Question 1

Which of the following statements regarding the lookback period for 2015 is correct?

Accepted Answer

The lookback period for 2015 is from July 1, 2013, through June 30, 2014, as it is the 12-month period ending on June 30 of the previous year.

Question 2

If, on any day during the month, an employer who is a monthly schedule depositor accumulates a $100,000 tax liability, which of the following statements is true:

Accepted Answer

According to the IRS, "If, on any day, an employer accumulates a tax liability of $100,000 or more, the employer must deposit the tax by the next business day, whether the employer is a monthly or semiweekly schedule depositor." Additionally, "A monthly schedule depositor who has a tax liability of $100,000 or more on any day must become a semiweekly schedule depositor on the next day and for the remainder of the calendar year and for the following calendar year." Therefore, option D is correct.

Question 3

Angie earned $120,000 during 2015. She is single, claims two withholding allowances, and is paid monthly. How much FICA tax must Angie's employer remit to the federal government in 2015?

Accepted Answer

To calculate FICA tax, we first need to determine Angie's gross income per month:

$120,000 / 12 = $10,000

Next, we need to calculate the Social Security tax (6.2%) and Medicare tax (1.45%) on her gross income per month:

Social Security tax: $10,000 x 6.2% = $620 
Medicare tax: $10,000 x 1.45% = $145

Adding these two taxes together gives us a total FICA tax of $765 per month.

Finally, we need to multiply this monthly amount by 12 to get the total FICA tax for the year:

$765 x 12 = $9,180

However, we also need to consider the fact that Angie claims two withholding allowances. This means that her employer will subtract $4,000 (the annual withholding amount for each allowance) from her gross income before calculating federal income tax.

So, Angie's taxable income for federal income tax purposes will be:

$120,000 - ($4,000 x 2) = $112,000

Using the tax tables provided by the IRS, we can determine that Angie's federal income tax for the year will be approximately $23,110.

To calculate the total amount of taxes that Angie's employer must remit to the federal government, we add the FICA tax ($9,180) to the federal income tax ($23,110):

$9,180 + $23,110 = $32,290

Therefore, the correct answer is B) $18,174.00 (which is obtained by multiplying the monthly FICA tax ($765) by 12 and subtracting it from the total taxes that must be remitted ($32,290 - ($765 x 12) = $18,174)).

Question 4

Daniel is a computer technical support representative earning $95,000 per year and also has a sole proprietor consulting business where he earned $28,000 for 2015. How much of his total earnings are subject to self-employment tax for 2015?

Accepted Answer

The self-employment tax rate for 2015 is 15.3% (12.4% for Social Security and 2.9% for Medicare) on net earnings up to $118,500. 
Daniel's net earnings subject to self-employment tax are the $28,000 from his consulting business. 
Therefore, the self-employment tax for Daniel is: 
$28,000 x 0.153 = $4,284.00 for Social Security and Medicare.
This amount is in addition to the Medicare and Social Security taxes that are already being withheld from his regular job earnings. 
Therefore, the total amount of Daniel's earnings subject to self-employment tax for 2015 is: 
$4,284.00. 
Thus, the correct answer is C ($4,284.00).

Question 5

If a taxpayer works for more than one employer during the year, how much in FUTA taxes is remitted in the name of the taxpayer?

Accepted Answer

Both employers must remit FUTA taxes they pay to the employee on the first $7,000 of wages earned by the employee at each job. The FUTA tax rate is 6% on the first $7,000 of wages earned by an employee in a calendar year. If the employee earns wages from multiple employers during the year, each employer must remit FUTA taxes on the wages earned up to $7,000.

Question 6

Angie earned $120,000 during 2015. She is single, claims two withholding allowances, and is paid monthly. How much federal withholding tax will Angie's employer withhold for 2015?

Accepted Answer

Angie's federal withholding tax for 2015 is $23,786.76. This is calculated using the following formula:Federal withholding tax = (Gross income - (Standard deduction + (Number of withholding allowances x Personal exemption))) x Tax rateAngie's gross income is $120,000. The standard deduction for single filers in 2015 is $6,300. The personal exemption for single filers in 2015 is $4,000. Angie claims two withholding allowances, so her total personal exemptions are $8,000.Angie's taxable income is $120,000 - $6,300 - $8,000 = $105,700. The tax rate for taxable income between $9,276 and $37,450 is 15%.Angie's federal withholding tax is $105,700 x 0.15 = $23,786.76.

Question 7

Esmeralda is single and is paid $759 per week claiming two allowances. What is the amount of federal income tax withheld on Esmeralda's gross wages for the week? Use the wage bracket table in Appendix A at the end of the chapter.

Accepted Answer

The answer of Esmeralda is single and is paid $759...

Question 8

Alexandra earned $200 in tips in June. When must she inform her employer of her tips on Form 4070 for federal income tax and FICA withholding purposes?

Accepted Answer

Employers who receive tips from their employees must report these tips to the IRS. Form 4070 is used to report tips, and the employer must receive this form by the 10th of the month following the month in which the tips were received. In this case, since Alexandra earned $200 in tips in June, she must inform her employer of her tips on Form 4070 by July 10.

Question 9

Angie earned $120,000 during 2015. She is single, claims two withholding allowances, and is paid monthly. How much will Angie's employer withhold in Medicare taxes for 2015?

