Federal & State Tax Withholding Flashcards
7 cards from real CPM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Federal & State Tax Withholding flashcards as text
An employer receives a lock-in letter (IRS Notice 2800C) for an employee. What must the employer do?
Answer: Withhold at the rate specified in the notice and disregard any W-4 claiming a lower withholding
A lock-in letter instructs the employer to withhold at a specific rate regardless of any W-4 the employee submits claiming a lower amount, until the IRS releases the lock.
What is the nonresident alien withholding adjustment added to wages before using the standard withholding tables?
Answer: An additional amount per pay period specified in Publication 15, based on payroll frequency
Nonresident aliens must add a specific additional amount (per Publication 15 instructions) to their wages before applying the standard withholding tables to account for their different tax situation.
For federal income tax withholding purposes, which of the following is NOT considered a supplemental wage?
Answer: Regular hourly wages paid on the normal payday
Regular wages paid on the normal payday are not supplemental wages; supplemental wages include bonuses, commissions, overtime, and severance when paid separately.
Which form must employers file annually to reconcile federal income tax withholding and FICA taxes?
Answer: Form W-3
Form W-3 is the transmittal form filed with the SSA that reconciles all W-2 forms issued and summarizes total wages and taxes withheld for the year.
What is backup withholding, and at what rate is it applied?
Answer: Withholding at 24% on payments to payees who fail to provide a correct TIN
Backup withholding at 24% applies to certain payments such as interest, dividends, and non-employee compensation when the payee fails to provide a correct taxpayer identification number.
An employee receives a $5,000 bonus paid separately from their regular paycheck. The employer chooses the flat rate withholding method. What federal income tax rate applies?
Answer: 22%
The optional flat rate for supplemental wages (when paid separately and total supplemental wages do not exceed $1 million) is 22% for federal income tax withholding.
Which states have no state income tax, eliminating the need for state income tax withholding?
Answer: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming
Nine states currently have no state income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.