CPP Certified Payroll Professional 4 — Questions and Answers
Question 1: Under the ACA employer mandate, applicable large employers (ALEs) must offer minimum essential coverage to at least what percentage of full-time employees?
- 50%
- 70%
- 95% (Correct answer)
- 100%
Correct answer: 95%
ALEs must offer minimum essential coverage to at least 95% of their full-time employees (and their dependents) to avoid the Section 4980H(a) penalty.
Question 2: Which of the following is a correct statement about the Additional Medicare Tax?
- It is paid equally by the employer and employee
- It is 0.9% on wages exceeding $200,000 for a single filer and is the employee's responsibility only (Correct answer)
- It applies to all Medicare wages without any threshold
- It replaces the standard 1.45% Medicare tax above the wage base
Correct answer: It is 0.9% on wages exceeding $200,000 for a single filer and is the employee's responsibility only
The 0.9% Additional Medicare Tax applies to wages over $200,000 (single) and is withheld from the employee only — the employer does not match it.
Question 3: What is the FUTA tax rate, and on what wage base does it apply?
- 6.0% on the first $7,000 of each employee's wages (Correct answer)
- 6.2% on the first $7,000 of each employee's wages
- 0.6% on all wages paid
- 6.0% on the first $10,000 of each employee's wages
Correct answer: 6.0% on the first $7,000 of each employee's wages
The gross FUTA rate is 6.0% on the first $7,000 of wages per employee; a credit of up to 5.4% reduces the net rate to 0.6% for most employers.
Question 4: Which form must an employer file to correct errors on a previously filed Form W-2?
- Form W-2c (Correct answer)
- Form W-3c
- Form 941-X
- Form 1099-C
Correct answer: Form W-2c
Form W-2c (Corrected Wage and Tax Statement) is used to correct errors on a previously issued Form W-2.
Question 5: A nonresident alien employee has a tax treaty exemption. Which form must the employee provide to claim treaty benefits on wages?
- Form W-9
- Form W-4
- Form 8233 (Correct answer)
- Form 1042-S
Correct answer: Form 8233
Nonresident alien employees use Form 8233 to claim exemption from withholding on compensation covered by a tax treaty.
Question 6: What is the lookback period used to determine an employer's deposit schedule for Form 941 purposes?
- The current calendar quarter
- The 12-month period ending June 30 of the prior year (Correct answer)
- The prior calendar year
- The most recent 4 quarters
Correct answer: The 12-month period ending June 30 of the prior year
The lookback period for Form 941 deposit schedule determination is July 1 through June 30 of the prior year (a 12-month window ending June 30).
Question 7: An employee elected to contribute $200 per pay period to a traditional 401(k) plan. How does this affect federal income tax withholding?
- It has no effect on federal income tax withholding
- It reduces the wages subject to federal income tax withholding by $200 (Correct answer)
- It reduces both federal income tax and FICA taxable wages by $200
- It increases the employee's tax refund directly
Correct answer: It reduces the wages subject to federal income tax withholding by $200
Traditional 401(k) contributions reduce wages subject to federal income tax withholding but do NOT reduce FICA (Social Security and Medicare) taxable wages.
CPP Certified Payroll Professional 4
Under the ACA employer mandate, applicable large employers (ALEs) must offer minimum essential coverage to at least what percentage of full-time employees?