AFTR AFTR Tax Withholding and Estimated Taxes 3

Question 1

A taxpayer who cannot pay their full tax bill by April 15 should:

Accepted Answer

File the return and pay as much as possible to minimize penalties and interest

Answer

Filing the return and paying as much as possible reduces both the failure-to-pay penalty and accruing interest, since an extension to file does not extend the time to pay.

Question 2

The Additional Medicare Tax of 0.9% applies to wages and self-employment income that exceeds what threshold for single filers?

Accepted Answer

$200,000

Answer

The 0.9% Additional Medicare Tax applies to wages, RRTA compensation, and self-employment income exceeding $200,000 for single filers ($250,000 for MFJ).

Question 3

Which IRS notice instructs a payer to begin backup withholding on a payee's account?

Accepted Answer

B-notice (CP2100)

Answer

A B-notice (CP2100 or CP2100A) is sent by the IRS to payers when a payee's name and TIN combination does not match IRS records, requiring backup withholding.

Question 4

An employee receives a bonus paid separately from regular wages. Which withholding method allows the employer to withhold a flat 22% federal income tax?

Accepted Answer

Supplemental wage method (flat rate)

Answer

The optional flat supplemental withholding rate of 22% can be applied to supplemental wages (like bonuses) paid separately from regular wages.

Question 5

Estimated tax payments made by a self-employed taxpayer are reported on Form 1040 as:

Accepted Answer

A credit against tax on the payments line

Answer

Estimated tax payments are entered on the 'Estimated tax payments' line of Form 1040, reducing the tax owed (or increasing the refund).

AFTR - Annual Federal Tax Refresher Practice Test

AFTR - Annual Federal Tax Refresher Practice Test

AFTR AFTR Tax Withholding and Estimated Taxes 3