Payroll Ch 4

CHAPTER 4

Matching Quiz (p. 4–35)

1. J

2. E

3. I

4. A

5. B

6. H

7. F

8. C

9. G

10. D

Questions for Review (p. 4–36)

Note: All answers and solutions are based on Tax Tables A and B in the textbook and the tax regulations presented in Chapter 4. Tax Tables A and B are used by employers, effective January 1, 2011.

1. The amount by which the fair market value of the fringe benefit exceeds what the employee paid, plus any amount the law excludes.

2. Cash tips of $20 or more received in a calendar month, in the course of employment with a single employer, are treated as remuneration subject to income tax withholding.

3. a. Nonexempt

b. Exempt

c. Exempt

d. Exempt

e. Exempt

4. The employer must match the employee’s contribution up to a maximum of

3 percent of the employee’s pay.

5. The maximum of deferred contributions that employees can make into their 401(k) plans is the lesser of $16,500 or 100 percent of their pay.

6. A personal allowance is a deduction allowed in computing taxable income.

In 2011, the amount of a personal allowance was $3,700.

7. None. D’Amato would have been entitled to a partial tax-free deduction if his modified adjusted gross income had been less than $66,000.

8. Employer contributions into employees’ health savings accounts are excluded from the employees’ taxable income.

9. Employees who had no income tax liability in 2011 and do not expect to have any for 2012 qualify for exemption from withholding of federal income tax from their wages. Single persons who made less than $9,500 in 2011 owed no federal income tax. During 2011, a married couple entitled to file a joint return could earn combined wages up to $19,000 without incurring any federal income tax liability. However, if someone else claimed the employee as a dependent on his or her tax return, the employee probably would have to pay some income tax. For example, in 2011, employees were not exempt from withholding if they had any nonwage...