ADP Tax Reporting and Filing 2 — Questions and Answers
Question 1: What is a W-2c and when must it be issued?
- A corrected W-2 issued when an error is discovered after the original W-2 was filed or furnished (Correct answer)
- A supplemental W-2 for employees with multiple jobs
- A W-2 for contractors who were later reclassified as employees
- A W-2 issued to employees who did not receive their original
Correct answer: A corrected W-2 issued when an error is discovered after the original W-2 was filed or furnished
Form W-2c corrects previously filed W-2 information and must be issued whenever errors in wages, taxes, or other reportable items are discovered after the original W-2 was furnished.
Question 2: Which ADP feature notifies the payroll team of upcoming state unemployment tax (SUTA) rate changes?
- ADP SmartCompliance Tax Rate Notification (Correct answer)
- ADP HR Analytics Dashboard
- ADP Time & Attendance Alerts
- ADP Workers' Comp Manager
Correct answer: ADP SmartCompliance Tax Rate Notification
ADP SmartCompliance automatically notifies clients of state unemployment tax rate changes and updates the rates in the system upon verification.
Question 3: What is the Social Security wage base for 2024 and how does ADP handle employees who exceed it?
- $168,600; ADP automatically stops Social Security withholding once an employee's YTD wages exceed the wage base (Correct answer)
- $160,200; payroll specialists must manually override the withholding
- $147,000; employees must file a separate form to stop withholding
- $168,600; withholding continues on all wages but at a reduced rate
Correct answer: $168,600; ADP automatically stops Social Security withholding once an employee's YTD wages exceed the wage base
The 2024 Social Security wage base is $168,600, and ADP automatically ceases Social Security withholding once year-to-date wages reach that threshold.
Question 4: An employer receives a penalty notice from the IRS for a late payroll tax deposit. What is the first step using ADP SmartCompliance?
- Submit the penalty notice through SmartCompliance for ADP's tax filing team to research and respond (Correct answer)
- Pay the penalty immediately and record it in QuickBooks
- Contact the IRS directly and dispute the notice
- Amend Form 941 for the affected quarter
Correct answer: Submit the penalty notice through SmartCompliance for ADP's tax filing team to research and respond
ADP SmartCompliance clients submit IRS and agency notices through the portal so ADP's tax experts can research, prepare a response, and resolve the issue on the employer's behalf.
Question 5: What is the difference between Form 940 and Form 941 in the context of ADP tax filing?
- Form 940 is the annual FUTA return; Form 941 is the quarterly return for federal income, Social Security, and Medicare taxes (Correct answer)
- Form 940 is filed monthly; Form 941 is filed annually
- Form 940 covers state unemployment taxes; Form 941 covers federal unemployment taxes
- Both forms cover the same taxes but for different-sized employers
Correct answer: Form 940 is the annual FUTA return; Form 941 is the quarterly return for federal income, Social Security, and Medicare taxes
Form 940 is the annual FUTA employer tax return, while Form 941 is filed quarterly to report federal income tax withheld plus Social Security and Medicare taxes.
Question 6: In ADP, which tax deposit schedule applies to employers with a lookback period tax liability of $50,000 or less?
- Monthly deposit schedule (Correct answer)
- Semi-weekly deposit schedule
- Next-day deposit schedule
- Quarterly deposit schedule
Correct answer: Monthly deposit schedule
Employers whose total lookback period tax liability was $50,000 or less are classified as monthly depositors and must deposit employment taxes by the 15th of the following month.
ADP Tax Reporting and Filing 2
What is a W-2c and when must it be issued?