Ch 3 Payroll FPC test

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  1. Social Security
    _________ % 

    Maximum Salary  $ ___________________
    Maximum Contribution for ER $__________
    Maximum Contribution for EE $__________
    • Social Security 6.2 %
    • Maximum Salary $113,700.00
    • Maximum for (ER) Employer $7,049.40
    • Maximum for (EE) Employee $7049.40
  2. Medicare Taxes
    Maximum Salary  $ ____________________
    Maximum Contribution for ER $___________
    Maximum Contribution for EE $___________
    •                     Medicare Taxes
    •                         1.45%
    • No Maximum Salary
    • No Maximum Contribution
    • Employer Matches (EE) Employee Contribution
  3. Name the States that both the Employer & Employee contribute to SUI
    (State Unemployment Insurance)
    Name the States
    • There are 3 states that both the Employer & the Employee contribute to SUI 
    • Alaska
    • New Jersey
    • Pennsylvania
  4. What are the 3 steps for the Gross Up Calculation Steps
    • 100% - Tax % = Net %     
    • Payment / Net % = Gross Earnings    Check by Calculating Gross to Net
  5. What are the 3 tax rates used for Gross up Calculations
    • Federal 25%   
    • Social Security 6.25% (Max Salary)
    • Medicare 1.45 %
  6. What is Pay Date
    Is the date wages are paid and dictates the taxability, as well as structure for depositing and reporting of taxes to government agencies
  7. What is Period Ending
    Is the period when wages were earned
  8. What is Constructive Receipt
    Is the date the funds are available to the employee
  9. Name the Three (3) main acceptable methods for Tax Deductions
    • *Wage-Bracket Method (Pub 15 - Circular E)
    • *Percentage Method (Pub 15 – Circular E)
    • Optional/Mandatory Flat Rate of 25% (or in some instances, 39.6%)  

    *Methods Used Most Commonly
  10. How Many States have Disability Tax
    Name the States
    Six (6) States have Disability Tax

    • California
    • New York
    • Hawaii
    • Puerto Rico
    • New Jersey
    • Rhode Island
  11. When would you use the mandatory flat rate of 39.6%?
    When YTD supplemental wages exceed $1,000,000
  12. What witholding certificate form do you use for Pensions and Annuities?
    Use Form W-4P
  13. A voluntary deduction must:
    A) Be authorized by the employee.
    B) Be deducted without the employee's permission
    C) Be changed to what the employeer needs to deduct.
    A. Employees must authorize voluntary deductions.
  14. What does an employer use to calculate the amount to withold for an IRS tax levy?
    A) Disposable pay
    B) Net pay
    C) Take-home pay
    D) Taxable wages
    C. The IRS requires the employee's take-home-pay be used when calculating the levy deduction.
  15. True or False
    Required deductions must take precedence over voluntary deductions.

    True.  Involuntary deductions have priority over other deductions.
  16. True or False
    When an employer receives a child support witholding order against an employee, that means the employee is delinquent in making their child support payments.
    False. Almost all divorce decrees require child support witholdings.
  17. All of the following deductions are involuntary deductions:
    A) Charitable contributions
    B) Tax Levy
    C) Child Support.
    D) Creditor Garnishment
    A. Charitable contributions are voluntary deductions from the employee's pay.
  18. When does an employer stop deducting a federal tax levy from an employee's wages?
    A) The amount of the levy is reached
    B) The IRS issues a Form 668-D
    C) The employee asks that the levy deduction be stopped.
    B. IRS interest and penalties continue to accrue on the outstanding taxes until Form 668-D is issued.
  19. Accrual
    The recognition of expenses, and revenues after the cash value has been determined but before it has been transferred (6.1.4)
  20. Deduction
    An amount subtracted from an employee's gross pay to reach net pay, or an amount allowed to taxpayers as an offset against income (3.3)
Card Set
Ch 3 Payroll FPC test
Paycheck Fundamentals
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