Solution Manual for Payroll Accounting 2024, 34th Edition by
Bernard J. Bieg, Bridget Stomberg, Verified Chapters 1 - 7,
Complete Newest Version
How is the amount of a fringe benefit that is taxable to an employee determined? -
ANSWER: It is the amount by which the fair market value of the fringe benefit
exceeds what the employee paid, plus any amount the law excludes.
The personal allowance amount is deducted from the employee's income in
computing taxable income. In 2014, the amount of a personal allowance was -
ANSWER: $3,950
In which of these situations are employer contributions into employees' health
savings accounts excluded from the employees' taxable income? - ANSWER: When
the employee has high-deductible health insurance
The formula used to "gross-up" supplemental payments in order to cover the taxes
on the supplemental payments is: - ANSWER: 1 Applicable Tax Rate/Divided by
intended payment
The penalties imposed on employees for filing false information on Form W-4 are: -
ANSWER: Fines of up to $1,000 or imprisonment for up to one year or both.
Damerly Company (a California employer) wants to give a holiday bonus check of
$250 to each employee. Since it wants the check amount to be $250, it will need to
gross-up the amount of the bonus. Calculate the withholding taxes and the gross
amount of the bonus to be made to John Rolen if his cumulative earnings for the
year are $46,910. Besides being subject to social security taxes and federal income
tax (supplemental rate), a 7% California income tax must be withheld on
supplemental payments. Round your calculations and final answers to the nearest
cent. - ANSWER: Gross bonus amount $414,25
Federal income tax withheld $103.56
OASDI tax withheld $25.68
HI tax withheld $6.01
California income tax withheld $29.00
Take-home bonus check $250
annualizing wages - ANSWER: method of determining amount of income taxes to be
withheld by multiplying the wages for one payroll period by the number of periods in
the year, determining the annual amount of withholding required on the total
wages, and dividing the annual withholding by the number of payroll periods.
backup withholding - ANSWER: amount of income tax withheld by payers of taxable
interest, dividends, and certain other payments made to payees who have failed to
furnish the payers with correct identification numbers.
, de minimis fringe benefit - ANSWER: any property or service the value of which is so
small that accounting for it would be unreasonable or impractical.
defined contribution plan - ANSWER: a retirement plan that provides future benefits
based solely on the amount paid by each employee and employer into the account,
plus investment gains.
gross-up - ANSWER: gross-up amount of payment so that after the appropriate
payroll taxes are withheld, the net amount left is equal to the original intended
payment.
information returns - ANSWER: forms upon which an employer reports
compensation paid to individuals who are not employees.
part-year employment - ANSWER: another method of calculating the withholding of
federal income tax from an employee's pay.
percentage method - ANSWER: method of determining amount of income taxes to
be withheld using Table of Allowance Values and Percentage Method Withholding
Table.
personal allowance - ANSWER: a deduction allowed in computing taxable income;
also known as a personal exemption.
quarterly averaging - ANSWER: method of determining the amount of income taxes
to be withheld by estimating the employee's average wages for the calendar quarter,
computing an average payment, and withholding an amount based on the average
payment.
reciprocal agreement - ANSWER: arrangement entered into by two or more states
whereby the resident of one state working in another state will not be subject to the
withholding of income taxes by the state in which the person is employed if that
state has entered into a similar agreement with the employee's resident state.
special withholding allowance - ANSWER: allowance claimed by employees so that
wages which are below the level subject to the income tax will not be subject to
withholding.
standard deduction - ANSWER: an amount of money used to reduce an individual's
adjusted gross income in computing taxable income.
supplemental wage payments - ANSWER: additional compensation such as vacation
pay, bonuses, and commissions paid to employees.
Bernard J. Bieg, Bridget Stomberg, Verified Chapters 1 - 7,
Complete Newest Version
How is the amount of a fringe benefit that is taxable to an employee determined? -
ANSWER: It is the amount by which the fair market value of the fringe benefit
exceeds what the employee paid, plus any amount the law excludes.
The personal allowance amount is deducted from the employee's income in
computing taxable income. In 2014, the amount of a personal allowance was -
ANSWER: $3,950
In which of these situations are employer contributions into employees' health
savings accounts excluded from the employees' taxable income? - ANSWER: When
the employee has high-deductible health insurance
The formula used to "gross-up" supplemental payments in order to cover the taxes
on the supplemental payments is: - ANSWER: 1 Applicable Tax Rate/Divided by
intended payment
The penalties imposed on employees for filing false information on Form W-4 are: -
ANSWER: Fines of up to $1,000 or imprisonment for up to one year or both.
Damerly Company (a California employer) wants to give a holiday bonus check of
$250 to each employee. Since it wants the check amount to be $250, it will need to
gross-up the amount of the bonus. Calculate the withholding taxes and the gross
amount of the bonus to be made to John Rolen if his cumulative earnings for the
year are $46,910. Besides being subject to social security taxes and federal income
tax (supplemental rate), a 7% California income tax must be withheld on
supplemental payments. Round your calculations and final answers to the nearest
cent. - ANSWER: Gross bonus amount $414,25
Federal income tax withheld $103.56
OASDI tax withheld $25.68
HI tax withheld $6.01
California income tax withheld $29.00
Take-home bonus check $250
annualizing wages - ANSWER: method of determining amount of income taxes to be
withheld by multiplying the wages for one payroll period by the number of periods in
the year, determining the annual amount of withholding required on the total
wages, and dividing the annual withholding by the number of payroll periods.
backup withholding - ANSWER: amount of income tax withheld by payers of taxable
interest, dividends, and certain other payments made to payees who have failed to
furnish the payers with correct identification numbers.
, de minimis fringe benefit - ANSWER: any property or service the value of which is so
small that accounting for it would be unreasonable or impractical.
defined contribution plan - ANSWER: a retirement plan that provides future benefits
based solely on the amount paid by each employee and employer into the account,
plus investment gains.
gross-up - ANSWER: gross-up amount of payment so that after the appropriate
payroll taxes are withheld, the net amount left is equal to the original intended
payment.
information returns - ANSWER: forms upon which an employer reports
compensation paid to individuals who are not employees.
part-year employment - ANSWER: another method of calculating the withholding of
federal income tax from an employee's pay.
percentage method - ANSWER: method of determining amount of income taxes to
be withheld using Table of Allowance Values and Percentage Method Withholding
Table.
personal allowance - ANSWER: a deduction allowed in computing taxable income;
also known as a personal exemption.
quarterly averaging - ANSWER: method of determining the amount of income taxes
to be withheld by estimating the employee's average wages for the calendar quarter,
computing an average payment, and withholding an amount based on the average
payment.
reciprocal agreement - ANSWER: arrangement entered into by two or more states
whereby the resident of one state working in another state will not be subject to the
withholding of income taxes by the state in which the person is employed if that
state has entered into a similar agreement with the employee's resident state.
special withholding allowance - ANSWER: allowance claimed by employees so that
wages which are below the level subject to the income tax will not be subject to
withholding.
standard deduction - ANSWER: an amount of money used to reduce an individual's
adjusted gross income in computing taxable income.
supplemental wage payments - ANSWER: additional compensation such as vacation
pay, bonuses, and commissions paid to employees.
