APA Payroll Fundamentals 3 — Questions and Answers
Question 1: Which of the following is NOT a payroll tax deposit schedule under IRS rules?
- Monthly
- Semiweekly
- Quarterly (Correct answer)
- Next-day
Correct answer: Quarterly
The IRS deposit schedules are monthly, semiweekly, and next-day (for $100,000+ liability); quarterly is a filing schedule, not a deposit schedule.
Question 2: What is the Medicare surtax rate imposed on employee wages exceeding $200,000 in a calendar year?
- 0.9% (Correct answer)
- 1.45%
- 2.35%
- 3.8%
Correct answer: 0.9%
The Additional Medicare Tax is 0.9% on wages exceeding $200,000 for single filers, withheld by the employer once that threshold is crossed.
Question 3: Which document establishes the legal basis for an employer to make involuntary deductions from an employee's paycheck for debt collection?
- Form W-4
- Court-issued garnishment order (Correct answer)
- IRS levy notice CP504
- State unemployment notice
Correct answer: Court-issued garnishment order
A court-issued garnishment order legally requires the employer to withhold and remit a portion of the employee's wages to a creditor.
Question 4: Under the CCPA, the maximum amount that can be garnished from disposable earnings for ordinary debts is:
- 10% of disposable earnings
- 25% of disposable earnings or the amount by which earnings exceed 30× federal minimum wage, whichever is less (Correct answer)
- 50% of disposable earnings
- 100% minus state minimum wage
Correct answer: 25% of disposable earnings or the amount by which earnings exceed 30× federal minimum wage, whichever is less
The Consumer Credit Protection Act caps ordinary garnishments at 25% of disposable earnings or the excess over 30× the federal minimum wage, whichever is lesser.
Question 5: What is the purpose of Form SS-4?
- To claim Social Security benefits
- To apply for an Employer Identification Number (EIN) (Correct answer)
- To report backup withholding
- To elect S-corporation status
Correct answer: To apply for an Employer Identification Number (EIN)
Form SS-4 is used by employers to apply for an EIN, which is required to file payroll tax returns and make tax deposits.
Question 6: A semiweekly depositor accumulates a tax liability of $110,000 on a Wednesday. When must the deposit be made?
- By the following Friday
- By the next business day (Correct answer)
- By the following Wednesday
- Within 3 banking days
Correct answer: By the next business day
The next-day deposit rule requires any single-day tax liability of $100,000 or more to be deposited by the next banking day.
Question 7: Which type of employee benefit is excluded from both federal income tax and FICA taxes?
- Group-term life insurance over $50,000
- Employee achievement awards over IRS limits
- Employer-paid health insurance premiums (Correct answer)
- Taxable fringe benefits
Correct answer: Employer-paid health insurance premiums
Employer-paid health insurance premiums are excluded from employees' federal income tax and FICA wages under IRC Section 106.
APA Payroll Fundamentals 3
Which of the following is NOT a payroll tax deposit schedule under IRS rules?