What is a payroll tax?
a) A tax levied on employees’ wages and salaries
b) A tax imposed on employers’ profits
c) A tax on the purchase of goods and services
d) A tax on property ownership
Answer: a) A tax levied on employees’ wages and salaries
Which of the following is not subject to payroll tax?
a) Employee wages
b) Bonuses and commissions
c) Employer contributions to retirement plans
d) Employee healthcare benefits
Answer: c) Employer contributions to retirement plans
True or False: Payroll taxes are used to fund social insurance programs like Social Security and Medicare.
Answer: True
How are payroll taxes typically divided between employers and employees?
a) Employers pay the full amount of payroll taxes.
b) Employees pay the full amount of payroll taxes.
c) Employers and employees share the burden of payroll taxes.
d) The division of payroll taxes varies by country and jurisdiction.
Answer: c) Employers and employees share the burden of payroll taxes.
What is the purpose of collecting payroll taxes?
a) To fund government programs and services
b) To stimulate economic growth
c) To encourage job creation
d) To reduce income inequality
Answer: a) To fund government programs and services
Which government agency is responsible for collecting payroll taxes in the United States?
a) Internal Revenue Service (IRS)
b) Social Security Administration (SSA)
c) Department of Labor (DOL)
d) Federal Reserve System (Fed)
Answer: a) Internal Revenue Service (IRS)
What is the current Social Security payroll tax rate for employees in the United States?
a) 6.2%
b) 7.65%
c) 10%
d) 15.3%
Answer: a) 6.2%
Payroll taxes are typically calculated based on:
a) Employees’ gross wages
b) Employees’ net wages
c) Employees’ bonuses only
d) Employees’ overtime earnings
Answer: a) Employees’ gross wages
True or False: Payroll taxes are deductible expenses for businesses.
Answer: True
What happens if an employer fails to withhold and remit payroll taxes?
a) Employees are responsible for paying the taxes directly.
b) The employer is fined by the tax authorities.
c) The tax liability is waived.
d) The government covers the unpaid taxes.
Answer: b) The employer is fined by the tax authorities.
Which payroll tax is specifically used to fund healthcare for individuals aged 65 and older in the United States?
a) Social Security tax
b) Medicare tax
c) Medicaid tax
d) Federal income tax
Answer: b) Medicare tax
Payroll taxes are generally considered:
a) Progressive taxes
b) Regressive taxes
c) Flat taxes
d) Voluntary taxes
Answer: b) Regressive taxes
True or False: Payroll taxes are only applicable to employees and not self-employed individuals.
Answer: False
What is the purpose of Form W-4 in relation to payroll taxes?
a) To report employee wages and salaries
b) To calculate the amount of federal income tax to withhold from an employee’s paycheck
c) To determine eligibility for tax credits and deductions
d) To reconcile payroll tax payments at the end of the year
Answer: b) To calculate the amount of federal income tax to withhold from an employee’s paycheck
Which of the following is an example of a payroll tax credit?
a) Earned Income Tax Credit (EITC)
b) Child Tax Credit (CTC)
c) Foreign Tax Credit (FTC)
d) Mortgage Interest Credit
Answer: a) Earned Income Tax Credit (EITC)
In the United States, what is the current payroll tax rate for the employer’s portion of Social Security tax?
a) 6.2%
b) 7.65%
c) 10%
d) 15.3%
Answer: a) 6.2%
How often are payroll taxes typically reported and remitted to tax authorities?
a) Monthly
b) Quarterly
c) Annually
d) Biannually
Answer: b) Quarterly
True or False: Payroll taxes are the same across all countries and jurisdictions.
Answer: False
What is the purpose of the Form 941 in the United States?
a) To report and remit federal income tax withholding
b) To report and remit payroll taxes on a quarterly basis
c) To request an extension for filing payroll tax returns
d) To claim tax exemptions for employees
Answer: b) To report and remit payroll taxes on a quarterly basis
Which of the following payroll taxes is typically paid by the employer only?
a) Social Security tax
b) Medicare tax
c) Unemployment tax
d) State income tax
Answer: c) Unemployment tax