Payroll and Tax Reporting Flashcards

A worker is classified as an independent contractor but the IRS reclassifies them as an employee. Which form does the employer use to report uncollected FICA taxes in this situation?

Answer: Form 941-X

Form 941-X (Adjusted Employer's Quarterly Federal Tax Return) is used to correct previously filed Form 941s when workers are reclassified.

Under the lookback period rule, a new employer with no prior tax history is classified as a:

Answer: Monthly depositor

New employers with no prior tax history are automatically classified as monthly depositors for their first calendar year.

Which payroll tax is NOT split equally between the employer and employee?

Answer: Additional Medicare Tax

The Additional Medicare Tax of 0.9% applies only to the employee on wages exceeding $200,000; there is no employer match.

A cafeteria plan under Section 125 allows employees to pay for certain benefits with:

Answer: Pre-tax dollars, reducing taxable wages

Section 125 cafeteria plans let employees pay qualified benefit premiums with pre-tax dollars, reducing their federal income tax and FICA taxable wages.

When must a monthly depositor submit payroll tax deposits for the prior month's liabilities?

Answer: The 15th of the following month

Monthly depositors must deposit employment taxes accumulated during a calendar month by the 15th day of the following month.

An employee receives a $5,000 bonus. Which withholding method uses a flat 22% federal income tax rate on supplemental wages up to $1 million?

Answer: Optional flat rate method

The optional flat rate (supplemental rate) method withholds a flat 22% federal income tax on supplemental wages such as bonuses up to $1 million.

What is the purpose of Form W-3 filed with the Social Security Administration?

Answer: To summarize all W-2s submitted by an employer

Form W-3 (Transmittal of Wage and Tax Statements) is a summary transmittal form that accompanies all W-2 copies sent to the SSA.