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Paper Topic:

PAyroll Accounting

1 . Before any federal income taxes may be withheld , there must be , or must have been , an employer-employee relationship

a . True

b . False

2 . Under the federal income tax withholding law , a definition of employee excludes partners

a . True

b .False

3 . After completion of Form W-4 , an employer must copy the employees social security card and place it in the employees employment

a . True

b . False

4 . Noncash fringe benefits that are provided employees are treated as nontaxable income and thus are excluded from federal income

tax withholding

a . True

b . False

5 . 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

a . True

b . False

6 . All of the following are properly defined as wages subject to the withholding of federal income taxes except _______

a . year-end bonus

b . kitchen appliances given by manufacturer in lieu of cash wages

c . dismissal payment

d . vacation pay

e . payments made under workers compensation law

7 . Which of the following noncash fringe benefits does not represent taxable income subject to federal income tax withholding

a . flight on employer-provided airline

b . personal use of company car

c . sick pay

d . employer-paid membership to a country club

e . All of the above are taxable

8 . A personal allowance ________

a . amounted to 2 ,000 in 2005

b . may be claimed to exempt a portion of their earnings from withholding c . is indexed for inflation every calendar quarter

d . may be claimed at the same time with each employer for whom an employee is working during the year

e . may not be claimed by nonresident aliens from Argentina

9 . To curb the practice of employees filing false Forms W-4 , the IRS requires that an employer submit to the agency a copy of each Form W-4 ________

a . the IRS has requested in writing

b . on which an employee , usually earning 180 each week at the time Form W-4 was d , now claims to be exempt from withholding

c . on which an employee claims to be single but has 9 withholding allowances

d . on which a married employee claims no withholding allowances

e . on which a recently divorced employee claims 5 withholding allowances and authorizes an additional 10 to be withheld each week

10 . A company must withhold federal income taxes from payments made to independent contractors in which of the following cases (Points : 1

when there is a signed contract between the parties

when the contractor is paid more than 10 ,000

when the contractor is a corporation

when the contractor has not provided a taxpayer identification number and the contract is 600 or more

all of the above...

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