Fundamental Payroll Certification Fundamental Payroll Payroll Reporting and Compliance 2 — Questions and Answers
Question 1: An employer discovers an error on a previously filed Form 941. Which form must be used to correct it?
- Form 941-X (Correct answer)
- Form 944
- Form W-2c
- Form 1099-NEC
Correct answer: Form 941-X
Form 941-X is the Adjusted Employer's Quarterly Federal Tax Return used to correct errors on a previously filed Form 941.
Question 2: What is the due date for depositing payroll taxes when an employer has a monthly deposit schedule and the liability was incurred in July?
- July 15
- August 15 (Correct answer)
- August 31
- September 15
Correct answer: August 15
Monthly schedule depositors must deposit payroll taxes by the 15th of the month following the month the liability was incurred.
Question 3: Which IRS publication provides the withholding tables employers use to calculate federal income tax withholding?
- Publication 15-B
- Publication 15 (Circular E) (Correct answer)
- Publication 505
- Publication 946
Correct answer: Publication 15 (Circular E)
IRS Publication 15, also known as Circular E (Employer's Tax Guide), contains the federal income tax withholding tables and employer instructions.
Question 4: An employee claims exempt from federal income tax withholding on Form W-4. How long is this exemption valid?
- Indefinitely until revoked
- One calendar year (Correct answer)
- Two years
- Until the employee's tax situation changes
Correct answer: One calendar year
A withholding exemption claimed on Form W-4 expires on February 15 of the following year, making it valid for one calendar year.
Question 5: Which of the following is reported in Box 12 of Form W-2 using Code DD?
- Deferred compensation
- Cost of employer-sponsored health coverage (Correct answer)
- Non-qualified plan distributions
- Dependent care benefits
Correct answer: Cost of employer-sponsored health coverage
Code DD in Box 12 of Form W-2 reports the cost of employer-sponsored health coverage under an employer-sponsored plan.
Question 6: What is the lookback period used to determine whether an employer is a monthly or semiweekly depositor?
- The current calendar quarter
- The prior calendar year
- A 12-month period ending June 30 of the prior year (Correct answer)
- The prior two calendar quarters
Correct answer: A 12-month period ending June 30 of the prior year
The lookback period is the 12-month period ending June 30 of the prior year; employers who reported $50,000 or less in taxes are monthly depositors.
Question 7: A new employee fails to submit a Form W-4. What withholding rate must the employer apply?
- 10% flat rate
- The single filer rate at standard withholding (Correct answer)
- Zero withholding
- The highest marginal tax rate
Correct answer: The single filer rate at standard withholding
If an employee does not provide a Form W-4, the employer must withhold as if the employee is single with no adjustments.
Fundamental Payroll Certification Fundamental Payroll Payroll Reporting and Compliance 2
An employer discovers an error on a previously filed Form 941.
Which form must be used to correct it?