Chapter 6 - Withholding Taxes

Front 1

What is form W4?

Back 1

EE's withholding allowance certificate

Front 2

How long must the er keep an ee's Form W-4 on file?

Back 2

4 years after the date the last tax return was due using the information from the form, which is April 15 of the following year

Front 3

Explain the principle of constructive payment.

Back 3

point in time when the ee has the ability to control the payments for services from the er

Front 4

Why is the date of actual or constructive payment of wages important?

Back 4

determines when wages are taxed and reported and at what rate

Front 5

When must a newly hired ee's Form W-4 be put into effect?

Back 5

the first wage payment after the form is filed

Front 6

What does a Form W-4 tell the er?

Back 6

how many withholding allowances
marital status
if exempt from withholding
additional $ amt to withhold

Front 7

What conditions must be satisifed for an ee to claim exempt from withholding?

Back 7

had a right to a refund of all fed taxes withhed the prior year because they had no tax liability
expect to have no tax liability in the current year
can no be calimed as a dependent if the ee will have more than $950 in income (including $300 nonwage) in 2012

Front 8

Under what circumstances must an er submit Forms W-4 to the IRS?

Back 8

if receive a written notice from the irs requiring to do so
if directed by irs to do so in a public guidance, such as a revenue procedure

Front 9

List 6 types of supplemental wage payments.

Back 9

reported tips
ot pay
bonuses
back pay
commissions
nonaccountable reimbursements
nonqualified deferred comp payments
noncash fringe
3rd pary sick pay
amounts includible in gross income 409a
imputed health insurance for an uncovered member of family

Front 10

What method of wihholding must be used if the ee claims exempt from withholding, has received $10,000 in regular and supplemental wages so far during the year, and is paid a bonus of $1,000 during a payroll period?

Back 10

the exemption would still apply so no taxes would be withheld

Front 11

What are eligible rollover distributions?

Back 11

all nonperiodic payments of all or any protion of the balance of a cecipients account in a qualified deferred comp plan

Front 12

What is backup withholding?

Back 12

28% of reportable nonpayroll payments during 2012

Front 13

What is the er social security tax rate for wages paid in 2012?

Back 13

6.2%

Front 14

Can ee's receive advance payments of Earned Income Credit for wages paid in 2012?

Back 14

No.

Front 15

Under IRS regulations, what methods may ers use to notify ees who have no income tax withheld and do not file exempt of their possible elibibility for a tax refund because of the EIC.

Back 15

Copy B of W2
Notice 797
or written statement with same verbage as form 797

Front 16

TF1
An er should refuse to change an ee's name until a new social security card with the ee's new info is presented or new info has otherwise been verified with the SSA.

Back 16

true

Front 17

TF2
Under the principle of constructive payment, an ee is considered to have been paid wages that have been made available to the ee with "substantial limitation or restriction"

Back 17

false

Front 18

TF3
Paychecks mailed to the ees are not constructively paid when mailed unless the ees have the option of picking up their checks at the office on the day they are mailed.

Back 18

true

Front 19

TF4
An amended W4 filed by a current ee must be put into effect by the er no later than the beginning of the first payroll period ending on the or after the 30th day after the form is filed with the er.

Back 19

true

Front 20

TF5
If supplemental wages paid with regular wages are not clearly identified, the er must withhold federal income tax as if the combined payment is a wage payment for that payroll period.

Back 20

true

Front 21

TF6
Under the principle of constructive payment, an ee is considered to have been paid wages when they are earned and become payable.

Back 21

false

Front 22

TF7
When an ee requests federal income tax withholdinng on sick pay, Form W-4S directs the third party to withhold a flat dollar amount.

Back 22

true

Front 23

TF8
The back up withholding rate for 2012 is 25&.

Back 23

false 27%

Front 24

TF9
An ee cannot receive advance payments of the Earned Income Credit based on wages paid after December 31, 2010.

Back 24

true

Front 25

TF10
The rate of social security tax paid by an er on an ee's wages in 2012 is 6.2%.

Back 25

true

Front 26

TF11
An ee's social security number is needed even if there is no withholding.

Back 26

true

Front 27

TF12
If a new ee does not provide a form W4, the er must withhold as if the ee were single with no allowances.

Back 27

true

Front 28

TF13
EE's have the option on their form W4 to have a flat dollar amount of tax withheld from their pay.

Back 28

false

Front 29

TF14
Pension recipients may claim a certain number of withholding allowances on form w-4p to be used in calculating the amount to withhold.

Back 29

true

Front 30

TF15
When determining the amount of federal income tax to withhold using the percentage method, ers may round off the withholding amount to the nearest dollar.

Back 30

true

Front 31

TF16
When using the wage-bracket method of withholding, if the wage payments are above the maximum table amount, the er has the option to use the optional flat rate.

Back 31

false
the % method must be used

Front 32

TF17
If an ee chooses to receive part of an eligible rollover distribution and to directly roll over the rest, federal income tax withholding is required only on the portion received by the ee.

Back 32

true

Front 33

TF18
As soon as the ee's wage payments for 2012 reach $110,100, the er must stop withholding social security tax from the ee's wages for the rest of the year.

Back 33

true

Front 34

TF19
ERs are required to notify ee's who have no federal income tax withheld from wages and do not claim exempt of their possible eligibility for a tax refund bc of the EIC.

