CPP Payroll Tax Compliance 4

Question 1

Which of the following wages is exempt from FUTA tax?

Accepted Answer

Wages paid to a spouse employed by the business owner's sole proprietorship

Answer

Wages paid to a spouse working in a spouse-owned sole proprietorship are specifically exempt from FUTA under IRC Section 3306.

Question 2

What is the wage base limit for Social Security (OASDI) taxes in payroll tax compliance planning?

Accepted Answer

It is adjusted annually by the SSA based on national average wage index

Answer

The Social Security wage base is announced annually by the Social Security Administration and increases each year based on wage inflation.

Question 3

An employer issues a $500 gift card to each employee for the holidays. How is this treated for payroll tax purposes?

Accepted Answer

It is taxable wages subject to income tax withholding and FICA

Answer

Cash-equivalent gifts such as gift cards are always considered taxable wages and cannot qualify as de minimis fringe benefits regardless of value.

Question 4

What is a Credit Reduction State in the context of FUTA?

Accepted Answer

A state that borrowed federal unemployment funds and has not fully repaid them, reducing the 5.4% SUTA credit

Answer

If a state borrows from the federal unemployment trust fund and fails to repay by November 10, employers in that state face a reduced FUTA credit, increasing their net FUTA liability.

Question 5

Which IRS form is used to correct errors made on a previously filed Form 941?

Accepted Answer

Form 941-X

Answer

Form 941-X, the Adjusted Employer's Quarterly Federal Tax Return or Claim for Refund, is used to correct errors on a previously filed Form 941.

CPP - Certified Payroll Professional Practice Test

CPP - Certified Payroll Professional Practice Test

CPP Payroll Tax Compliance 4