1. Which of the following amounts paid by an employer to an employee is not subject to withholding?
A. Salary
B. Bonus
C. Commissions
D. Reimbursement of expenses under an accountable plan
E. All of the above are subject to withholding

2. Abbe, age 56, is married and has three dependent children over age 17. Abbe has one job, and her husband, age 58, is not employed. How many allowances should Abbe claim on her Form W-4 for 2011.
A. 3
B. 4
C. 5
D. 6
E. 7

3. Michele is single with no dependents and earns $23,000 this year. Michele claims sixteen allowances on her Form W-4 for 2011.
Which of the following is correct concerning her Form W-4?
A. Michele may not under any circumstances claim sixteen allowances.
B. Michele’s employer will require her to verify her right to claim sixteen allowances.
C. Michele’s employer will disregard her Form W-4 and withhold as single with no allowances.
D. Michele’s employer will submit a copy of her W-4 to the IRS if directed to do so by written notice.
E. None of the above is correct.

 
4. Which of the following forms would a lottery winner receive for her winnings?
A. Form W-4
B. Form W-2G
C. Form 1099-DIV
D. Form 1099-R
E. Form 1099-MISC

5. For 2011, Roberta is a self-employed truck driver with earnings of $43,000 from her business. During the year, Roberta received $2,500 in interest income and dividends of $500. She also sold investment property and recognized a $1,500 gain.
What is the amount of Roberta’s self-employment tax (Social Security and Medicare taxes) liability for 2011?
A. $3,038

B. $3,290
C. $5,281
D. $6,579
E. None of the above

6. Which of the following is not subject to self-employment tax?
A. Net earnings of the owner of a shoe store
B. Net earnings of a self-employed lawyer
C. Distributive share of earnings of a partnership
D. Gain on the sale of real estate held for investment
E. Net earnings of the owner of a dry cleaner

7. Bob employs a maid to clean his house. He pays her $1,800 during the current year. 
What is the proper tax treatment of the FICA and Medicare tax for the maid?
A. None of the $1,800 is subject to FICA or Medicare tax.
B. The $1,800 is subject to the Medicare tax, but not the FICA tax.
C. $500 is subject to the FICA and Medicare tax.
D. The entire $1,800 is subject to the FICA and Medicare tax.

8. Which of the following employees would not be exempt from the FICA and Medicare taxes on wages paid for household work?
A. The taxpayer’s 20-year-old sister
B. The taxpayer’s wife
C. The taxpayer’s 16-year-old daughter
D. The 14-year-old babysitter from down the street

9. 3a. Sophie is a single taxpayer. For the first payroll period in October 2011, she is paid wages of $3,250.00 monthly. Sophie claims 3 allowance on her W-4.
Use the percentage method to calculate the amount of withholding for a monthly pay period. Calculate the witholding from the percentage table in appendix C.
A. None of the choices
B. $256.77
C. $289.12
D. $291.25
E. $287.10
F. $261.23

G. $247.47

10. 3b. Sophie is a single taxpayer. For the first payroll period in October 2011, she is paid wages of $3,250.00 monthly. Sophie claims 3 allowance on her W-4.
b. Use the withholding tables to determine the amount of Sophie’s withholding for the same period. Determine the withholding from the withholding table.
A. $289.00
B. None of the choices.
C. $258.00
D. $259.66
E. $291.25
F. $247.47

11. 7. Jenny earns $34,500.00 in 2011. Calculate the FICA tax that must be paid and match the amount to the heading below.
Match Choice
1. Total FICA Tax
A. $ 500.25
2. Jenny’s Employer’s Social Security
B. $525.11
3. Jenny’s Employer’s Medicare
C. $ 2,139.00
4. Jenny’s Social Security
D. $ 500.25
5. Jenny’s Medicare
E. $ 1,449.00
F. $ 4,588.50
1. Total FICA Tax: F. $4,588.50
2. Jenny’s Employer’s Social Security: C. $2,139.00
3. Jenny’s Employer’s Medicare: A. $500.25
4. Jenny’s Social Security: E. $1,449.00
5. Jenny’s Medicare: D. $500.25

12. 8. Yolanda earns $107,00.00 in 2011. Calculate the FICA tax that must be paid. Match the calculation with the heading.
Match Choice
1. Yolanda’s Social Security
A. $1,550.00
2. Total FICA Tax
B. $14,210.20
3. Yolanda’s Employer’s Social Security
C. $4,485.60
4. Yolanda’s Employer’s Medicare
D. $ 1,551.50
5. Yolanda’s Medicare
E. $ 1,551.50
F. $ 6,621.60
1. Yolanda’s Social Security: C. $4,485.60
2. Total FICA Tax: B. $14,210.20
3. Yolanda’s Employer’s Social Security: F. $6,621.60
4. Yolanda’s Employer’s Medicare: D. $1,551.50
5. Yolanda’s Medicare: E. $1,551.50

