FICA taxes include Social Security and Medicare taxes with employer rates of 6.2% and 1.45%, respectively.
FICA taxes are typically due monthly or semiweekly, and Form 941 is due quarterly.
What is due by January 31st
- File Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return. However, if you deposited all of the FUTA tax when due, you have 10 additional calendar days to file.
- File Form 943, Employer’s Annual Federal Tax Return for Agricultural Employees if you paid wages to one or more farmworkers and the wages were subject to social security and Medicare taxes or federal income tax withholding under the Form 944, Employer’s Annual Federal Tax Return, for the previous calendar year instead of Form 941 if the IRS has notified you in writing to File Form 944.
- File Form 945, Annual Return of Withheld Federal Income Tax, to report any nonpayroll income tax withheld in the previous year. If you deposited all taxes when due, you have 10 additional calendar days to file. See Nonpayroll Income Tax Withholding under Reminders in Publication 15 for more information.
- File Copy A of all paper Forms W-2, Wage and Tax Statement, with Form W-3, Transmittal of Wage and Tax Statements, or file electronic Forms W-2, with the Social Security Administration (SSA) to report wages, tips and other compensation paid to an employee. For information on reporting Form W-2 information to the SSA electronically, visit the SSA Employer W-2 Filing Instructions & Information Web page. See SSA Publication No. 42-007 for help in electronically filing Forms W-2.
- File Copy A of paper, Form 1099, Miscellaneous Income, with Form 1096, Annual Summary and Transmittal of U.S. Information Returns, or file electronic Forms 1099, Miscellaneous Income with the IRS, when you are reporting non-employee compensation payments in box 7. See IRS Publication 1220 (PDF) for help in electronically filing Forms 1099.
When to file Form 940
by January 31st, April 30th, July 31st and October 31st.
What is due by February 28th
File Copy A of paper Form 1099, other than those with entries in box 7, (see By January 31 above,) with Form 1096, Annual Summary and Transmittal of U.S. Information Returns, with the IRS. For electronically filed returns, see By March 31 below.
File paper Form 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips, with the IRS. See section 6 of Publication 15. For electronically filed returns, see By March 31 below.
What is due by March 31
File electronic Form 1099, other than those with entries in box 7, (see By January 31 above,)
and electronic Form 8027 with the IRS. (See Publication 1220 for help in electronically filing Forms 1099 and Publication 1239 (PDF) for help in electronically filing Forms 8027.)
When to deposit FUTA
FUTA tax by the last day of the first month that follows the end of the quarter. If the due date for making your deposit falls on a Saturday, Sunday, or legal holiday, you may make your deposit on the next business day.
If your liability for the fourth quarter (plus any undeposited amount from any earlier quarter) is over $500, deposit the entire amount by the due date of Form 940 (January 31). If it is $500 or less, you can make a deposit, pay the tax with a credit or debit card, or pay the tax with your Form 940 by January 31.
What is on a 940 Form
Employer’s Annual Federal Unemployment (FUTA) Tax Return
An employee is provided a parking space on the
employer’s premises. The FMV of the space is $200. This
is referred to as a:
A. De minimis fringe benefit.
B. Qualified transportation fringe benefit.
C. No-additional-cost fringe benefit.
D. Qualified employee discount.
B. Qualified transportation fringe benefit.
A nonexempt employee is paid $9.50 per hour and
recorded the following hours:
Sun Mon Tues Wed Thurs Fri Sat
0 (sick) 10 8 8 8 0
Company policy allows pay for sick days at 8 hours per
day. Under the FLSA, calculate the employee’s gross
weekly pay.
A. $323.00
B. $399.00
C. $408.50
D. $418.00
B. $399.00
What types of wages are excluded when calculating the
regular rate?
A. Production bonus.
B. Shift differential.
C. Paid time not worked.
D. Premium pay less than one and one-half times the
base rate.
