Practice Test Geeks(CPS) Certified Payroll Specialist Practice Test
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Client Advisory Services Flashcards

7 cards from real CPS practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Client Advisory Services flashcards as text

  1. A client asks why their multistate employee's W-2 shows wages allocated to two different states. What is the best explanation?

    Answer: Wages are apportioned based on the days or time worked in each state

    Multistate W-2 wages are apportioned based on the actual days or time the employee worked in each state, per each state's sourcing rules.

  2. A small business client wants to pay a household employee $5,000 for the year. What federal payroll tax threshold is relevant?

    Answer: $2,700 cash wages threshold for FICA

    For 2024, household employers must withhold and pay FICA taxes when cash wages to a household employee reach $2,700 in a calendar year.

  3. When advising a client on retroactive pay increases resulting from a union contract settlement, which payroll compliance step is most critical?

    Answer: Calculate and withhold applicable taxes on the retroactive wages in the current period

    Retroactive pay is taxable wages subject to withholding in the pay period it is actually paid, not the prior periods it relates to.

  4. A client is setting up a SIMPLE IRA plan. What is the employer contribution option that requires no employee election?

    Answer: Non-elective contribution of 2% of each eligible employee's compensation

    Employers may choose to make a 2% non-elective contribution to all eligible employees regardless of whether the employee contributes.

  5. A client's employee claims exempt from federal income tax withholding on their W-4. By what date must a new W-4 be filed to maintain the exempt status each year?

    Answer: February 15

    Exempt status on a W-4 expires on February 15 each year, and employees must submit a new W-4 by that date to continue claiming exemption.

  6. Which form should a payroll advisor recommend a client use to report FUTA tax liability if the annual FUTA tax exceeds $500?

    Answer: Form 940

    Form 940 is the Employer's Annual Federal Unemployment (FUTA) Tax Return, used to report and pay FUTA taxes.

  7. A client asks about the look-back period used to determine their federal tax deposit schedule. Which period does the IRS use?

    Answer: The 12-month period ending the previous June 30

    The IRS look-back period is the 12-month period from July 1 of the second preceding year through June 30 of the preceding year.