QBO Payroll Setup and Management 3 — Questions and Answers
Question 1: What is the purpose of the 'Workers' Compensation' feature in QuickBooks Online Payroll Elite?
- It automatically files workers' comp claims on behalf of injured employees
- It calculates and pays workers' compensation premiums based on actual payroll data (Correct answer)
- It replaces the need for a third-party workers' comp insurance policy
- It tracks OSHA injury reports within the payroll system
Correct answer: It calculates and pays workers' compensation premiums based on actual payroll data
The workers' compensation feature in Elite calculates premiums based on real payroll runs and can integrate with pay-as-you-go policies.
Question 2: In QBO Payroll, what does 'Same-Day Direct Deposit' require compared to standard direct deposit?
- A separate bank account designated for payroll only
- Submission by 7:00 AM PT on the payday
- An additional per-transaction fee and a Premium or Elite subscription (Correct answer)
- Manual approval from the employee for each deposit
Correct answer: An additional per-transaction fee and a Premium or Elite subscription
Same-Day Direct Deposit requires a Premium or Elite plan and incurs an extra fee, with submissions due by a same-day cutoff.
Question 3: A business has employees working in two different states. How does QBO Payroll handle multi-state payroll taxation?
- It only calculates taxes for the state where the business is registered
- It requires a separate payroll subscription for each state
- It calculates taxes for each state based on the employee's work location entered in their profile (Correct answer)
- Multi-state payroll is not supported and requires third-party software
Correct answer: It calculates taxes for each state based on the employee's work location entered in their profile
QBO Payroll supports multi-state taxation by using the work and home state information in each employee's profile to apply correct tax rates.
Question 4: When is a Form 944 used instead of Form 941 for payroll tax reporting?
- When a business has more than 100 employees
- When the IRS notifies a small employer that their annual tax liability is $1,000 or less (Correct answer)
- When a business operates in multiple states
- When total payroll exceeds $500,000 annually
Correct answer: When the IRS notifies a small employer that their annual tax liability is $1,000 or less
The IRS designates employers who owe $1,000 or less in annual employment taxes to file Form 944 annually instead of Form 941 quarterly.
Question 5: In QuickBooks Online Payroll, where do you set up a garnishment deduction for an employee's child support order?
- Employee profile > Pay Types tab
- Employee profile > Deductions & Contributions tab (Correct answer)
- Payroll Settings > Deductions
- Accounting > Chart of Accounts
Correct answer: Employee profile > Deductions & Contributions tab
Garnishments are configured as deduction items in the employee's Deductions & Contributions tab within their profile.
Question 6: Which federal deposit schedule requires payroll taxes to be deposited the next business day after payroll?
- Monthly depositor schedule
- Semi-weekly depositor schedule
- Next-day deposit rule (Correct answer)
- Annual depositor schedule
Correct answer: Next-day deposit rule
The next-day deposit rule applies when a single payroll accumulates $100,000 or more in tax liability on any day.
Question 7: What is the effect of adding a 401(k) employee contribution in QBO Payroll on the employee's taxable wages?
- It reduces federal and state taxable wages but not Social Security and Medicare wages (Correct answer)
- It reduces all taxable wages including Social Security and Medicare
- It has no effect on taxable wages
- It only reduces state taxable wages
Correct answer: It reduces federal and state taxable wages but not Social Security and Medicare wages
Traditional 401(k) contributions are pre-tax for federal and state income tax purposes but are still subject to FICA (Social Security and Medicare) taxes.
QBO Payroll Setup and Management 3
What is the purpose of the 'Workers' Compensation' feature in QuickBooks Online Payroll Elite?