IAB Taxation & Compliance 2

Question 1

A self-employed bookkeeper earns $85,000 net profit. What is the self-employment tax rate applied to net earnings?

Accepted Answer

15.3%

Answer

Self-employment tax is 15.3%, comprising 12.4% Social Security and 2.9% Medicare, applied to net self-employment earnings.

Question 2

Which IRS form is used by employers to report annual wages and withholding for each employee?

Accepted Answer

Form W-2

Answer

Form W-2 (Wage and Tax Statement) is issued by employers annually to report each employee's wages and taxes withheld.

Question 3

Under the cash basis of accounting for tax purposes, income is recognized when:

Accepted Answer

Actually received

Answer

Under the cash method, income is recognized when payment is actually received, not when earned or invoiced.

Question 4

A business purchases equipment for $50,000. Under Section 179, the maximum first-year expensing deduction for 2024 is:

Accepted Answer

$1,160,000

Answer

The Section 179 deduction limit for 2024 is $1,160,000, allowing businesses to expense qualifying property in the year of purchase.

Question 5

Which payroll tax deposit schedule applies to employers with $50,000 or less in employment taxes in the lookback period?

Accepted Answer

Monthly depositor

Answer

Employers who reported $50,000 or less in employment taxes during the lookback period are monthly depositors.

(IAB) International Association of Bookkeepers Certification Practice Test