What is the primary purpose of payroll tax withholding?
Payroll tax withholding ensures that employees pay their federal and state taxes, which are deducted from their wages each period.
Which payroll tax applies to both employees and employers?
FICA taxes for Social Security and Medicare apply to both employees and employers, with each paying a percentage.
What is the current federal income tax withholding method for most employers?
Employers use the IRS withholding tables or the percentage method to determine the amount of federal income tax to withhold.
Which document is required for new employees to complete for tax withholding purposes?
New employees are required to complete Form W-4, which determines the amount of federal income tax withholding based on allowances and exemptions.
What is the purpose of the Form W-2?
The W-2 form is used to report an employee's annual wages and the amount of taxes withheld from their paycheck.
What is a common penalty for failing to pay payroll taxes on time?
The IRS imposes penalties for late payments of payroll taxes, including interest charges and fines, to encourage timely compliance.
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What is the IRS requirement for electronic filing of payroll tax forms?
Employers must file payroll tax forms electronically if their total annual payroll tax liability is $50,000 or more.
Which of the following is an example of an after-tax deduction?
After-tax deductions are taken from an employee's net pay after taxes have been withheld, such as retirement contributions.
What should an employer do if they notice an error in an employee's tax withholding?
If there is an error in withholding, the employer should correct the mistake and issue a corrected W-2 or W-4 form as needed.