CPP CPP Advanced Practice 2

Question 1

An employee receives a $5,000 signing bonus that must be repaid if they leave within 12 months. How should this bonus be treated for payroll tax purposes when paid?

Accepted Answer

Subject to FICA and federal income tax withholding when paid

Answer

Signing bonuses are taxable wages subject to FICA and federal income tax withholding in the pay period they are paid, regardless of repayment conditions.

Question 2

Which method must employers use to deposit federal payroll taxes if their total tax liability exceeded $50,000 in the prior lookback period?

Accepted Answer

Semi-weekly deposit schedule

Answer

Employers with more than $50,000 in tax liability during the lookback period are classified as semi-weekly depositors.

Question 3

Under the FLSA, what is the maximum tip credit an employer may claim against the federal minimum wage for tipped employees?

Accepted Answer

$2.13 per hour

Answer

The federal maximum tip credit is $2.13 per hour, meaning tipped employees must receive at least $2.13 in direct wages.

Question 4

A nonresident alien employee on an F-1 visa has been in the US for 4 years. Which FICA treatment applies?

Accepted Answer

Subject to both Social Security and Medicare taxes

Answer

F-1 visa holders are exempt from FICA only during their first 5 calendar years; after that period they become subject to both taxes.

Question 5

An employer pays an employee's $1,200 personal cell phone bill as a taxable fringe benefit. What is the proper payroll treatment?

Accepted Answer

Include in wages and withhold both FIT and FICA

Answer

Employer-paid personal cell phone expenses that are not for business use are taxable wages subject to FIT withholding and FICA taxes.

CPP - Certified Payroll Professional Practice Test

CPP - Certified Payroll Professional Practice Test

CPP CPP Advanced Practice 2