CPP CPP Advanced Practice 4

Question 1

Under IRS rules, what is the annual exclusion limit for employer-provided dependent care assistance through a DCAP/FSA in 2024?

Accepted Answer

$5,000 per household ($2,500 if married filing separately)

Answer

The dependent care FSA exclusion is $5,000 per household annually ($2,500 for married filing separately), and amounts above this limit are taxable wages.

Question 2

Which of the following correctly describes the 'special accounting rule' for fringe benefits?

Accepted Answer

Employers may treat fringe benefits provided in November–December as paid in the following January

Answer

The IRS special accounting rule allows employers to treat fringe benefits provided during the last 2 months of the year as paid in January of the following year for reporting purposes.

Question 3

An employee is paid biweekly and claims exempt on their W-4. In February, the employer discovers the employee earned $50,000 last year and owed $800 in taxes. What should the employer do?

Accepted Answer

Begin withholding based on Single-0 status starting with the next paycheck

Answer

If an employer has reason to believe an exempt claim is invalid (employee owed taxes and earned above a threshold), the employer should withhold as if the employee is single with no adjustments.

Question 4

What triggers the Additional Medicare Tax of 0.9% for an employee, and who is responsible for withholding it?

Accepted Answer

Wages over $200,000; employer withholds once cumulative wages exceed that threshold

Answer

Employers must withhold the 0.9% Additional Medicare Tax on wages paid to an employee once their wages from that employer exceed $200,000 in a calendar year.

Question 5

An employee receives a company car with an annual lease value of $9,600 and uses it 70% for business. What is the taxable fringe benefit amount using the annual lease value method?

Accepted Answer

$2,880

Answer

Only personal use (30%) is taxable: $9,600 × 30% = $2,880, which must be included in the employee's wages.

CPP - Certified Payroll Professional Practice Test

CPP - Certified Payroll Professional Practice Test

CPP CPP Advanced Practice 4