Back 34

TRUE

Front 35

TF20
If an ee works for more than one er, each er is liable for withholding and paying the ee's share of social security and medicare taxes.

Back 35

true

Front 36

MC1
What program does the social security administration provide to verify ee's social security numbers?
a. immigration reform and control act
b. social security number verification service
c. new hire reporting
d. online tin verification

Back 36

b

Front 37

MC2
If the number of withholding allowances decreases for an ee, how long does the ee have to submit a new form, W-4?
a. 10 days
b. 30 days
c. 15 days
d. 1 year

Back 37

a

Front 38

MC3
If a payer receives a "b" notice from the IRS, how long does the payer have to send a copy to the payee along with form W-9, request for taxpayer id number and certification?
a. 30 days
b. 15 days
c. 10 days
d. 5 days

Back 38

b

Front 39

MC4
What is the medicare wage base for 2012?
a. $106,800
b. no limit
c. $110,100
d. $135,00

Back 39

b

Front 40

MC5
An ee is supposed to receive his last paycheck of $1500 for 2012 on Monday, December 31. Because of a system failure, paychecks are no available until Thursday, January 3, 2013. Before Dec 31, the ee's 2012 earnings were $109,400. How much fica must be withheld?
a. ss $93 and med $21.75
b. ss $93 and med $0
c. ss $0 and med $21.75
d. ss $63 and med $21.75

Back 40

a

Front 41

MC6
Which of the following forms must be completed to obtain a social security number?
a. ss-4
b. ss-5
c. ss-8
d. w-9

Back 41

b

Front 42

MC7
Ee's paychecks are mailed from their corporate office on Monday for a thursday pay day. BC of a disaster in the area no mail will be delivered until sat, when the ee's are not at work. So the ee's can get paid during this week, the er wires cash wages to the ee's on fri. the checks arrive at the office on monday. When are the wages considered paid?
a. thurs
b. fri
c. sat
d. mon

Back 42

b

Front 43

MC8
Which form is completed by recipients of pension and annuity payments to determine the amount to withhold?
a. w4
b. w4s
c. w4p
d. 1099r

Back 43

c

Front 44

MC9
Which of the following states allows ers to use the federal form W4 to calculate state income tax withholding?
a. arizona
b. california
c. michigan
d. north carolina

Back 44

b

Front 45

MC10
An ee claims single and one withholding allowance and is paid $550 every Friday in 2012. Use the wage-bracket tables, how much federal income tax must be withheld?
a. $33
b. $58
c. $60
d. $48

Back 45

b

Front 46

MC11
What must an er do after learning that a form w4 submitted by a current ee is invalid?
a. not implement the w4
b. withhold as if the ee were single with 0 allow
c. inform the irs
d. make the necessary corrections

Back 46

a

Front 47

MC12
A newly hired ee who is married with 2 children fails to complete form w4 by his first payday. What withholding status does the er use when calculating the ee's withholding?
a. married, 2
b. married, 3
c. single, 2
d. single 0

Back 47

d

Front 48

MC13
If a pension recipient fails to complete w-4p, what withholding status must be used by the payer to calculate withholding?
a. single, 0
b. single, 1
c. married, 0
d. married, 3

Back 48

d

Front 49

MC14
In 2012, an ee claims married with 5 allowances on form w-4, ans is paid $2356 every other Wednesday. Using the wage-bracket tables, how much federal income tax must be withheld from each wage payment?
a. $166
b. $163
c. $141
d. $185

Back 49

b

Front 50

MC15
For 2012, how much can ees receive in advance EIC payments?
a. ee's cannot recieve eic payments in 2012
b. $1826
c. $1750
d. $1830

Back 50

a

Front 51

MC16
In 2012, an ee claims single with 2 allowances on form w4, and is paid $1110 on the 1st and 15th of each month. Using the wage-bracket tables, how much federal income tax must be withheld from each wage payment?
a. $111
b. $87
c. $64
d. $46

Back 51

b

Front 52

MC17
For 2012, what is the social security tax wage base?
a. $102,000
b. $110,100
c. $106,800
d. $97,500

Back 52

b

Front 53

MC18
A ee worked for 3 ers by August 20, 2012. The ee earned $26,000, $29,000, and $15,000 respectively from each er. What is the total amount of social security and medicare that should have been withheld from the ee's wage?
a. $4340
b. $2940
c. $5355
d. $3955

Back 53

d

Front 54

MC19
A single ee with no dependents earns $43000 in 2012. The ee claimes 12 allowances on form w4 for 2012. Which of the following is correct concerning the form w4?
a. the ee may claim 12 allowances.
b. the er will require the ee to verify the 12 allowances
c. the er will disregard the form w4 and withhold as single 0 allowances
d. the er will notify the irs of the claim by submitting a copy of form w4

Back 54

a

Front 55

MC20
During 2012, a corporate officer is paid a semimonthly salary of $7500 on the 15th and last day of the month. How much social security and medicare taxes should be withheld from the officer's august 31 paycheck (pp16)?
a. ss $75.60, med $26.10
b. ss $0, med $108.75
c. ss $111.60, and med $108.75
d. ss $315, med $108.75

Back 55

b