Xero Certified Advisor Xero Payroll Management 2

Question 1

When processing payroll in Xero (US), which federal payroll tax is split equally between the employer and the employee?

Accepted Answer

FICA (Federal Insurance Contributions Act) — Social Security and Medicare

Answer

FICA taxes — Social Security (6.2%) and Medicare (1.45%) — are each paid half by the employer and half by the employee, totaling 15.3% combined.

Question 2

What is the employee portion of the Social Security tax rate for US payroll?

Accepted Answer

6.2%

Answer

The employee's Social Security tax rate is 6.2% of wages up to the annual wage base limit, with the employer also contributing a matching 6.2%.

Question 3

In Xero Payroll, what does 'post payroll' do after a payroll run is approved?

Accepted Answer

Creates journal entries in Xero's general ledger

Answer

Posting payroll creates the corresponding journal entries in Xero's general ledger, recording wages expense, tax liabilities, and net pay payable.

Question 4

Which form must US employers file quarterly to report federal payroll taxes withheld and employer contributions?

Accepted Answer

Form 941

Answer

Form 941 (Employer's Quarterly Federal Tax Return) is filed each quarter to report federal income tax, Social Security, and Medicare taxes withheld from employee wages.

Question 5

What is FUTA, and who is solely responsible for paying it?

Accepted Answer

A federal unemployment tax paid entirely by the employer

Answer

FUTA (Federal Unemployment Tax Act) is a federal unemployment tax paid entirely by the employer — it is never withheld from employee wages.

Xero Certified Advisor Practice Test

Xero Certified Advisor Practice Test

Xero Certified Advisor Xero Payroll Management 2