CPP Basic 3

Question 1

An employee's W-4 shows single filing status and no additional withholding. Under the 2020+ W-4, what determines federal income tax withholding?

Accepted Answer

Filing status and income from Steps 2–4 only

Answer

The 2020 revised W-4 eliminated allowances; withholding is based on filing status plus any adjustments from Steps 2, 3, and 4.

Question 2

Which payroll register entry records the employer's share of FICA taxes?

Accepted Answer

Employer payroll tax expense

Answer

The employer's matching FICA contributions are recorded as employer payroll tax expense, separate from employee withholding deductions.

Question 3

What is the FUTA tax rate after the standard 5.4% credit for states with no credit reduction?

Accepted Answer

0.6%

Answer

The gross FUTA rate is 6.0%; employers in states with no credit reduction receive a 5.4% credit, leaving a net rate of 0.6%.

Question 4

Which document authorizes a payroll professional to release an employee's paycheck to a third party?

Accepted Answer

Written power of attorney signed by the employee

Answer

A written power of attorney legally authorizes a third party to receive wages on behalf of the employee.

Question 5

Under IRS rules, how long must payroll records generally be retained?

Accepted Answer

At least 4 years

Answer

The IRS requires employment tax records to be kept for at least 4 years after the due date of the tax or the date it was paid, whichever is later.

CPP - Certified Payroll Professional Practice Test