CPP Payroll Tax Compliance 2 — Questions and Answers
Question 1: What is the employer's share of the Social Security tax rate applied to employee wages up to the wage base?
- 6.2% (Correct answer)
- 7.65%
- 12.4%
- 1.45%
Correct answer: 6.2%
The employer pays 6.2% of the employee's wages up to the Social Security wage base as their share of OASDI.
Question 2: Which IRS form must employers file quarterly to report federal income tax withheld and FICA taxes?
- Form 941 (Correct answer)
- Form 940
- Form W-2
- Form 1099
Correct answer: Form 941
Form 941, the Employer's Quarterly Federal Tax Return, is used to report withheld income taxes and FICA taxes each quarter.
Question 3: An employee earns $3,000 bi-weekly. What is the combined employee FICA tax (Social Security + Medicare) withheld per paycheck?
- $229.50 (Correct answer)
- $186.00
- $244.50
- $153.00
Correct answer: $229.50
Employee FICA is 7.65% (6.2% SS + 1.45% Medicare) × $3,000 = $229.50.
Question 4: Under FUTA, what is the standard federal unemployment tax rate before any state credit reduction?
- 6.0% (Correct answer)
- 0.6%
- 5.4%
- 3.0%
Correct answer: 6.0%
The gross FUTA rate is 6.0% on the first $7,000 of each employee's wages, before applying the 5.4% state tax credit.
Question 5: What is the deposit penalty rate for payroll taxes that are 1–5 days late under the IRS penalty schedule?
- 2% (Correct answer)
- 5%
- 10%
- 15%
Correct answer: 2%
A 2% penalty applies when federal payroll tax deposits are 1–5 days late under the tiered penalty structure.
Question 6: Which lookback period determines whether a semi-weekly or monthly deposit schedule applies for Form 941 filers?
- The 12-month period ending June 30 of the prior year (Correct answer)
- The prior calendar quarter
- The prior calendar year January–December
- The most recent 4 quarters
Correct answer: The 12-month period ending June 30 of the prior year
The IRS uses the 12-month lookback period ending June 30 of the prior year to assign a 941 depositor's schedule.
Question 7: What triggers the Additional Medicare Tax of 0.9% for employees?
- Wages exceeding $200,000 from a single employer in a calendar year (Correct answer)
- Combined household income exceeding $125,000
- Any wages paid to a highly compensated employee
- Medicare wages exceeding the Social Security wage base
Correct answer: Wages exceeding $200,000 from a single employer in a calendar year
Employers must withhold the additional 0.9% Medicare Tax once they pay an employee more than $200,000 in a calendar year, regardless of filing status.
CPP Payroll Tax Compliance 2
What is the employer's share of the Social Security tax rate applied to employee wages up to the wage base?