Payroll Administration & Taxation Flashcards

An employee claims exempt from federal income tax withholding on Form W-4. Under what condition is this allowable?

Answer: They had no tax liability last year and expect none this year

Exempt status on W-4 is valid only when the employee had zero federal tax liability the prior year and anticipates none in the current year.

Which IRS publication provides the income tax withholding tables used in the percentage method for federal withholding calculations?

Answer: Publication 15-T

IRS Publication 15-T contains the federal income tax withholding tables including the percentage method tables.

A tipped employee earns $2.13/hour in direct wages but tips bring total hourly earnings to $6.00. The federal minimum wage is $7.25. What must the employer do?

Answer: Make up the $1.25 difference so total equals minimum wage

When tips plus the direct wage fall short of federal minimum wage, the employer must make up the difference.

What is the lookback period used to determine an employer's federal payroll tax deposit schedule for 2026?

Answer: July 1, 2024 through June 30, 2025

The lookback period for a given year runs from July 1 of two years prior through June 30 of the prior year.

Which form must employers file annually to reconcile total wages paid, taxes withheld, and deposits made for the year?

Answer: Form W-3

Form W-3 is the transmittal form that summarizes all W-2s and reconciles annual wages and withholding totals.

Under the FUTA tax rules, which of the following payments is EXEMPT from FUTA tax?

Answer: Payments to a spouse employed in the business by a sole proprietor

Wages paid by a sole proprietor to their spouse are specifically exempt from FUTA tax.

An employee's regular rate of pay for overtime purposes under the FLSA must include which of the following?

Answer: Non-discretionary bonuses

Non-discretionary bonuses must be included in the regular rate of pay when calculating overtime under the FLSA.