Practice Test Geeks(CPM) Certified Payroll Manager Practice Test
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W-2, 1099 & Year-End Reporting Flashcards

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

Read the first 7 W-2, 1099 & Year-End Reporting flashcards as text

  1. An employer provides group-term life insurance coverage of $75,000 to an employee. What amount is reported on the W-2?

    Answer: The cost of coverage over $50,000, reported in Box 1 and Box 12 with code C

    The IRS-table cost of group-term life insurance coverage exceeding $50,000 is imputed income, reported as wages in Box 1 and in Box 12 with code C.

  2. A company pays $1,500 in attorney fees to a law firm incorporated as a C corporation. Is a 1099 required?

    Answer: Yes — attorney fees always require a 1099-NEC regardless of payee type

    Attorney fees are a specific exception to the corporate exemption rule; payments of $600 or more to attorneys must be reported on Form 1099-NEC or 1099-MISC regardless of the firm's corporate status.

  3. Which W-2 Box 12 code is used to report Roth 401(k) contributions?

    Answer: Code AA

    Designated Roth 401(k) contributions are reported in Box 12 with code AA, while code D is used for traditional pre-tax 401(k) deferrals.

  4. An employer fails to file correct 1099-NEC forms within 30 days of the January 31 deadline. What is the per-form penalty for this first-tier failure?

    Answer: $60

    The first-tier penalty for information returns filed within 30 days of the due date is $60 per form (2024 indexed amount), with an annual cap for small businesses.

  5. Which box on Form W-2 reports tips that the employee reported to the employer?

    Answer: Box 7

    Box 7 reports Social Security tips that employees reported to the employer, while Box 8 reports allocated tips that employers assign to tipped employees.

  6. A payroll manager discovers that a 1099-NEC was issued to a vendor that is actually a corporation. What action should be taken?

    Answer: File a corrected 1099-NEC showing $0 and issue a corrected recipient copy

    To correct an erroneously issued 1099-NEC, the payer must file a corrected return with the IRS showing $0 and furnish the corrected copy to the recipient.

  7. Backup withholding is applied at what flat rate on reportable payments when a payee fails to provide a valid TIN?

    Answer: 24%

    Backup withholding is required at a flat 24% rate when a payee fails to furnish a correct taxpayer identification number (TIN) to the payer.