APA Taxation and Compliance 3 — Questions and Answers
Question 1: An employer pays $400 in moving expense reimbursements to an employee. Under current tax law (post-TCJA), how is this treated?
- Excluded from income if the move meets distance and time tests
- Fully taxable as wages (Correct answer)
- Excluded up to $5,000
- Subject only to Medicare tax
Correct answer: Fully taxable as wages
Under the Tax Cuts and Jobs Act (2018–2025), employer-provided moving expense reimbursements are fully taxable wages, except for active military moves.
Question 2: What is the employer's deadline to furnish Form W-2 to employees each year?
- January 15
- January 31 (Correct answer)
- February 15
- February 28
Correct answer: January 31
Employers must furnish Form W-2 to employees by January 31 of the year following the tax year.
Question 3: Which box on Form W-2 reports Social Security wages subject to Social Security tax?
- Box 1
- Box 3 (Correct answer)
- Box 5
- Box 16
Correct answer: Box 3
Box 3 of Form W-2 reports the total wages subject to Social Security tax, which may differ from Box 1 federal wages.
Question 4: An employee receives a $2 million bonus. What withholding rate applies to the amount exceeding $1 million?
- 22%
- 24%
- 37% (Correct answer)
- 39.6%
Correct answer: 37%
Supplemental wages exceeding $1 million in a calendar year are subject to mandatory federal income tax withholding at the highest individual tax rate of 37%.
Question 5: Under the IRC Section 132, which fringe benefit allows an employer to exclude from income the cost of job-related education up to $5,250 annually?
- Working condition fringe benefit
- No-additional-cost service
- Educational assistance program (Correct answer)
- De minimis fringe benefit
Correct answer: Educational assistance program
IRC Section 127 educational assistance programs allow employers to exclude up to $5,250 per year in qualifying educational assistance from employee income.
Question 6: When must an employer deposit federal payroll taxes if it is a monthly depositor and the payroll is run on October 15?
- October 15
- October 22
- November 15 (Correct answer)
- October 31
Correct answer: November 15
Monthly depositors must deposit taxes accumulated during a calendar month by the 15th of the following month.
Question 7: Which IRS notice requires an employer to begin withholding child support from an employee's wages?
- Form W-4
- National Medical Support Notice
- Income Withholding for Support (IWO) (Correct answer)
- Form 668-W
Correct answer: Income Withholding for Support (IWO)
The Income Withholding for Support (IWO) is the standardized order used to require employers to withhold child support from an employee's disposable earnings.
APA Taxation and Compliance 3
An employer pays $400 in moving expense reimbursements to an employee.
Under current tax law (post-TCJA), how is this treated?