CPB / BookKeeping Payroll and Tax Reporting Questions and Answers

Question 1

A business client has failed to deposit their payroll taxes for a pay period. The total amount due was $10,000. They paid the full amount 12 calendar days after the due date. According to IRS penalty rates, what would be the failure-to-deposit penalty?

Accepted Answer

5% of the unpaid deposit

Answer

The IRS imposes a tiered penalty for late payroll tax deposits. For deposits that are 6 to 15 calendar days late, the penalty is 5% of the unpaid amount.

Question 2

Which of the following is the correct due date for an employer to file Form 941, Employer's QUARTERLY Federal Tax Return, for the second quarter (April 1 - June 30)?

Accepted Answer

July 31

Answer

Form 941 is due by the last day of the month that follows the end of the quarter. For the second quarter ending June 30, the deadline is July 31.

Question 3

An employer is calculating their Federal Unemployment Tax Act (FUTA) liability. The FUTA tax rate is 6.0% on the first $7,000 of wages paid to each employee. If the employer is in a state with a certified unemployment program and has made all state unemployment tax payments on time, what is the maximum credit they can receive against their FUTA tax, and what is the effective FUTA tax rate?

Accepted Answer

A 5.4% credit, resulting in a 0.6% effective rate.

Answer

Employers who pay their state unemployment taxes in a timely manner are eligible for a credit of up to 5.4% against their FUTA tax. This reduces the effective FUTA tax rate to 0.6% (6.0% - 5.4%).

Question 4

A small construction company hires a specialized welder for a single, two-week project. The company provides the welding equipment and materials, specifies the exact hours the welder must work on-site, and dictates the sequence of the welding tasks. For payroll tax purposes, how should this welder most likely be classified?

Accepted Answer

Common-Law Employee

Answer

The key factor in determining worker status is the degree of control the business has over the worker. Because the company controls how, when, and where the work is done, and provides the tools, the welder would be classified as a common-law employee, requiring the company to withhold and pay employment taxes.

Question 5

What is the annual deadline for employers to furnish Form W-2, Wage and Tax Statement, to their employees and file Copy A with the Social Security Administration (SSA)?

Accepted Answer

January 31

Answer

Employers are required to furnish W-2s to employees and file them with the Social Security Administration by January 31 of the year following the calendar year the wages were paid.

CPB / BookKeeping Practice Test

CPB / BookKeeping Practice Test

CPB / BookKeeping Payroll and Tax Reporting Questions and Answers