Payroll Taxes MCQs
What is the primary purpose of payroll taxes?
A) To fund social security and Medicare
B) To pay for state education programs
C) To support local government projects
D) To finance corporate tax credits
Answer: A
Which of the following taxes is typically withheld from an employee’s paycheck?
A) Federal income tax
B) Sales tax
C) Property tax
D) Corporate tax
Answer: A
What is the current employee contribution rate for Social Security tax as of 2024?
A) 6.2%
B) 7.65%
C) 1.45%
D) 15.3%
Answer: A
What is the Medicare tax rate for employees as of 2024?
A) 1.45%
B) 6.2%
C) 3.4%
D) 7.65%
Answer: A
What is the maximum taxable wage limit for Social Security tax as of 2024?
A) $160,200
B) $200,000
C) $250,000
D) $120,000
Answer: A
Which tax is imposed on employers to fund unemployment insurance?
A) Federal Unemployment Tax Act (FUTA)
B) Social Security Tax
C) Medicare Tax
D) State Income Tax
Answer: A
How often is FUTA tax typically paid by employers?
A) Quarterly
B) Annually
C) Monthly
D) Bi-weekly
Answer: B
What percentage of Medicare tax is paid by employers?
A) 1.45%
B) 0.9%
C) 3.0%
D) 7.65%
Answer: A
What is the additional Medicare tax rate for high-income earners as of 2024?
A) 0.9%
B) 1.45%
C) 3.4%
D) 7.65%
Answer: A
Which form is used to report federal payroll taxes withheld from employees?
A) Form 941
B) Form 1040
C) Form W-2
D) Form 1099
Answer: A
What information is reported on Form W-2?
A) Employeeâs wages and the amount of taxes withheld
B) Employerâs annual tax return
C) Total payroll tax liabilities
D) Social Security benefits received
Answer: A
Which payroll tax is shared equally between employer and employee?
A) Social Security tax
B) Sales tax
C) State income tax
D) Property tax
Answer: A
What does the acronym FICA stand for?
A) Federal Insurance Contributions Act
B) Federal Income Contributions Act
C) Federal Insurance Compensation Act
D) Federal Income Compensation Act
Answer: A
What type of tax is paid under the Federal Unemployment Tax Act (FUTA)?
A) Unemployment tax
B) Social Security tax
C) Medicare tax
D) Income tax
Answer: A
Which tax is specifically designed to assist employees who lose their jobs?
A) Unemployment tax
B) Sales tax
C) Property tax
D) Estate tax
Answer: A
What is the primary purpose of the State Unemployment Tax Act (SUTA)?
A) To provide unemployment benefits to workers
B) To fund state education systems
C) To support state health programs
D) To provide retirement benefits
Answer: A
What is the maximum amount of wages subject to FUTA tax as of 2024?
A) $7,000
B) $10,000
C) $15,000
D) $20,000
Answer: A
Which payroll tax is withheld from employees’ wages to fund Social Security?
A) Social Security tax
B) Medicare tax
C) Unemployment tax
D) Sales tax
Answer: A
How frequently must employers file Form 941?
A) Quarterly
B) Annually
C) Monthly
D) Bi-weekly
Answer: A
Which form reports annual wages and taxes withheld to the IRS and employees?
A) Form W-2
B) Form 941
C) Form 1099
D) Form 1040
Answer: A
What is the primary purpose of the Employee Retirement Income Security Act (ERISA)?
A) To protect employees’ retirement benefits
B) To regulate wage and hour laws
C) To enforce workplace safety regulations
D) To provide unemployment benefits
Answer: A
Which of the following taxes are typically NOT withheld from an employee’s paycheck?
A) Property tax
B) Federal income tax
C) Social Security tax
D) Medicare tax
Answer: A
What is the percentage of FUTA tax paid by employers?
A) 6.0%
B) 7.65%
C) 1.45%
D) 15.3%
Answer: A
What is the purpose of Form 940?
A) To report and pay federal unemployment tax
B) To report employee income and tax withholding
C) To report annual wage and tax data
D) To report self-employment income
Answer: A
What is the additional Medicare tax rate imposed on high-income earners?
A) 0.9%
B) 1.45%
C) 3.4%
D) 7.65%
Answer: A
Which of the following does NOT contribute to payroll tax calculations?
