Payroll Processing & Compliance Flashcards
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Read the first 7 Payroll Processing & Compliance flashcards as text
A company has a FUTA tax liability of $480 for the year after the state unemployment credit. What is the employer's net FUTA tax rate applied to taxable wages after the maximum state credit?
Answer: 0.6%
After the maximum 5.4% credit for state unemployment taxes paid, the net FUTA rate is 0.6% on the first $7,000 of each employee's wages.
Under the Trust Fund Recovery Penalty (TFRP), who can be held personally liable for unpaid employee withholding taxes?
Answer: A responsible person who willfully failed to collect or pay over taxes
The TFRP under IRC Section 6672 attaches to any 'responsible person' who willfully failed to ensure withheld taxes were paid to the IRS.
Which payroll journal entry correctly records the employee Social Security tax withholding?
Answer: Debit Salaries Expense; Credit Social Security Tax Payable
Employee Social Security withholding increases Salaries Expense (debit) and creates a current liability in Social Security Tax Payable (credit).
What is the primary purpose of a payroll reconciliation performed before each pay date?
Answer: To ensure the payroll register totals agree with payroll bank account funding and general ledger entries
Payroll reconciliation confirms that register totals, funding transfers, and GL postings all match before disbursement to prevent over- or underpayments.
Under the FLSA, non-exempt employees who work more than 40 hours in a workweek must be compensated at a rate of at least how much for each overtime hour?
Answer: 1.5 times the regular rate
The FLSA mandates overtime pay of at least 1.5 times the employee's regular rate of pay for all hours worked beyond 40 in a workweek.
Which payroll record retention period does the IRS generally require for employment tax records such as Forms W-4 and payroll registers?
Answer: 4 years
The IRS requires employers to retain employment tax records, including W-4s and payroll registers, for at least 4 years after the tax is due or paid, whichever is later.
A company pays an employee a $500 moving expense reimbursement in 2024. How must this amount be treated for payroll tax purposes?
Answer: Included in wages and subject to federal income tax and FICA withholding
Under the Tax Cuts and Jobs Act (2017), qualified moving expense exclusions are suspended for most employees through 2025, so reimbursements are taxable wages subject to withholding.