C. Paid time not worked.
When setting up a new payroll system, testing is part of: A. RFP preparation. B. Needs analysis. C. Implementation. D. Evaluation. 5. Pre-tax contributions
C. Implementation.
Pre-tax contributions to a cafeteria plan for medical
insurance are exempt from:
A. Social security, Medicare, FIT, and FUTA only.
B. Social security, Medicare, and FIT only.
C. Social security, Medicare, and FUTA only.
D. FIT and FUTA only.
A. Social security, Medicare, FIT, and FUTA only.
In a state that is not credit reduction, an employee’s
current pay is $1,300.00. YTD wages are $5,895.00.
Calculate the FUTA tax the employer must accrue if all
taxes are paid timely and in full.
A. $6.63
B. $7.80
C. $66.30
D. $78.00
A. $6.63
5895+1300=7195
Only tax up to 7000 so
1300-195=1105
1105*.6%=6.63
Non-employee compensation is not reported to the IRS if the payments are less than: A. $600.00 in the calendar year. B. $600.00 in any 12-month period. C. $1,000.00 in the calendar year. D. $1,000.00 in any 12-month period.
A. $600.00 in the calendar year.
All of the following duties should be included in the job
description of a payroll department employee EXCEPT:
A. Data entry of payroll input.
B. Reviewing source documents for proper authorization.
C. Reconciliation of payroll bank accounts.
D. Distribution of payroll-related reports.
C. Reconciliation of payroll bank accounts.
Taxes advanced by an employer on behalf of employees
must be recovered from employees by no later than:
A. January 1 of the following year.
B. January 31 of the following year.
C. March 31 of the following year.
D. April 1 of the following year.
D. April 1 of the following year.
All of the following accounts are asset accounts EXCEPT: A. Cash. B. Accounts receivable. C. Inventory. D. Accounts payable.
D. Accounts payable.
Child Labor Restrictions
Under 14- Generally forbidden from working, except family farms
14 and 15- food service, bag and carry out, office and clerical, cashier, clean-up
work hours:
In school: 7am-7pm 3 hours per day 18 hours per week
Out of School: 7am -9pm No more than 8 hours per day, 40 hours per week
16 and 17- Any with the exception of hazardous jobs no hour limitations
Penalties for failure to pay minimum wage and/or overtime
- Recovery of back wages & equal damages
- Repeated willful violations up to $2,050 per violation
Federal minimum wage
$7.25 per hour
Opportunity wage $4.25 first 90 calendar day just learning and under 20
Penalties Child Labor
- up to $13,072 per employee subject to violation
- $59,413 if death or serious injury
- Repeated willful violations up to $118,826 per Violation
Minimum wage federal vs. State
When differ employer must follow the law that is more favorable to the employee. (usually state)
Shift premiums
No federal or state requirements
must be included in regular rate of pay (Gifts, Vac and holidays not included in regular rate of pay.
Additional Medicare Tax
Wages exceeding $200,000 YTD
-additional Medicare tax rate =.9%
No employer match
Can show under Sur tax
Supplemental wages
Are not regular wages.
- bonuses, prizes, awards
- commissions
- severance or dismissal pay
- Nonqualified moving expense reimbursements
- nonaccountable business expenses reimbursements
- noncash fringe benefits\
- 409A income
Aggregated method with holding on Supplemental wages
If 1,000,000 or less
What is a key characteristic of a change agent?
One who can overcome the natural resistance of people to change
In working to effect change, a change agent should seek help form:
a. A team of qualified and enthusiastic employees
b. Upper management
C. Lower level employees who will be affected by the changes
d. All of the above.
D all of the above
The support for change comes from what part of organization?
Top management
How does change differ from transition?
Transition is internal, not external, and takes longer than change.
Transition starts with and ending, which occurs by letting go of the old situation. Employees may experience the feelings of behaviors commonly associated with mourning.
Transition ends and beginning.
In between resides the neutral zone.
Which of the following is a characteristic of successful change management?
A. Termination or marginalization of employees resisting change
B. Limit input and knowledge of the process to need to know basis
C. Clear definition of changes to be implemented with verifiable performance measures
D. Allow employees with the lightest schedule to manage the process.
C. Clear definition of changes to be implemented with verifiable performance measures
What is the first rule of crisis management?
Be proactive
When developing plans to manage a crisis, what scenario is planned for?
