APA Payroll Administration and Management 3

Question 1

Which of the following is considered a supplemental wage payment subject to a flat 22% federal withholding rate (below $1 million threshold)?

Accepted Answer

Retroactive pay adjustment for a prior period

Answer

Retroactive pay is a supplemental wage; employers may withhold at the optional flat 22% rate for supplemental wages below the $1 million threshold.

Question 2

Under a non-accountable plan, employee expense reimbursements are treated as:

Accepted Answer

Taxable wages subject to income tax, FICA, and FUTA withholding

Answer

Reimbursements under a non-accountable plan (no business purpose requirement or substantiation) are treated as supplemental wages, fully taxable to the employee.

Question 3

An employee receives a $5,000 cash award from their employer for outstanding performance. How is this typically treated for payroll purposes?

Accepted Answer

Included in wages and subject to income tax and FICA

Answer

Cash awards, regardless of the reason, are taxable wages subject to both income tax withholding and FICA taxes.

Question 4

Which payroll method calculates each employee's net pay independently based on their specific tax withholding elections?

Accepted Answer

Percentage method

Answer

The percentage method uses IRS Publication 15-T tables and each employee's W-4 data to compute withholding for any payroll frequency.

Question 5

FUTA tax is deposited using Form 941 quarterly. Which statement about FUTA is correct?

Accepted Answer

The FUTA tax rate is 6% on the first $7,000 of each employee's wages, paid solely by the employer

Answer

FUTA is exclusively an employer tax at 6% on the first $7,000 of each employee's annual wages, with a credit of up to 5.4% for timely state unemployment tax payments.

(APA) American Payroll Association Certification Practice Test

(APA) American Payroll Association Certification Practice Test

APA Payroll Administration and Management 3