Withholding Methods (LO 9.1)

Which of the following amounts paid by an employer to an employee is not subject to withholding?

a.Commissions.

b.Salary.

c.Reimbursement of expenses under a non-accountable plan.

d.Bonus.

e.All of these choices are subject to withholding.

---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Michele is single with no dependents and earns $23,000 this year. Michele claims sixteen allowances on her Form W-4. Which of the following is correct concerning her Form W-4?

a.Michele may not under any circumstances claim sixteen allowances.

b.Michele's employer should ask her to prepare a corrected Form W-4. If Michele is unwilling to update her Form W-4, then her employer should disregard her Form W-4 and withhold at the single taxpayer rate with no allowances.

c.Michele's employer will require her to verify her right to claim sixteen allowances.

d.Michele's employer will submit a copy of her W-4 to the IRS if directed to do so by written notice.

e.None of these choices are correct.