The worse case scenario
In the middle of a crisis, what approach should be taken to resolve it?
A. Be as positive or negative as you need to be with staff to let them know what you are thinking
B Identify the problem and analyze the situation for multiple solutions
C. Keep communication with impacted personnel to a minimum until the crisis is over
D. Remain in your office and away form your staff so others know where to find you.
B Identify the problem and analyze the situation for multiple solutions
What steps should be taken after a crisis has passed?
List the problems that surfaced, determine which issues where preventable, list issues not resolved
Meet with the crisis team to discuss the crisis, create a trauma file, itemize the successes achieved.
T/F- The IT department’s disaster recovery plan should be kept separate form a business continuity plan so each area of an organization can recover form a disaster independently.
False
When would a business continuity plan be implemented?
With any disruption of business activities.
What should be developed to plan for recovery form a business interruption?
A list of the staff and tools required to each day of the recovery.
How frequently should the plan be updated?
The plan should be updated after each test and when processes change
Which of the following aims to test a business continuity plan most thoroughly? A. Functional testing B. Full-scale testing C. Tabletop testing D. Walk-through testing
B. Full-scale testing
T/F
Business transformation outsourcing is the same as business process outsourcing.
False
Like BPO, BTO involves transferring responsibility for entire business processes to an external vendor or business partner. BTO also involves transferring responsibility for managing future changes in the process.
T/F It is a federal requirement to withhold income tax form a statutory employee
False
T/F Employers are required to furnish a Form 1099-misc to statutory employees
False
T/F A worker who asked to submit a Form W-4 is being consistently treated as an independent contractor.
False
A qualified real estate agent is a category of:
A. Statutory employee
B. Statutory nonemployee
B. Statutory nonemployee
List the four categories of statutory employees
Diver
Insurance sales agent (life)
Sales Person
Home worker (receives materials and assemblies material sent to company)
List 4 elements of reasonable basis
- Court Decisions, IRS Published rulings, IRS Private letter rule
- Past IRS audit
- Longstanding practice
- Professional advice (form someone that knows the company like company lawyer)
T/F The penalties for intentional and unintentional misclassification of workers are the same.
False
T/F The penalties for intentional misclassification of workers replace other penalties that might be assessed for failure to pay taxes.
False
and employer unintentionally misclassifies an employ as an independent contractor. The employer has not withheld federal income tax or social security and Medicare taxes. However, the employer did furnish a Form 1099-Misc for the worker with the IRS. What Penalties apply
1.5% of wage paid and 20% of employee’s share of social Security and Medicare taxes.
Unintentional Misclassification Penalties what taxes were not withheld to get this penalty:
1.5% of wages paid
Not withholding federal income tax.
Unintentional Misclassification Penalties what taxes were not withheld to get this penalty:
3% of wages paid
Not withholding federal income tax and failure to file Form 1099-Misc for the worker
Unintentional Misclassification Penalties what taxes were not withheld to get this penalty:
20% of employees share
Not withholding employees share of social security and Medicare taxes.
Unintentional Misclassification Penalties what taxes were not withheld to get this penalty:
40% of employee’s share
Not withholding the employee’s share of social security and Medicare taxes and failure to file form 1099-Misc for the worker
Intentional Misclassification Penalties
Full amount of federal income tax that should have been withheld.
100% of the employee’s and employer’s share of social security and Medicare taxes.
Also subject to all other penalties that can be assessed for ailing to file returns or pay taxes.
T/F - an employer using E-Verify is not required to use form I-9
False-
I-9 form is mandatory
T/F - An employee must provide an employer that participates in the E-Verify system with a social security number on Form I-9
True
E-Verify requires a SSN so employee must provide.
If only I-9 not required.
Minimum wage
$7.25
work week has to be
168 fixed hours (7 day period)
What min for Exempt employees per week
$684 per week
T/F Under the FLSA, garnishments and wage assignments cannot take an employee’s pay below the minimum wage.
False
T/F An employer can recover money stolen form the employer without violating the FLSA when the employee has a court conviction for the theft.
