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CPP Advanced Practice 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 CPP Advanced Practice flashcards as text

  1. Under IRS rules, what is the annual exclusion limit for employer-provided dependent care assistance through a DCAP/FSA in 2024?

    Answer: $5,000 per household ($2,500 if married filing separately)

    The dependent care FSA exclusion is $5,000 per household annually ($2,500 for married filing separately), and amounts above this limit are taxable wages.

  2. Which of the following correctly describes the 'special accounting rule' for fringe benefits?

    Answer: Employers may treat fringe benefits provided in November–December as paid in the following January

    The IRS special accounting rule allows employers to treat fringe benefits provided during the last 2 months of the year as paid in January of the following year for reporting purposes.

  3. An employee is paid biweekly and claims exempt on their W-4. In February, the employer discovers the employee earned $50,000 last year and owed $800 in taxes. What should the employer do?

    Answer: Begin withholding based on Single-0 status starting with the next paycheck

    If an employer has reason to believe an exempt claim is invalid (employee owed taxes and earned above a threshold), the employer should withhold as if the employee is single with no adjustments.

  4. What triggers the Additional Medicare Tax of 0.9% for an employee, and who is responsible for withholding it?

    Answer: Wages over $200,000; employer withholds once cumulative wages exceed that threshold

    Employers must withhold the 0.9% Additional Medicare Tax on wages paid to an employee once their wages from that employer exceed $200,000 in a calendar year.

  5. An employee receives a company car with an annual lease value of $9,600 and uses it 70% for business. What is the taxable fringe benefit amount using the annual lease value method?

    Answer: $2,880

    Only personal use (30%) is taxable: $9,600 × 30% = $2,880, which must be included in the employee's wages.

  6. Which payroll concept determines whether a worker is an employee or independent contractor for FICA purposes under the common law test?

    Answer: The degree of behavioral and financial control the hiring firm exercises

    The IRS common law test focuses on behavioral control, financial control, and the type of relationship to determine worker classification for tax purposes.

  7. A Section 125 cafeteria plan allows employees to pay for group health insurance premiums on a pre-tax basis. Which tax is NOT reduced by employee contributions made through the plan?

    Answer: FUTA tax

    FUTA (Federal Unemployment Tax Act) is an employer-only tax and is not directly affected by Section 125 salary reductions, though FUTA wages are reduced since Section 125 amounts are excluded from FUTA wages.