Practice Test Geeks(APA) American Payroll Association Certification Practice Test
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Taxation and Compliance Flashcards

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  1. Which IRS form must an employer use to correct a previously filed Form W-2 that reported incorrect wages?

    Answer: Form W-2c

    Form W-2c (Corrected Wage and Tax Statement) is used to correct errors on a previously issued Form W-2.

  2. Under the Trust Fund Recovery Penalty, who can be held personally liable for unpaid payroll taxes?

    Answer: Any responsible person who willfully fails to collect or pay over taxes

    The TFRP under IRC Section 6672 imposes personal liability on any responsible person who willfully fails to collect, account for, or pay over trust fund taxes.

  3. What is the social security wage base for 2024?

    Answer: $168,600

    The Social Security wage base for 2024 is $168,600; wages above this threshold are not subject to the 6.2% Social Security tax.

  4. An employee's Form W-4 is received by the employer on March 10. When must the employer implement the new withholding?

    Answer: By the start of the next payroll period, no later than 30 days after receipt

    Employers must put a new or revised W-4 into effect no later than the start of the first payroll period ending on or after the 30th day from when the form was received.

  5. Which of the following is a characteristic of a Section 125 cafeteria plan?

    Answer: Employees may choose between taxable cash and nontaxable benefits

    A Section 125 cafeteria plan allows employees to choose between taxable cash compensation and qualified nontaxable benefits, reducing taxable wages.

  6. Which payroll tax deposit rule requires a next-day deposit when total accumulated undeposited taxes reach $100,000 or more?

    Answer: $100,000 one-day rule

    The $100,000 one-day (next-day) rule requires any employer—regardless of depositor status—to deposit accumulated taxes by the next banking day once they reach $100,000.

  7. For federal unemployment tax (FUTA) purposes, which employees are excluded from FUTA coverage?

    Answer: Employees of section 501(c)(3) nonprofit organizations

    Employees of qualifying Section 501(c)(3) organizations are generally exempt from FUTA tax coverage.