Unit 5 / Chap. 22.1 Review

Which of the following is considered a fringe benefit?

• Vacation time

• Social Security

• Salary

• Private insurance

Answer explanation

Fringe Benefits - Many full-time employees receive extra financial rewards called fringe benefits. These are extra benefits provided by the employer in addition to a regular paycheck; For example; 

Paid sick leave / vacation time 

Health & life insurance 

All retirement accounts are paid for by the employer.

• True

• False

Answer explanation

This is false. Employees have the option to create their own private retirement accounts.

For self-employed workers, setting up a retirement plan is a do-it-yourself job.

There are four available plans tailored for the self-employed: one-participant 401(k), SEP IRA, SIMPLE IRA, and Keogh plan.

Health savings plans (HSAs) and traditional and Roth IRAs are two more supplemental options.

If an employer has a "matching" program for your 401(k) that means:

• They will match your saving contributions in your stock options.

• They match your salary to those in comparable companies.

• They will put money into your retirement account up to a certain amount to match what you put into it.

• They will match the amount of stocks you buy in the company which you plan to put towards retirement.

Benefits should be considered as:

• Free things you are entitled to.

• Part of the total salary package.

• Perks of the company which you get to select from.

• Perks which you have to pay towards.

FICA is:

• A soccer league.

• A tax act.

• A salary bonus.

• A bank procedure.

Answer explanation

FICA tax is the U.S. federal payroll tax and is the amount withheld for both Medicare and Social Security taxes.

 Social security and Medicare tax  (FICA) for 2023  is 7.65%.

FICA includes:

• Social Security and Medicare tax.

• Social Security and Maternity Leave tax.

• Income and Medicare tax.

• Income and Social Security tax.

Net pay means

• The money I make before taxes

• The money I make after taxes

• All the money I've made for the year, before taxes

What's the difference between "gross" and "net" pay?

• Net pay is what I earn before taxes come out, gross is what I receive after taxes come out

• Gross pay is what I earn before taxes come out, net is what I receive after taxes come out

• They are two terms for the same thing

A W-4 Form is:

• used by employers to determine the amount of income tax to withhold from employees' earnings.

• the form taxpayers must fill out if they paid more income tax than necessary and want a refund.

• is a form employers must provide to employees shortly after year-end to report annual income and withholding for the employee's tax return.

• a printed statement of the amount that an employee is paid.

Wages are

• found by multiplying an hourly pay rate by the numbers of hours worked.

• a payment people receive for providing natural resources in the market.

• an annual amount paid monthly or bi-monthly for a specified number of hours worked.

• government fees on business and individual income, activities, products or property.