True
Yes/No Arnold works 40 hours per week at $8 an hour. In the last workweek, Arnold missed 4 hours of work. The employer docked his pay and Arnold received total wages of $288 for that workweek. Did the employer violate the FLSA?
No
Under the FLSA, all of the following deductions can take an employee below the minimum wage Except: A. Union Dues B. Interest on a loan C. Recover salary advances D. Taxes
B Interest on a loan
T/F Employees making at least $20 per month in cash tips must report their tips monthly.
True
T/F Employers are required by the IRS to pay their share AND the employee’s share of social security and Medicare taxes if the employee underreports tip income.
False
What from is used to report tip allocations?
8027
T/F Meals furnished for the convenience of the employee are excluded from the employee’s taxable income.
True
T/F If employer-provided lodging is required as a condition of employment, it is included in the employee’s taxable income.
False
All of the following types of employer-provided lodging are excluded form the employee’s income EXCEPT:
A. Lodging on the employer’s business premises
B. Lodging provide for the employer’s convenience.
C. Lodging provided as a relocation incentive
D. Lodging provided as a condition of employment
C. Lodging provide as a relocation incentive
List the two valuation methods for determining the value of personal travel on a company aircraft.
General valuation rule, non-commercial flight valuation rule
T/F David a a graduate assistant who received a full qualified scholarship to his state university. As a condition of the scholarship, he teaches undergraduate level art courses at the university. The income David receives for teaching courses is excluded from his taxable income because he recieved a scholarship.
False
T/F Generally, sick pay paid by the employer is subject to income tax withholding based on the employee’s Form W-4.
True
T/F Generally, the employer’s EIN is used on all reporting forms if sick pay is paid by an agent of the employer.
True
T/F When an employer contracts with a third-party insurer to make disability payments, the third bears the responsibility of all withholding, depositing, and reporting unless the liability is transferred back to the employer.
True
An employee goes out on the company disability plan on March 5 and returns on December 17. Social security and Medicare taxes should be withheld until what date? A. April 5 B. September 5 C. September 30 D. December 17
C. September 30
If a third party sick-pay provider is filling Forms W-2 with respect to the sick pay under the name and EIN of the third party , Form 8992 is filed by the :
a. Employer
B. Third-Party Sick pay provider
A. Employer
List two types of stipends that are excluded from an employee’s taxable income.
Qualified scholarship, fellowship grant
T/F The value of employer-provided season tickets to an employee’s local collegiate football team is not taxable.
False
T/F A company had a recent round of lay-offs and is providing outplacement services to its former employees in an effort to retin its positive corporate image. The value of the outplacement service would no be included in the employee’s taxable income.
True
T/F An employer’s payment of the registration fee for a payroll professional to attend a class at APA’s Payroll Learning Center is generally excluded form income.
True
Which gift card given to an employee by the employer is taxable?
A. $200 VISA card for 20 years of service
B. $25 Subway restaurant card
C. $10 local movie theatre
D. All of the above
D All
$200 VISA card for 20 years of service
$25 Subway restaurant card
$10 local movie theatre
T/F All eligible employees automatically receive COBRA continuation coverage for themselves and their qualified beneficiaries.
False
Which of the following is NOT a qualifying event for COBRA coverage?
A. Death of a covered employee
B. Termination of a covered employee due to gross misconduct
C. A dependent child losing dependent status
D. Divorce of the covered employee
B. Termination of a covered employee due to gross misconduct
T/F A cafeteria plan must be written plan with participants being employees.
True
T/F No deferral of compensation is allowed under a cafeteria plan.
True
T/F An employer may limit availability of a grace period to certain benefits and not others.
True
T/F Cash in lieu of purchasing a benefit is nontaxable.
False
List two ways that cafeteria plans are funded.
Flex dollars or credits, Salary reduction
List two circumstances that allow a change or revocation within the plan year.
Change in status, cost-driven change
T/F A health FSA may only reimburse certain substantiated medical care expenses incurred by the employee or the employee’s spose or dependents.
True
T/F To qualify for a dependent care assistance program, the dependent must only be a child under the age of 13.
False
Yes/No Vickie’s day care provider requires a monthly fee in advance of service. She has a receipt of payment for next month. Can she be reimbursed at the time of billing?
