CA Payroll Processing & Administration 3 — Questions and Answers
Question 1: An employer deposits payroll taxes using the monthly deposit schedule. For March wages paid on March 31, by what date must the deposit be made?
- March 31
- April 10
- April 15 (Correct answer)
- April 30
Correct answer: April 15
Monthly depositors must deposit taxes accumulated during each calendar month by the 15th of the following month.
Question 2: Which of the following is a correct statement about the Additional Medicare Tax under the ACA?
- Employers must match the 0.9% Additional Medicare Tax
- The 0.9% surtax applies to wages exceeding $200,000 for single filers (Correct answer)
- The Additional Medicare Tax applies to all employees regardless of earnings
- Employers withhold the tax only upon employee request
Correct answer: The 0.9% surtax applies to wages exceeding $200,000 for single filers
Employers must withhold the 0.9% Additional Medicare Tax on wages over $200,000 paid to an employee in a calendar year; there is no employer match.
Question 3: A salaried exempt employee is absent for three full days due to personal reasons and the employer docks pay. What is the FLSA implication?
- Permissible; exempt status is maintained
- Permissible only if the deduction does not reduce pay below the salary threshold
- Impermissible; docking destroys the salary basis and may eliminate exemption (Correct answer)
- Permissible if the employee signed a deduction agreement
Correct answer: Impermissible; docking destroys the salary basis and may eliminate exemption
Docking an exempt employee's pay for partial-week personal absences violates the salary basis test and can destroy the FLSA exemption.
Question 4: What is the purpose of the IRS Publication 15 (Circular E)?
- To guide employees on completing Form W-4
- To provide employers with federal income tax withholding tables and payroll tax guidance (Correct answer)
- To instruct employers on state unemployment insurance rates
- To outline Social Security benefit calculations for retirees
Correct answer: To provide employers with federal income tax withholding tables and payroll tax guidance
IRS Publication 15 (Employer's Tax Guide) provides withholding tables and instructions for calculating federal payroll taxes.
Question 5: Under IRC Section 125, a cafeteria plan allows employees to pay for qualified benefits with pre-tax dollars. Which of the following is NOT a qualified benefit under a Section 125 plan?
- Health insurance premiums
- Dependent care FSA contributions
- Group-term life insurance up to $50,000
- Vacation pay cash-out (Correct answer)
Correct answer: Vacation pay cash-out
Vacation pay cash-outs are not a qualified benefit under Section 125 and cannot be paid with pre-tax dollars through a cafeteria plan.
Question 6: An employee's gross pay is $5,000 per month. Their pre-tax 401(k) contribution is $500 and health insurance premium is $200. What is the employee's FICA taxable wage base for that month?
- $4,300
- $4,500
- $4,800 (Correct answer)
- $5,000
Correct answer: $4,800
401(k) contributions reduce federal income tax but not FICA wages; only the $200 health premium (Section 125) reduces FICA, leaving $4,800 subject to FICA.
Question 7: Which form must employers file to report annual federal unemployment (FUTA) tax?
- Form 940 (Correct answer)
- Form 941
- Form 944
- Form W-3
Correct answer: Form 940
Form 940 (Employer's Annual Federal Unemployment Tax Return) is used to report and pay FUTA tax annually.
CA Payroll Processing & Administration 3
An employer deposits payroll taxes using the monthly deposit schedule.
For March wages paid on March 31, by what date must the deposit be made?