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14 Cards in this Set
- Front
- Back
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Chapter 03 Review #13:
13. For employers to exclude the value of a length of service award from an employee's income, what is the minimum length of service for which the award can be given? |
Five years.
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Chapter 03 Review #14:
14. With regard to bonuses, what is meant by the "push money exception?" |
When a manufacturer pays a bonus to sales employees working for a retailer to get them to "push" its products, the bonus is not wages because it is being paid by a third party, not the employer (for services performed for the third party), and is not subject to federal income tax withholding or social security, Medicare, and FUTA taxes. The bonus is taxable income to the sales employees, however, and must be reported on their personal income tax return.
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Chapter 03 Review #15:
15. What conditions and limitations must be satisfied for employer-provided dependent care assistance to be excluded from an employee's income? |
Exclusion limitation: The excluded amount of dependent care assistance cannot exceed $5,000 in a year or the employee's earned income for the year, whichever is less. When expenses are incurred: An employer's dependent care expenses are treated as incurred when the care is provided, not when payments are made to the employee or third party.
Written plan: The dependent care assistance program must be a separate, written plan of the employer and it must be designed solely for the employees' benefit. No discrimination: The program must not discriminate in favor of highly compensated employees. Notification: Eligible employees must receive reasonable notification of the availability and terms of the program. Annual statement: The employer must give the employee a statement each year by January 31 showing the dependent care assistance provided by the employer during the previous year (Box 10 of Form W-2). |
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Chapter 03 Review #16:
16. What is meant by the term "golden parachute" payments? |
When companies change ownership, key executives are often provided with "golden parachutes" to soften their landing should they be terminated by the new owner. The tax law defines a "parachute payment" as compensation that is paid to an officer, shareholder, or highly compensated employee only after a change in corporate ownership or control and that is at least three times the employee's average compensation during the five most recent tax years.
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Chapter 03 True or False #4:
4. An employer may provide transit passes valued at up to $230 in a month to its employees in 2010 without including the fair market value of the benefits in their income. |
T
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Chapter 03 True or False #5:
5. The value of an employee's personal use of a company-provided vehicle is taxable income to the employee. |
T
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Chapter 03 True or False #6:
6. When an employer-provided vehicle is used for business-related purposes, it is a working condition fringe benefit. |
T
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Chapter 03 True or False #7:
7. Restaurant employers can participate in the Attributed Tip Income Program by check a box on Form 941 files for the fourth quarter of a calendar year. |
F. Restaurant employers wishing to participate in ATIP must check a box on Form 8027 when it is filed after the end of the calendar year.
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Chapter 03 Multiple Choice#1:
1. All of the following benefits are nontaxable fringe benefits EXCEPT: a. No-additional-cost services b. Qualified employee discounts c. Employer-paid membership fees to an athletic club d. De minimis fringes |
c. Employer-paid membership fees to an athletic club
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Chapter 03 Multiple Choice#2:
2. All of the following benefits are working condition fringe benefits EXCEPT: a. Business use of a company car or airplane b. Dues and membership fees to professional organizations c. Goods used for product testing by employees d. Dependent care assistance |
d. Dependent care assistance
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Chapter 03 Multiple Choice#3:
3. All of the following benefits are de minimis fringe benefits EXCEPT: a. Occasional tickets to sporting events b. Subscriptions to business periodicals c. Traditional holiday gifts (e.g., turkeys, candy) d. Occasional personal use of company telephones |
b. Subscriptions to business periodicals
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Chapter 03 Multiple Choice#7:
7. An employer must withhold on group-term life insurance in excess of $50,000 for which of the following taxes? a. Social security and Medicare taxes only b. Social security, Medicare and federal income taxes c. Social security, Medicare and FUTA taxes d. Social security, Medicare, federal income, and FUTA taxes |
a. Social security and Medicare taxes only
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Chapter 03 Multiple Choice#8:
8. Which of the following conditions need not be met for job-related educational assistance to be excluded from income? a. Courses are not taken to qualify the employee for a promotion or transfer b. Courses must be related to the employee's current job c. Must be covered by an Educational Assistance Program d. Course must not be necessary to meet the minimum education requirement of the job |
c. Must be covered by an Educational Assistance Program
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Chapter 03 Multiple Choice#9:
9. Under the "fixed-date" method for substantiating business travel expenses, an advance can be provided no more than how many days before an expense is incurred? a. 10 days b. 15 days c. 20 days d. 30 days |
d. 30 days
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