Solutions for Payroll Accounting 2026, 36th
Edition by Bernard J. Bieg (Cases Answers
Included)
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
1
, 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.
2
Edition by Bernard J. Bieg (Cases Answers
Included)
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
1
, 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.
2
