Payroll Accounting 2016 26th Edition by Bieg – Test Bank
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Sample
Test
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Chapter 4 1. Before any federal income taxes may be withheld, there
must be, or must have been, an employer-employee relationship.
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2. Since
not-for-profit corporations are exempt from federal income taxes, they are
not defined as employers under the federal income tax withholding law.
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3. Under the federal
income tax withholding law, a definition of employee excludes partners.
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4. The amount of
federal income taxes to be withheld is determined after subtracting from the
employee’s gross wages any local and state taxes.
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5. Under the federal
income tax withholding law, income taxes are not withheld from the value of
meals that employers furnish workers on the employers’ premises for the employers’
convenience.
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6. Noncash fringe
benefits that are provided employees are treated as nontaxable income and
thus are excluded from federal income tax withholding.
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7. All taxable noncash
fringe benefits received during the year can only be added to the employees’
taxable pay on the last payday of the year.
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8. Cash tips of $20 or
more received by a tipped employee in a calendar month are treated as
remuneration subject to federal income tax withholding.
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9. A waiter receives
cash tips amounting to $120 in a month. The waiter must report the amount of
the cash tips to the employer by the 10th of the month following the month
they receive the tips.
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10. The withholding of
federal income and FICA taxes from a tipped employee is made from the
employee’s wages that are under the employer’s control.
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11. An employer must
withhold federal income taxes on both the
tips reported by tipped employees and the tips that the employer allocates to
the employees.
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12. There is no limit
to the amount of educational assistance that is exempt from federal income
tax withholdings.
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13. The payments to a
cook employed by a college fraternity are excluded from federal income tax
withholding.
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14. There is no limit
to the amount that an employer can contribute in an employee’s SIMPLE
retirement account.
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15. In the case of a
401(k) plan, employees age 50 or over can shelter an extra $10,000 of their
wages from federal income tax.
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16. Persons eligible
for deductible IRA contributions may put aside a specified amount of their
compensation without paying federal income taxes on that amount.
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17. The IRA format of
the SIMPLE plan allows employees to make tax-free contributions of up to
$12,500
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18. In the IRA form of
the Simple Retirement Account, employers must match the employee’s
contribution, dollar-for-dollar, up to 3% of the employee’s compensation.
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19. Evers, who works
for two employers, is entitled to three personal allowances. Evers must claim
the three allowances with each of the two employers during the entire
calendar year.
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20. After completion
of Form W-4, an employer must copy the employee’s social security card and
place it in the employee’s employment file.
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21. If married
employees do not claim their marital status on Form W-4, the employer must
withhold according to the withholding tables for single employees.
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22. The special
withholding allowance may be claimed only by those employees who do not
itemize deductions on their income tax returns.
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23. Gere became the
father of triplets on June 20. He must file an amended Form W-4 on or before
June 30.
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24. On August 3, Hunt
filed an amended Form W-4 to show a decrease in the number of allowances
claimed. Hunt’s employer must put the new withholding allowance certificate
into effect before the next weekly payday on August 5.
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25. A person holding
two jobs may have additional income tax withheld by increasing the number of
withholding allowances claimed.
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26. An employee
submits an invalid Form W-4 to the employer and does not replace it with a
valid form. The employer should withhold federal income taxes at the rate for
a single person claiming no exemptions.
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27. An employer is
required to submit a copy of the employee’s Form W-4 to the IRS if the
employee has claimed 15 or more withholding allowances.
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28. By completing Form
W-4P, a person can elect to have no income tax withheld from the annuity amounts
the person receives.
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29. Of the two main
methods of withholding, only the wage-bracket method distinguishes unmarried
persons from married persons.
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30. The standard
deduction varies according to whether the wage-bracket method or the
percentage method is used.
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31. When you pay
supplemental wages at the same time as regular wages, the method of
calculating the withholding is the same for vacation payments as for
semiannual bonuses.
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32. In calculating a
“gross-up” amount of a bonus payment, an employer does not use the OASDI/HI
tax rates in the formula.
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33. Employees must be
given Form W-2 on or before January 31 following the close of the calendar
year.
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34. Form W-3 is filed
with the Social Security Administration when transmitting information returns
on Forms W-2.
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35. If you, an
employer, are filing 550 Forms W-2, you must use electronic filing rather
than paper Forms W-2.
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36. For state income
tax purposes, all states treat 401(k) plan payroll deductions as nontaxable.
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37. Under the federal
income tax withholding law, which of the following is not defined as
an employee?
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38. Which of the
following noncash fringe benefits does not represent taxable income subject
to federal income tax withholding?
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39. For which of the
following payments is the employer required to withhold federal income taxes?
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