Free CPB Payroll & Tax Compliance Questions and Answers

Question 1

What is the purpose of Form W-4 in payroll processing?

Accepted Answer

To provide tax withholding information

Answer

Form W-4, Employee's Withholding Certificate, is used by employees to inform their employer how much federal income tax to withhold from their paychecks. Employees fill out this form to indicate their marital status, number of dependents, and any additional amounts they want withheld. This information helps employers accurately calculate the amount of federal income tax to deduct from each payroll.

Question 2

Which tax is withheld from an employee's paycheck for Social Security?

Accepted Answer

FICA Social Security tax

Answer

FICA (Federal Insurance Contributions Act) tax includes two components: Social Security and Medicare. The FICA Social Security tax is specifically withheld from an employee's paycheck to fund the Social Security program, which provides retirement, disability, and survivor benefits. Both employees and employers contribute to this tax.

Question 3

When must employers provide employees with a W-2 form?

Accepted Answer

By January 31

Answer

Employers are legally required to provide each employee with a Form W-2, Wage and Tax Statement, by January 31 of the year following the calendar year in which wages were paid. This form reports the employee's annual wages and the amount of taxes withheld from their paycheck. Employees need their W-2 to file their federal and state income tax returns.

Question 4

Which payroll tax is paid only by the employer?

Accepted Answer

FUTA

Answer

FUTA (Federal Unemployment Tax Act) tax is a payroll tax paid solely by employers, not withheld from employee wages. This tax funds federal unemployment compensation programs and helps states pay unemployment benefits. It is distinct from FICA taxes (Social Security and Medicare), which are paid by both employers and employees.

Question 5

What is the deadline for filing quarterly payroll tax returns?

Accepted Answer

Last day of the month following the quarter

Answer

Employers are generally required to file quarterly payroll tax returns, such as Form 941 (Employer's Quarterly Federal Tax Return), by the last day of the month following the end of each calendar quarter. For example, for the quarter ending March 31, the deadline is April 30. This ensures timely reporting and payment of federal income tax, Social Security, and Medicare taxes withheld from employee wages and employer contributions.

CPB - Certified Public Bookkeeper Practice Test

CPB - Certified Public Bookkeeper Practice Test

Free CPB Payroll & Tax Compliance Questions and Answers