CPM Cheat Sheet 2026

The 30 highest-yield CPM facts, distilled from real exam questions. Print it, save it as a PDF, or study it here — free, no sign-up.

1. What is a Roth 401(k) contribution? → An after-tax employee contribution that grows tax-free with qualified tax-free withdrawals
2. Which form must employers file annually to reconcile federal income tax withholding and FICA taxes? → Form W-3
3. Which of the following deductions does NOT reduce gross wages to 'disposable earnings' for garnishment purposes? → Voluntary 401(k) contributions
4. Under a qualified Employee Stock Purchase Plan (ESPP) that meets Section 423 requirements, the maximum discount that may be offered to employees is: → 15%
5. Which form does the employer use to notify employees of their COBRA rights upon a qualifying event? → COBRA Election Notice
6. Which IRS form is used to report federal income tax withheld from non-payroll payments such as pensions and gambling winnings? → Form 945
7. What is the purpose of Form W-3 in year-end reporting? → To transmit Copy A of all W-2 forms to the Social Security Administration
8. For Incentive Stock Options (ISOs), which item is a preference item for Alternative Minimum Tax (AMT) purposes in the year of exercise? → The spread between the exercise price and FMV at exercise
9. An employee receives a $5,000 nonqualified deferred compensation payment. When is this amount subject to FICA taxes? → When the compensation vests and is no longer subject to a substantial risk of forfeiture
10. What is included in gross pay? → Base salary, bonuses, and overtime pay.
11. Under COBRA, how long must continuation coverage be offered to a qualified beneficiary who loses coverage due to voluntary termination? → 18 months
12. Under California's ABC test (AB5), which prong requires that the worker perform work outside the usual course of the hiring entity's business? → Prong B
13. Which system feature automatically prevents a payroll run from processing if total gross payroll exceeds a predefined threshold? → Payroll control total / threshold alert
14. An employee works in State A but lives in State B. The two states have a reciprocal agreement. Where should the employer withhold income tax? → State B (the employee's state of residence)
15. A remote employee's state income tax withholding obligation is primarily determined by which factor under the 'convenience of the employer' doctrine? → Whether the employee works remotely for their own convenience or due to employer necessity
16. Which law governs the minimum standards for most voluntarily established retirement plans in private industry? → ERISA
17. A reciprocity agreement between two states typically allows an employee to: → Have taxes withheld only for their state of residence
18. A company acquires another business mid-year. Under a successor employer situation, how should the acquired employees' FICA wage bases be treated? → The successor may continue counting wages paid by the predecessor toward the wage base
19. A CPM professional encounters an unfamiliar situation while performing federal & state tax withholding duties. What is the most appropriate first action? → Consult relevant standards, guidelines, or a qualified supervisor before proceeding
20. For federal income tax withholding purposes, which of the following is NOT considered a supplemental wage? → Regular hourly wages paid on the normal payday
21. An employer fails to file correct 1099-NEC forms within 30 days of the January 31 deadline. What is the per-form penalty for this first-tier failure? → $60
22. A company grants a $500 non-accountable plan expense reimbursement to an employee. How should this be reflected in payroll accounting? → Included in the employee's gross wages subject to income tax withholding and FICA
23. Under the common law control test, which factor is given the GREATEST weight in determining worker classification? → Behavioral control over how the work is performed
24. Which form must a payer file with the IRS when backup withholding has been applied to 1099 payments? → Form 945
25. Which financial statement line item is most directly affected when payroll liabilities remain unpaid at period-end? → Accrued liabilities on the balance sheet
26. Which provision of the Affordable Care Act requires applicable large employers (ALEs) to report health coverage information to the IRS? → Section 6056
27. Under IRS regulations, what is the maximum contribution limit for a Health Flexible Spending Account (Health FSA) employee salary reduction in 2024? → $3,200
28. A CPM professional encounters an unfamiliar situation while performing payroll audit & sox controls duties. What is the most appropriate first action? → Consult relevant standards, guidelines, or a qualified supervisor before proceeding
29. How can payroll systems improve tax compliance? → By automating tax calculations and generating accurate reports.
30. When an employer registers in a new state for payroll withholding purposes, which agency typically issues the employer withholding account number? → The state's department of revenue or taxation