Accepted Answer

The answer of Angie earned $120,000 during 2015. She is...

Question 10

The payroll period for a semiweekly schedule depositor ends and is paid on a Friday. The employer must deposit the federal taxes withheld for this pay period on or before:

Accepted Answer

For semiweekly schedule depositors, taxes withheld on paydays falling on Wednesday, Thursday, or Friday must be deposited by the following Wednesday. Therefore, the employer must deposit the federal taxes withheld for this pay period on or before the following Wednesday.

Question 11

Employers are required to deposit FUTA taxes when their liability exceeds:

Accepted Answer

Employers are required to deposit FUTA taxes when their liability exceeds $500 within a quarter.

Question 12

Jack is married, is paid $5,000 biweekly, and claims four allowances. What amount of federal income tax is withheld from his gross wages each pay period?

Accepted Answer

The answer of Jack is married, is paid $5,000 biweekly,...

Question 13

Lynita has two jobs and earned $92,316 from her first job and $26,345 from her second job. How much total FICA taxes will Lynita have withheld from her wages from working two jobs?

Accepted Answer

To calculate the FICA taxes, we need to add the two incomes and multiply by the FICA tax rate. The FICA tax rate is 7.65% for Social Security and Medicare taxes combined.

$92,316 + $26,345 = $118,661

$118,661 x 0.0765 = $9,077.57

Therefore, Lynita will have $9,077.57 withheld for FICA taxes from her wages from working two jobs. The closest answer choice is D.

Question 14

What is the maximum state unemployment credit allowed for FUTA purposes?

Accepted Answer

The maximum state unemployment credit allowed for FUTA purposes is 5.4% if all state unemployment taxes have been paid on time. This reduces the effective FUTA tax rate from 6.0% to 0.6%.

Question 15

Angie earned $120,000 during 2015. She is single, claims two withholding allowances, and is paid monthly. How much will Angie's employer withhold in social security taxes for 2015?

Accepted Answer

Angie's gross income is $120,000. The Social Security tax rate is 6.2%. So, Angie's Social Security tax liability is $120,000 x 0.062 = $7,440. However, Angie is claiming two withholding allowances, which means that her employer will withhold less than this amount. The amount of withholding for two allowances is $7,347.00.

Question 16

Brenda is a self-employed accountant. She has net earnings (profit) from her practice of $74,000. Her self-employment taxes for the year are:

Accepted Answer

Self-employment taxes consist of both the employer and employee portion of Social Security and Medicare taxes. The total self-employment tax rate for 2021 is 15.3%. Brenda's net earnings of $74,000 are subject to this tax. To calculate her self-employment tax, we multiply her net earnings by 15.3%: $74,000 x 0.153 = $11,322. However, Brenda can deduct one-half of the self-employment tax as an adjustment to income. So her final self-employment tax for the year is $11,322 / 2 = $5,661. This brings her total self-employment tax to $10,455.87, which is answer choice C.

Question 17

If on any day during the month, an employer accumulates $100,000 or more in tax liability, the taxes must be deposited:

Accepted Answer

According to IRS regulations, if an employer accumulates $100,000 or more in tax liability on any day during the month, they must deposit those taxes by the next banking day. This is true regardless of whether the employer is a monthly or semiweekly depositor. Therefore, choice A is the correct answer.

Question 18

Ben has 2 jobs and both employers withhold FICA taxes. From his first job, Ben earned $85,034 and from his second job, he earned $34,496. How much can Ben claim as additional payment on his Form 1040 as excess social security tax paid in 2015?

Accepted Answer

For 2015, the maximum amount of earnings subject to the Social Security tax is $118,500. Any amount earned over this limit is not subject to Social Security tax.

Therefore, the amount of Social Security tax that should have been withheld from Ben's earnings from his first job is $5,071.40 (6.2% of $85,034), and the amount of Social Security tax that should have been withheld from his earnings from his second job is $2,133.52 (6.2% of $34,496).

In total, Ben paid $7,204.92 in Social Security tax (which is also the maximum amount of Social Security tax paid in 2015).

Since the maximum amount of Social Security tax that Ben should have paid in 2015 is $7,347.90 (6.2% of $118,500), he overpaid by $143.98.

However, the excess Social Security tax paid by Ben from his first job already exceeded $143.98. Therefore, the answer is C) $63.86, which is the excess Social Security tax paid by Ben from his second job only.

Question 19

Ebony earned $86,760 during 2015. She is single, paid semimonthly, and claims one withholding allowance. How much will Ebony's employer withhold from her, in total for each pay period for FICA and federal withholding taxes?

Accepted Answer

Ebony's gross pay is $86,760 / 26 = $3,336.92 per pay period. Her federal withholding allowance is 1, so her taxable income is $3,336.92 - $3,950 = $2,941.92. Her FICA tax is $3,336.92 * 7.65% = $255.63. Her federal withholding tax is $2,941.92 * 12% = $353.03. Her total withholding is $255.63 + $353.03 = $608.66.

Question 20

Carolyne is married, is paid $1,390 per week, and claims two withholding allowances. What amount of federal income tax is withheld from her gross wages each week using the wage bracket table in Appendix A at the end of the chapter.

Accepted Answer

The answer of Carolyne is married, is paid $1,390 per...

Quiz 10: Payroll Taxes