Payroll Administration and Management Flashcards
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Read the first 7 Payroll Administration and Management flashcards as text
Which of the following is NOT a characteristic of a qualified Section 401(k) plan from a payroll perspective?
Answer: Employer matching contributions are taxable to the employee when contributed
Employer matching contributions to a qualified 401(k) plan are not taxable to the employee when made; they are only taxable upon distribution from the plan.
Under the IRS accountable plan rules, which of the following expense reimbursements is excluded from an employee's taxable wages?
Answer: Reimbursement of actual business meals with itemized receipts returned within 60 days
Reimbursements excluded from wages must meet the accountable plan rules: business connection, substantiation with receipts, and return of excess amounts within a reasonable period.
When calculating imputed income for employer-provided group-term life insurance, which coverage amount is excluded from an employee's gross income?
Answer: $50,000
Under IRC Section 79, the first $50,000 of employer-provided group-term life insurance coverage is excluded from the employee's gross income; coverage above that threshold generates imputed income.
A new state income tax withholding order arrives for an employee who already has a federal tax levy in effect. In what priority order are these obligations handled?
Answer: The federal tax levy takes priority; state order is applied only to remaining disposable earnings after the federal levy
Federal tax levies (IRS) take priority over state orders; the state garnishment is applied only to whatever disposable earnings remain after satisfying the federal levy.
Which Form is used by employers to correct previously filed Forms 941 when errors are discovered in reported wages or taxes?
Answer: Form 941-X
Form 941-X (Adjusted Employer's Quarterly Federal Tax Return or Claim for Refund) is used to correct errors on a previously filed Form 941.
An employer uses direct deposit for payroll. An employee's bank returns a direct deposit as undeliverable on payday. What is the employer's obligation?
Answer: The employer must make the net pay available to the employee by the original payday or as soon as practicable per state law
Employers remain obligated to pay employees on time even if a direct deposit fails; funds must be made available by the scheduled payday or as quickly as state wage payment laws require.
The payroll department receives a Notice of Levy (Form 668-W) from the IRS for an employee. Within how many days must the employer begin withholding?
Answer: Immediately on the next payroll after receipt
Upon receiving Form 668-W, the employer must begin withholding on the next payroll; there is no grace period — levy compliance begins immediately.