Certified Payroll Professional Practice Exam

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How can employers determine the federal income tax using the Wage Bracket method?

Based on employee's job title
By looking up the gross wage in the IRS table
Using the pay cycle and marital status
Referring to the unemployment rates

The correct answer is: By looking up the gross wage in the IRS table

Employers can determine the federal income tax using the Wage Bracket method by looking up the gross wage in the IRS table. This method involves finding the intersection of the employee's gross wages and the number of withholding allowances claimed. The IRS provides tables that contain these intersections, making it a straightforward way for employers to calculate federal income tax withholding accurately. Options A, C, and D are incorrect: - Option A (Based on employee's job title) is incorrect because federal income tax is not determined based on job title but on the employee's gross wage and number of withholding allowances. - Option C (Using the pay cycle and marital status) is incorrect because while pay cycle and marital status can impact tax withholding, the Wage Bracket method specifically relies on gross wage and withholding allowances. - Option D (Referring to the unemployment rates) is incorrect as unemployment rates are not relevant to determining federal income tax using the Wage Bracket method.