Fundamental Payroll Certification Fundamental Payroll Employment Taxes and Withholding 2 — Questions and Answers
Question 1: An employee claims 'Exempt' on their W-4. What does this mean for federal income tax withholding?
- Withhold at a flat 10% rate
- No federal income tax is withheld from their wages (Correct answer)
- Withhold only FICA taxes
- Withhold at the supplemental rate of 22%
Correct answer: No federal income tax is withheld from their wages
An exempt claim on a W-4 means the employer should not withhold any federal income tax from the employee's wages.
Question 2: Which IRS form is used by employers to report federal income tax withheld and FICA taxes on a quarterly basis?
- Form 944
- Form 941 (Correct answer)
- Form W-2
- Form 1099-NEC
Correct answer: Form 941
Form 941, the Employer's Quarterly Federal Tax Return, is used to report federal income tax withheld and FICA taxes each quarter.
Question 3: The Additional Medicare Tax of 0.9% applies to wages exceeding what threshold for a single filer?
- $125,000
- $200,000 (Correct answer)
- $250,000
- $300,000
Correct answer: $200,000
Employers must withhold the 0.9% Additional Medicare Tax on wages paid to an employee exceeding $200,000 in a calendar year, regardless of filing status.
Question 4: Which deposit schedule applies to a new employer with no lookback period history?
- Annual depositor
- Monthly depositor (Correct answer)
- Semi-weekly depositor
- Next-day depositor
Correct answer: Monthly depositor
New employers with no lookback period history are automatically classified as monthly depositors.
Question 5: An employee's wages are $1,500 for the pay period. Using the percentage method, which IRS table does the employer consult to determine withholding under the 2020+ W-4?
- Publication 15-T Percentage Method Tables for Automated Payroll Systems (Correct answer)
- Publication 15-A Employer's Supplemental Tax Guide
- Form W-4 Employee's Withholding Certificate Tables
- Publication 15-B Employer's Tax Guide to Fringe Benefits
Correct answer: Publication 15-T Percentage Method Tables for Automated Payroll Systems
Publication 15-T contains the Percentage Method Tables for Automated Payroll Systems used to calculate federal income tax withholding.
Question 6: What is the employer's share of the Social Security tax rate?
- 5.35%
- 6.2% (Correct answer)
- 7.65%
- 12.4%
Correct answer: 6.2%
The employer's share of Social Security tax is 6.2% on wages up to the annual wage base limit.
Question 7: A state requires employers to withhold state income tax. If no state W-4 is provided, what is the general employer practice?
- Do not withhold any state income tax
- Withhold at the highest marginal rate
- Default to the state's withholding tables using the equivalent of single with zero allowances (Correct answer)
- Apply the same withholding as the federal W-4
Correct answer: Default to the state's withholding tables using the equivalent of single with zero allowances
When no state withholding certificate is provided, employers typically default to withholding as single with zero allowances per most state guidelines.
Fundamental Payroll Certification Fundamental Payroll Employment Taxes and Withholding 2
An employee claims 'Exempt' on their W-4.
What does this mean for federal income tax withholding?