IAB Payroll Processing & Administration

Question 1

Which federal form must employees complete to indicate their withholding allowances for federal income tax purposes?

Accepted Answer

Form W-4

Answer

Form W-4 (Employee's Withholding Certificate) is completed by employees to tell employers how much federal income tax to withhold from their paychecks.

Question 2

What is the current Social Security tax rate paid by employees on wages up to the wage base limit?

Accepted Answer

6.20%

Answer

Employees pay 6.20% Social Security tax on wages up to the annual wage base limit; employers match this amount for a combined rate of 12.40%.

Question 3

Form 941 must be filed with the IRS on what schedule?

Accepted Answer

Quarterly

Answer

Form 941 (Employer's Quarterly Federal Tax Return) is filed quarterly to report wages paid, federal income tax withheld, and Social Security/Medicare taxes.

Question 4

Which of the following is NOT subject to FICA (Federal Insurance Contributions Act) taxes?

Accepted Answer

Employer-paid health insurance premiums

Answer

Employer-paid health insurance premiums are excluded from FICA taxes because they are not considered wages for Social Security and Medicare purposes.

Question 5

What is the Medicare tax rate withheld from employee wages?

Accepted Answer

1.45%

Answer

The employee Medicare tax rate is 1.45%; employers also pay 1.45%, for a combined rate of 2.90%, with no wage base limit.

(IAB) International Association of Bookkeepers Certification Practice Test

(IAB) International Association of Bookkeepers Certification Practice Test

IAB Payroll Processing & Administration