Payroll and Tax Reporting Flashcards
7 cards from real CPB / BookKeeping practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Payroll and Tax Reporting flashcards as text
Which payroll journal entry correctly records the employer's share of FICA taxes?
Answer: Debit Payroll Tax Expense; Credit FICA Taxes Payable
The employer's share of FICA is recorded as a debit to Payroll Tax Expense and a credit to FICA Taxes Payable until remitted.
What is the maximum penalty rate for failure to deposit payroll taxes when the failure exceeds 15 days past the due date?
Answer: 10%
The IRS imposes a 10% penalty on payroll tax deposits that are more than 15 days late (or unpaid amounts remaining after an IRS notice).
A bookkeeper discovers that $200 in Social Security taxes was under-withheld from an employee in Q1. Which form is used to correct this error?
Answer: Form 941-X
Form 941-X is the amended quarterly payroll tax return used to correct errors in previously filed Form 941s, including under-withheld FICA.
Under the constructive receipt doctrine, when is a paycheck mailed on December 31 includible in the employee's taxable income?
Answer: In the year it is actually received and cashed
Under constructive receipt, income is taxable when it is made available; a mailed check is not available until received, so it is taxable in the year received.
An employer operates in a state with a 5.4% SUTA rate on the first $7,000 of wages. What is the net FUTA tax per employee for the year?
Answer: $42.00
Net FUTA = 0.6% × $7,000 = $42.00 per employee, because the full 5.4% SUTA credit reduces the gross 6.0% FUTA rate to 0.6%.
Which IRS notice triggers the employer's obligation to begin a wage garnishment for an employee's federal tax debt?
Answer: IRS Form 668-W
IRS Form 668-W (Notice of Levy on Wages, Salary, and Other Income) is the notice employers receive requiring them to withhold and remit portions of employee wages.
For purposes of computing FUTA taxes, which payment is EXCLUDED from the FUTA taxable wage base?
Answer: Employer contributions to a qualified pension plan
Employer contributions to qualified pension and profit-sharing plans are excluded from the FUTA wage base as they are not considered wages.