A) Employee bonuses
B) Regular salary
C) Capital gains
D) Overtime pay
Answer: C
What is the Social Security wage base limit for employers as of 2024?
A) $160,200
B) $120,000
C) $250,000
D) $200,000
Answer: A
Which tax is specifically for funding Medicare?
A) Medicare tax
B) Social Security tax
C) Unemployment tax
D) Income tax
Answer: A
Which payroll tax is typically paid by both the employee and employer?
A) Social Security tax
B) Sales tax
C) Property tax
D) Estate tax
Answer: A
Which of the following forms is used to report wages and taxes withheld for self-employed individuals?
A) Form 1099
B) Form 941
C) Form W-2
D) Form 1040
Answer: A
What is the employee contribution rate for Social Security tax in 2024?
A) 6.2%
B) 1.45%
C) 7.65%
D) 3.4%
Answer: A
What is the employerâs responsibility regarding payroll taxes?
A) To withhold taxes from employee wages and remit them to the IRS
B) To pay the employeeâs income tax directly to the state
C) To provide tax advice to employees
D) To pay employee bonuses based on tax bracket
Answer: A
Which of the following does NOT fall under the category of payroll taxes?
A) Unemployment insurance
B) Social Security
C) Medicare
D) Sales tax
Answer: D
Which form provides information on tips and other compensations received by employees?
A) Form 4070
B) Form 1099
C) Form W-2
D) Form 941
Answer: A
Which of the following is a correct statement about payroll taxes?
A) They are used to fund social welfare programs
B) They are only applied to income above a certain threshold
C) They are paid by employees only
D) They are considered an optional deduction
Answer: A
Which tax is NOT an employer payroll tax?
A) Federal income tax
B) Medicare tax
C) Social Security tax
D) Sales tax
Answer: D
What is the purpose of the IRS Form 1099?
A) To report various types of income other than wages
B) To report employee wages and tax withholdings
C) To file annual income tax returns
D) To report payroll taxes paid by employers
Answer: A
How are payroll taxes generally calculated?
A) Based on employee wages and applicable tax rates
B) Based on company profits and revenue
C) Based on individual tax returns
D) Based on property value
Answer: A
What is the tax rate for Federal Insurance Contributions Act (FICA) as of 2024?
A) 7.65%
B) 6.2%
C) 1.45%
D) 3.4%
Answer: A
Which type of tax does NOT directly affect an employeeâs paycheck?
A) Property tax
B) Social Security tax
C) Medicare tax
D) Federal income tax
Answer: A
What is the purpose of Form 1040 in relation to payroll taxes?
A) To file an individualâs annual income tax return
B) To report payroll taxes withheld
C) To report annual FUTA tax liability
D) To provide employee income statements
Answer: A
What is the employeeâs portion of the Medicare tax rate?
A) 1.45%
B) 3.4%
C) 6.2%
D) 7.65%
Answer: A
Which payroll tax is not matched by the employer?
A) Income tax
B) Social Security tax
C) Medicare tax
D) FUTA tax
Answer: A
Which payroll tax form is filed annually?
A) Form 940
B) Form 941
C) Form W-2
D) Form 1099
Answer: A
What is the primary use of funds collected from Social Security tax?
A) To provide retirement and disability benefits
B) To support state-level infrastructure projects
C) To fund public education
D) To pay for municipal services
Answer: A
Which form must employers provide to employees by January 31 each year?
A) Form W-2
B) Form 941
C) Form 1040
D) Form 1099
Answer: A
What is the FUTA tax rate for employers as of 2024?
A) 6.0%
B) 7.65%
C) 1.45%
D) 3.4%
Answer: A
Which of the following taxes are withheld from an employeeâs paycheck but not matched by the employer?
A) Federal income tax
B) Social Security tax
C) Medicare tax
D) State unemployment tax
Answer: A
What is the purpose of Form 941?
A) To report quarterly payroll taxes withheld from employee wages
B) To report annual employee income
C) To report self-employment income
D) To report charitable contributions
Answer: A
Which of the following is NOT a payroll tax?
A) Sales tax
B) Social Security tax
C) Medicare tax
D) Unemployment tax
Answer: A