QBO Payroll Setup and Management 2 — Questions and Answers
Question 1: When setting up a new employee in QuickBooks Online Payroll, which section is used to enter federal and state withholding allowances?
- Pay Types
- Deductions & Contributions
- Withholding (Correct answer)
- Employment Info
Correct answer: Withholding
The Withholding section of the employee profile stores federal and state W-4 information used to calculate tax withholding.
Question 2: A company wants to pay employees a non-taxable car allowance. What is the correct way to set this up in QBO Payroll?
- Add it as a taxable wage pay type
- Create a deduction item
- Add a non-taxable reimbursement pay type (Correct answer)
- Record it as a company contribution
Correct answer: Add a non-taxable reimbursement pay type
A non-taxable reimbursement pay type is used for expenses like car allowances that do not constitute taxable wages.
Question 3: What happens to payroll taxes when a payroll run is voided in QuickBooks Online Payroll?
- Taxes are automatically refunded to the employee
- Tax liabilities are reversed in the system (Correct answer)
- Taxes remain in the liability account and must be manually adjusted
- Nothing changes; voiding only affects the net pay check
Correct answer: Tax liabilities are reversed in the system
Voiding a payroll run in QBO reverses the associated tax liabilities and wage amounts in the books.
Question 4: In QuickBooks Online Payroll, which report shows the total wages, taxes, and deductions for each employee for a selected period?
- Payroll Summary by Employee (Correct answer)
- Employee Details Report
- Tax Liability Report
- Payroll Item Listing
Correct answer: Payroll Summary by Employee
The Payroll Summary by Employee report breaks down earnings, deductions, and taxes per employee for the chosen date range.
Question 5: An employee claims exempt from federal income tax withholding on their W-4. How should this be recorded in QBO Payroll?
- Set federal filing status to 'Single' with 10 allowances
- Enter 'Exempt' in the federal withholding section (Correct answer)
- Leave the withholding fields blank
- Set withholding amount to $0 as an additional withholding override
Correct answer: Enter 'Exempt' in the federal withholding section
Selecting 'Exempt' in the federal withholding section tells QBO not to withhold federal income tax for that employee.
Question 6: Which payroll subscription tier in QuickBooks Online includes automated tax filing and payment for all 50 states?
- Core
- Premium
- Elite
- Both Premium and Elite (Correct answer)
Correct answer: Both Premium and Elite
Both QuickBooks Online Payroll Premium and Elite include automated multi-state tax filing and payments.
Question 7: A client uses QuickBooks Online Payroll and needs to track tips received by restaurant employees. Which pay type should be used for reported tips?
- Bonus
- Commission
- Reported Tips (Correct answer)
- Cash Tips Received
Correct answer: Reported Tips
The 'Reported Tips' pay type in QBO Payroll properly accounts for employee-reported tips for tax withholding purposes.
QBO Payroll Setup and Management 2
When setting up a new employee in QuickBooks Online Payroll, which section is used to enter federal and state withholding allowances?