Betty's CPP Section 6 and 7 Withholding Taxes Unemployment

Question 1

An ER must send an EE’s W4 to the IRS if the EE claims:

Answer 1

W4 must be submitted to the IRS when the IRS requests it

Question 2

How long must the ER retain an EE’s W4?

Answer 2

4 years

Question 3

What is the rate of backup withholding tax used for payments made to an independent contractor who neglects to give the ER a tax identification number (or a SS number)?

Answer 3

24%

Question 4

What is the BEST explanation of the Constructive Receipt Doctrine?

Answer 4

an EE is considered to have been constructively paid when wages are made available to him/her without restriction

Question 5

An EE is terminated with 3 workdays remaining in a month. The EE earned an annual salary of $24,000.00 and was paid semimonthly. What is the regular compensation due this EE for the final pay period?

Answer 5

a) $723.08 ; 24,000/2080 = 11.5385 * 24 = -276.96 less 1000 (24000/24)

Question 6

An EE who works for more than one ER and has exceeded the SS wage base may:

Answer 6

receive tax credit on Form 1040

Question 7

An EE retires and is collecting SS benefits. Her former ER asks her to return to work in a part-time position to train new EEs. The EE earns $200.00 per week. How much SS/Med. tax must her ER withhold from these wages?

Answer 7

$12.40 SS; $2.90 Med. (Still pays same SS & med tax)

Question 8

An EE leaves company A with YTD SS wages of $137,900. She goes to work for Company B and earns $1,250.00 in her first paycheck. How much SS will her new ER withhold from this payment?

Answer 8

c) $77.50 (Co B wouldn’t know so 6.2%) but note: $168,600 annual limit)

Question 9

At what age would an EE stop paying SS taxes?

Answer 9

There is no age limit! If you are earning wages, you pay SS, even if you are collecting benefits due to retirement!

Question 10

Employee Rose Bush changes her name after a marriage. Which of the following steps the Payroll Department should take?

Answer 10

Wait to make the change until a new social security card with Rose’s new name is presented

Question 11

If an original valid W-4 cannot be provided by an employee…

Answer 11

The employer must withhold as if the employee were single with no withholding allowances

Question 12

When should a W-4 be submitted?

Answer 12

On or before the first day of work

Question 13

Employee Rhoda Denton, who is paid weekly, submitted an amended W-4 on Monday, December 23, 2022 with one less allowance for the New Year. Rhoda’s next payday is Friday, December 28, for the payroll period ending the previous Saturday. When must Rhoda’s employer put her amended W-4 into effect?

Answer 13

For the payroll period ending January 2023 (gets 30 days)

Question 14

Which of the following W-4s must be submitted to the IRS?

A A W-4 indicating a flat dollar amount of tax
B A W-4 claiming exempt from withholding
C A W-4 with alterations such as additions or striking through any of the language
D None of the above

Answer 14

None of the above

Question 15

If a Form W-4P is not submitted for pension and annuity payments…

Answer 15

Tax is withheld as if the payee is single with no adjustments

Question 16

Form W-4S differs from Form W-4 in that…

A The employee uses the form to tell a third-party insurer to withhold a flat dollar amount
B No federal income tax is withheld unless the employee requests it
C Forms W-4S cannot be filed electronically
D Both A and B

Answer 16

D Both A and B

Question 17

What is the federal income tax withholding rule for eligible rollover distributions from a qualified deferred compensation plan?

Answer 17

20% unless directly rolled over to another qualified plan

Question 18

Employee Kelly Greene has an account balance of $25,000 in her employer’s qualified deferred compensation plan and an outstanding loan from the plan of $5,000. Upon her resignation, Kelly elects to receive the remainder of her account balance. What is the federal withholding on Kelly’s distribution?

Answer 18

$5,000 (20% of 25k) no offset for loan for tax purposes

Question 19

federal income tax is withheld on reportable payments subject to backup withholding at:

Answer 19

24%

Question 20

Which of the following is exempt from social security and Medicare taxes?

A Elective deferrals to a qualified deferred compensation plan
B Work performed by a nonresident alien under an H-1B visa
C Disability benefits paid more than 6 calendar months after the employee’s last month worked
D All of the above

Answer 20

Disability benefits paid more than 6 calendar months after the employee’s last month worked

Question 21

Which of the following entities would not be subject to FUTA tax?
A Nonfarm employers paying $20,000 or more in covered wages in any calendar quarter during the current or preceding calendar year
B Farm employers paying $20,000 or more in covered wages in any calendar quarter during the current or preceding calendar year
C Nonfarm employers employing at least one employee for at least part of one day in 20 different weeks during the current or preceding calendar year
D Federal, state, and local government employees

Answer 21

Federal, state, and local government employees

Question 22

2. Which of the following payments is specifically exempted from FUTA tax under the Internal Revenue Code?

Answer 22

Value of group term life insurance over $50,000
payments made under a deferred compensation plan, except elective deferrals to the plan

Question 23

3. The FUTA tax rate is

Answer 23

6%

Question 24

4. FUTA tax over $500

Answer 24

Must be deposited by the last day of the month following the end of the quarter

Question 25

5. The normal credit against FUTA tax liability includes which of the following?

Answer 25

All state unemployment taxes paid by the filing date for Form 940

Question 26

6. Employers in states with outstanding loans from the federal unemployment insurance fund

Answer 26

Can avoid a credit reduction by paying its state unemployment tax by November 10

Question 27

7. All of the following would appear on the federal Form 940 except A Gross wages reported for state unemployment B Qualified moving expenses C Payments over $7,000 to each employee D State experience rate

Answer 27

Qualified moving expenses

Question 28

Unless there is reasonable cause, failure to pay FUTA tax results in an addition to tax up to a maximum of

Answer 28

25% of any unpaid tax

Question 29

9. Which factor used in determining the unemployment insurance state, if met, can eliminate the need to consider the other allocation factors?

Answer 29

Where the employee’s services are localized

Question 30

10. An employer’s experience rating is based on the employer’s unemployment benefit charges and

Answer 30

Average annual taxable payroll

Question 31

12. To increase the reserve ratio to the next higher bracket on the state’s unemployment tax rate table, some states allow

Answer 31

Voluntary contributions to unemployment tax accounts

Question 32

13. In states where multiple worksite reporting is mandatory, an employer must file a MWR if it A Uses one unemployment insurance account number in that state for all its employees B Has more than one worksite in the state C Has a total of at least 10 employees at all its secondary worksites D All of the above

Answer 32

All of the above

Question 33

2. FUTA requires that each state’s taxable wage base must be at least equal to the FUTA taxable wage base of what dollar amount?

Answer 33

c. $7,000

Question 34

3. The contribution rate is determined by the employer’s experience rating, which is based on what factors?

Answer 34

b. The employer’s unemployment benefit charges and average annual taxable payroll c. The reserve

Question 35

Each state requires employers to submit quarterly contribution and wage reports containing some or all of the following information.

Answer 35

a. Number of weeks worked by each employee

Question 36

Employers covered by FUTA must report their liability annually on what form?

Answer 36

d. Form 940