Payroll Processing and Taxation Quiz

Form W-4 is used by employees to inform employers about the amount of federal income tax to withhold from their paychecks.

Form W-2 is used by employers to report wages, tips, and other compensation paid to employees and the taxes withheld from them.

FICA tax, which includes both Social Security and Medicare taxes, is used to fund the Social Security and Medicare programs.

The penalty for late federal payroll tax deposits varies depending on the delay period and the amount of taxes owed.

FUTA funds state unemployment programs by imposing a federal tax on employers' payroll.

401(k) contributions are voluntary and not mandatory deductions from an employee's paycheck.

Form 940 is used by employers to report and pay federal unemployment taxes (FUTA) annually.

Form 1099-MISC is used to report non-employee compensation, such as payments to freelancers and independent contractors.

Form 941 is used by employers to report quarterly wages, tips, and other compensation, as well as the taxes withheld.

The penalty for late or non-filing of Form 941 depends on both the amount owed and the delay period.

The federal unemployment tax (FUTA) is not withheld from an employee's paycheck; it is solely the employer's responsibility.

All employees are subject to FICA taxes, and there is no threshold for exemption.

As of the latest information, the maximum amount of earnings subject to Social Security tax is $150,000.

Self-employed individuals use Schedule C (Form 1040) to report their business income and expenses for tax purposes.