CA Payroll Processing & Administration 2 — Questions and Answers
Question 1: An employee earns $3,200 bi-weekly. What is the correct annualized salary used for federal income tax withholding purposes?
- $76,800
- $83,200 (Correct answer)
- $38,400
- $96,000
Correct answer: $83,200
Bi-weekly pay periods (26 per year) × $3,200 = $83,200 annualized salary.
Question 2: Under the Fair Labor Standards Act (FLSA), which of the following employees is classified as exempt from overtime pay requirements?
- A part-time retail cashier earning $12/hour
- A salaried executive earning $684/week managing two or more employees (Correct answer)
- A full-time warehouse worker earning $50,000/year
- A non-supervisory office worker paid on a salary basis
Correct answer: A salaried executive earning $684/week managing two or more employees
The FLSA executive exemption requires a salary of at least $684/week and management of two or more employees as a primary duty.
Question 3: A company pays employees on a semi-monthly basis. How many payroll periods occur annually?
- 12
- 24 (Correct answer)
- 26
- 52
Correct answer: 24
Semi-monthly payroll occurs twice per month, resulting in 24 pay periods per year.
Question 4: Which IRS form must an employer use to report annual wage and tax information for each employee?
- Form 940
- Form 941
- Form W-2 (Correct answer)
- Form 1099-NEC
Correct answer: Form W-2
Form W-2 (Wage and Tax Statement) is filed annually to report each employee's earnings and withholdings.
Question 5: When an employee claims 'exempt' on their Form W-4, what does the employer do?
- Withholds federal income tax at the highest rate
- Withholds only FICA taxes, not federal income tax
- Withholds no federal income tax from the employee's wages (Correct answer)
- Submits the W-4 to the IRS for approval
Correct answer: Withholds no federal income tax from the employee's wages
An 'exempt' W-4 claim means the employer withholds zero federal income tax, though FICA taxes still apply.
Question 6: Which payroll record retention requirement does the IRS generally mandate for employment tax records?
- 1 year
- 2 years
- 4 years (Correct answer)
- 7 years
Correct answer: 4 years
The IRS requires employers to retain employment tax records for at least 4 years after the tax is due or paid.
Question 7: A garnishment order requires withholding 25% of an employee's disposable earnings. The employee's weekly disposable earnings are $480. Federal minimum wage is $7.25/hour (30× = $217.50). What is the maximum allowable garnishment?
- $120.00 (Correct answer)
- $217.50
- $262.50
- $480.00
Correct answer: $120.00
The CCPA limits garnishment to the lesser of 25% of disposable earnings ($120) or the amount exceeding 30× minimum wage ($262.50), so $120 applies.
CA Payroll Processing & Administration 2
An employee earns $3,200 bi-weekly.
What is the correct annualized salary used for federal income tax withholding purposes?