No
T/F Dependent care assistance FSAs are not subject to the uniform coverage rule.
True
T/F A health FSA debit or credit card cannot be used at stores with the pharmacy merchant code unless the store has an inventory information approval system.
True
The decision weather to offer a qualified reservist distribution is: A. Determined by IRS regulation B. Required by military order C. Up to the discretion of the employer D. Made by the reservist
C. Up to the discretion of the employer
Why must an employee pay and substantiate the initial expenses to a dependent care provider if the employer adopts a payment card program to reimburse dependent care expenses?
A. Reimbursements can only be distributed after expenses are incurred
B. To help the employer fund the benefit
C. Providers won’t take credit cards
D. A waiting period is mandatory for these types of cards
A. Reimbursements can only be distributed after expenses are incurred
T/F Forfeitures are amounts contributed on behalf of employees who terminated employment prior to vesting.
True
T/F Employees automatically enroll in a 401(k) plan may be given up to 90 days to withdraw their automatic contributions if they elect out of the plan. The amount distributed is not subject to the early withdrawal penalty.
True
T/F A Roth IRA is different from a traditional IRA in that contributions to a Roth IRA are not deductible form income.
True
T/F Contributions and withdrawals of designated Roth contributions must be credited and debited to a designated Roth contribution amount.
True
T/F In providing an applicable electronic notice, an employee must consent to receiving that notice in an electronic format or have the option of receiving written notification in lieu of electronic notification without additional cost.
True
Which plan is NOT a defined contribution plan? A. Money purchase pension plan B. Healthy Savings plan C. Profit Sharing Plan D. Stock Bonus Plan
B. Health Savings Plan
List the two categories of qualified plans.
Defined benefit plan, defined contribution plan
At what age is an employee eligible to make catch-up contributions to a 401(k) plan?
50
T/F Giving and receiving appropriate feedback is an example of a good communication skill.
True
Yes/No
Tom used the appropriate steps in communication a payroll compliance issue to his upper management. However, upper management decided not to correct the mistake. Because of upper management’s decision to forego changing its practice, was Tom’s communication a poor one?
No
All of the following actions are guidelines for productive meetings Except:
A. Holding a meeting only if there is a purpose.
B. Prepare an agenda
C. Invite everyone so information won’t have to be repeated
D. End the meeting on time
C. Invite everyone so information won’t have to be repeated
List the appropriate steps in communicating a payroll compliance issue to upper management.
Document the current company practice, identify the compliance issue and develop examples online the possible penalties that could be assessed by the company. This will show the impact of the noncompliance.
T/F All employers must report the cost of health coverage on Forms W-2 for 2020
False- the reporting requirement for 2020 Forms W-2 will not apply to employers that are required to file fewer than 250 Forms W-2 for tax year 2019
T/F An employer must use the same method for calculating the reportable cost of an employee receiving coverage for all of its plans.
False Ann employer is not required to use the same method for every plan, but must use the same method with respect to a plan for every employee receiving coverage under plan.
Which of the following describes the premium charged method?
A. The employer uses the fair market value of the premium that would be changed to an employee by an insurer if the employee had to buy an individual insurance policy.
B. The employer uses the premium charged by the insurer for an employee’s coverage under a group plan for each period as the reportable cost for that period.
C. The employer uses the COBRA applcable premium that would be charged to an employee plus 2%.
D. Non of the Above.
B. The employer uses the premium charged by the insurer for an employee’s coverage under a group plan for each period as the reportable cost for that period.
T/F A form 945 is not required if no nonpayroll tax liability was incurred for that tax year.
True
T/F Interest is charged on taxes paid late.
True
Which payment should NOT be included on Form 945? A. Withholding reported on Form 1099 B. Withholding reported on Form W-2G C. Withholding reported on Form W-2c D. Backup withholding
C. Withholding reported on Form W-2c
For third-party designees, which of the following statements is TRUE?
A. Additional tax liability is possible
B. Designees may receive refund checks
C. Written tax return information is available upon request
D. Authorization automatically expires 90 days from the due date.
C. Written tax return information is available upon request