13. Jan has two jobs during 2011. One employer withheld and paid FICA taxes on $66,600 of Jan’s salary, and the other employer withheld and paid FICA taxes on $44,400 in salary paid to Jan.
Calculate the amount of Jan’s overpayment of FICA taxes that he should claim on his 2011 Form 1040.
A.$0
B.$932.40
C. $4,662.00
D. $2,797.20
E. $1,688.40
F. $2,620.80
G. None of the choices

14. For each of the following payments, indicate the form that should be used to report the payment.
Match Choice
1. Form 1099-INT
SelectA.B.C.D.E.F.
 A. Periodic payments from a retirement plan
2. Form 1099-DIV
SelectA.B.C.D.E.F.
 B. Salary as president of the company
3. Form W-2G
SelectA.B.C.D.E.F.
 C. Las Vegas Black Jack winning of $25,000
4. Form 1099-R
SelectA.B.C.D.E.F.
 D. Interest of $400 paid by a bank
5. Form W-2      
SelectA.B.C.D.E.F.
E.Payment of $400 in dividends by a corporation to a shareholder
F.Depreciation schedule
1. Form 1099-INT: D. Interest of $400 paid by a bank
2. Form 1099-DIV: E. Payment of $400 in dividends by a corporation to a shareholder
3. Form W-2G: C. Las Vegas Black Jack winning of $25,000
4. Form 1099-R: A. Periodic payments from a retirement plan
5. Form W-2: B. Salary as president of the company

15. Thomas is an employer with one emploXXXXX, XXXXX. Sarah’s wages during 2011 are $19,450, and the state unemployment tax rate is 5.4 percent. Calculate the following amounts for Thomas:
a. FUTA tax before the state tax credit?
A.$1,050.30
B.$434.00
C.$56.00
D.$525.15
E.None of the choices

16. Thomas is an employer with one emploXXXXX, XXXXX. Sarah’s wages during 2011 are $19,450, and the state unemployment tax rate is 5.4 percent. Calculate the following amounts for Thomas:
b. State unemployment tax?
A.$434.00
B.$56.00
C.None of the choices.
D.$378.00
E.$1,050.30

17. Thomas is an employer with one emploXXXXX, XXXXX. Sarah’s wages during 2011 are $19,450, and the state unemployment tax rate is 5.4 percent. Calculate the following amounts for Thomas:
c. FUTA tax after the state tax credit?
A.$56.00
B.$350.10
C.$525.15
D.None of the choices.
E.$1,050.30

18. Sally hires a maid to work in her home for $250 per month. The maid is 25 years old and not related to Sally. During 2011, the maid worked 10 months for Sally.
a. What is the amount of Social Security tax sally must pay as the maid’s employer?
A.$160.22
B.$136.25
C.None of the choices
D.$250.00
E.$141.25
F.$155.00

19. Sally hires a maid to work in her home for $250 per month. The maid is 25 years old and not related to Sally. During 2011, the maid worked 10 months for Sally.
b. What is the amount of Medicare tax Sally must pay as the maid’s employer?
A.$41.25
B.$60.22
C.None of the choices
D.$50.00
E.$55.00
F.$36.25

20. Sally hires a maid to work in her home for $250 per month. The maid is 25 years old and not related to Sally. During 2011, the maid worked 10 months for Sally.
c. What is the amount of Social Security and Medicare tax which must be withheld from the maid’s wages?
A.None of the choices
B.$160.22
C.$155.00
D.$136.25
E.$141.25
F.$250.00

21. Ann hires a nanny to watch her two children while she works at a local hospital. She pays the 19-year-old- nanny $125 per week for 48 weeks during the current year.
a. What is the employer’s portion of Social Security and Medicare tax for the nanny that Ann should pay when she files her Form 1040 for 2011?
A.$77.29
B.$360.00
C.$459.00
D.$488.22
E.$511.23
F.None of the choices

22. Ann hires a nanny to watch her two children while she works at a local hospital. She pays the 19-year-old- nanny $125 per week for 48 weeks during the current year.
b. What is the nanny’s portion of FICA and Medicare tax?
A.None of the choices
B.$488.22
C.$339.00
D.$77.29
E.$459.00
F.$360.00