IAB Payroll Processing & Administration 2

Question 1

An employer must deposit payroll taxes using the Electronic Federal Tax Payment System (EFTPS). Which deposit schedule applies to an employer whose total tax liability in the lookback period was $50,000 or less?

Accepted Answer

Monthly depositor

Answer

Employers with $50,000 or less in payroll tax liability during the lookback period are classified as monthly depositors and must deposit by the 15th of the following month.

Question 2

Which form is used to report wages paid and taxes withheld to each employee at the end of the calendar year?

Accepted Answer

Form W-2

Answer

Form W-2 (Wage and Tax Statement) is provided to each employee and filed with the Social Security Administration to report annual wages and withheld taxes.

Question 3

Garnishments deducted from employee paychecks for child support orders are classified as what type of payroll deduction?

Accepted Answer

Involuntary deduction

Answer

Child support garnishments are involuntary deductions because they are legally mandated by a court order, not elected by the employee.

Question 4

What is a pay stub required to show under most state laws?

Accepted Answer

Gross pay, deductions, and net pay

Answer

Most state pay stub laws require disclosure of gross earnings, itemized deductions (taxes, benefits, garnishments), and the resulting net pay so employees can verify their compensation.

Question 5

Which of the following correctly describes a Section 125 Cafeteria Plan deduction for an employee's health insurance premium?

Accepted Answer

Pre-tax, exempt from federal income tax and FICA

Answer

Under IRC Section 125, employee health insurance premiums paid through a cafeteria plan are excluded from federal income tax and FICA taxes, reducing both employee and employer tax burdens.

(IAB) International Association of Bookkeepers Certification Practice Test

(IAB) International Association of Bookkeepers Certification Practice Test

IAB Payroll Processing & Administration 2