CPP MCQ 3 — Questions and Answers
Question 1: Under the Consumer Credit Protection Act (CCPA), what is the maximum amount that can be garnished from an employee's disposable earnings for a child support order when the employee supports another family?
- 25%
- 50% (Correct answer)
- 55%
- 60%
Correct answer: 50%
When supporting another spouse or child, the CCPA limits child support garnishment to 50% of disposable earnings (55% if more than 12 weeks in arrears).
Question 2: Which payroll record retention period is required by the FLSA for payroll records of non-exempt employees?
- 1 year
- 2 years
- 3 years (Correct answer)
- 7 years
Correct answer: 3 years
The FLSA requires employers to retain payroll records for non-exempt employees for at least 3 years.
Question 3: A non-resident alien employee on an F-1 visa in their first year in the US is classified for tax withholding purposes as:
- Resident alien subject to regular withholding
- Non-resident alien subject to 30% flat withholding (Correct answer)
- Exempt from all federal taxes
- Subject to FICA but not federal income tax
Correct answer: Non-resident alien subject to 30% flat withholding
F-1 visa holders in their first five years are generally classified as non-resident aliens and may be subject to 30% withholding on US-source income unless a tax treaty applies.
Question 4: Which of the following accurately describes the IRS 'safe harbor' rule for federal tax deposit shortfalls?
- No penalty if the shortfall is $100 or less
- No penalty if the shortfall is $200 or less
- No penalty if the shortfall does not exceed the greater of $100 or 2% of the required deposit (Correct answer)
- No penalty if the deposit is made within 5 days of the due date
Correct answer: No penalty if the shortfall does not exceed the greater of $100 or 2% of the required deposit
The safe harbor rule waives the failure-to-deposit penalty if the shortfall does not exceed the greater of $100 or 2% of the required deposit amount.
Question 5: When an employee's state income tax withholding exemption certificate (state W-4 equivalent) is not provided, the employer must withhold state income tax as if the employee is:
- Single with zero allowances (Correct answer)
- Married with one allowance
- Single with one allowance
- Exempt from state withholding
Correct answer: Single with zero allowances
Most states require employers to withhold at the highest rate (single with zero allowances) when no valid withholding certificate is provided.
Question 6: What is the penalty rate for failure to make timely federal tax deposits for an employer that is 1 to 5 days late?
- 2%
- 5% (Correct answer)
- 10%
- 15%
Correct answer: 5%
Deposits made 1 to 5 days late are subject to a 2% penalty; however, deposits that are 6 to 15 days late incur a 5% penalty.
Question 7: An employee who is a statutory employee receives which tax treatment on their wages?
- Subject to FICA but not federal income tax withholding (Correct answer)
- Subject to federal income tax withholding only
- Exempt from all payroll taxes
- Subject to all payroll taxes including FUTA
Correct answer: Subject to FICA but not federal income tax withholding
Statutory employees (e.g., certain drivers, full-time life insurance agents) have FICA taxes withheld but are not subject to federal income tax withholding.
CPP MCQ 3
Under the Consumer Credit Protection Act (CCPA), what is the maximum amount that can be garnished from an employee's disposable earnings for a child support order when the employee supports another family?