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

7 cards from real APA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Taxation and Compliance flashcards as text

  1. Under the CCPA, what is the maximum percentage of disposable earnings that can be garnished for ordinary creditor garnishments?

    Answer: The lesser of 25% of disposable earnings or the amount by which disposable earnings exceed 30 times the federal minimum wage

    The Consumer Credit Protection Act limits ordinary garnishments to the lesser of 25% of disposable earnings or the amount exceeding 30 times the federal minimum hourly wage.

  2. Which form does an employer file annually to reconcile federal income tax withheld and FICA taxes for the year?

    Answer: Form W-3

    Form W-3 is the transmittal form that reconciles and summarizes all W-2s filed with the Social Security Administration for the year.

  3. What is the lookback period used to determine whether an employer is a monthly or semi-weekly depositor for the current year?

    Answer: July 1 of the second preceding year through June 30 of the prior year

    The lookback period is July 1 of the second preceding year through June 30 of the immediately preceding year.

  4. Which type of cafeteria plan allows employees to carry over up to $660 (2024 limit) in unused health FSA funds to the next plan year?

    Answer: Carryover provision

    The carryover provision under IRS Notice 2013-71 allows plans to permit employees to carry over a limited amount of unused FSA funds to the following plan year.

  5. A new employee hired on November 1 fails to submit a Form W-4. How should the employer withhold federal income tax?

    Answer: Withhold at the highest tax rate as if single with no adjustments

    If an employee fails to furnish a W-4, the employer must withhold as if the employee is single with no other adjustments — the highest default withholding.

  6. Sick pay paid by a third-party insurer is subject to FICA taxes for how long after the employee's first day of absence?

    Answer: 6 months

    Third-party sick pay is subject to FICA taxes only for the first six months following the last month the employee worked.

  7. Which penalty applies when an employer intentionally disregards the requirement to file correct information returns?

    Answer: $630 per return

    For intentional disregard of filing requirements, the IRS imposes a penalty of $630 per return (2024 amount) with no annual cap.