Certified Payroll Professional Flashcards
7 cards from real CPP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Certified Payroll Professional flashcards as text
Which of the following correctly describes a 'constructive receipt' of wages?
Answer: Wages are taxable when made available to the employee without restriction, even if not yet received
Under the doctrine of constructive receipt, income is taxable when it is credited to an employee's account or made available without substantial restrictions.
An employer provides a company car for both business and personal use. How should the personal use portion be treated for payroll purposes?
Answer: It is imputed as taxable income subject to federal income tax and FICA
The fair market value of personal use of a company vehicle is imputed income — it is added to taxable wages and subject to both federal income tax withholding and FICA.
What is a Household Employer's threshold for FICA tax obligations in 2024?
Answer: $2,700 in cash wages paid to any household employee during the year
For 2024, household employers must withhold and pay FICA taxes if they pay any single household employee $2,700 or more in cash wages during the calendar year.
Under the FLSA, which test is primarily used to determine if an individual is an employee or an independent contractor?
Answer: The economic reality test
The FLSA uses the 'economic reality test,' which examines whether the worker is economically dependent on the employer or is truly in business for themselves.
If a semiweekly depositor accumulates a tax liability of $100,000 or more on any day, when must the deposit be made?
Answer: By the next business day
The next-day deposit rule requires that if a deposit obligation reaches $100,000 on any day, the deposit must be made by the next banking day.
Which of the following is an example of an excluded fringe benefit that is NOT subject to federal income tax or FICA?
Answer: Employer-paid group-term life insurance up to $50,000
Employer-provided group-term life insurance coverage up to $50,000 is excluded from an employee's gross income under IRC Section 79.
A payroll professional discovers that Social Security taxes were under-withheld for an employee due to a system error discovered in the same quarter. What is the proper correction procedure?
Answer: Collect the under-withheld amount from the employee and report it on the current quarter's Form 941
When an under-withholding error is discovered in the same calendar year, the employer may collect the employee's share and correct it on the current quarter's Form 941 without filing Form 941-X.