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 receives a levy from the IRS on an employee's wages. How quickly must the employer begin withholding?

    Answer: As soon as possible but no later than the next payday

    Upon receiving an IRS wage levy (Form 668-W), the employer must begin withholding the required amount as soon as possible, at the next regular payday.

  2. A client asks about the difference between a discretionary and a non-discretionary bonus for FLSA overtime purposes. Which type must be included in the regular rate of pay?

    Answer: Non-discretionary bonuses promised in advance or tied to productivity

    Non-discretionary bonuses—those promised, announced, or tied to production/attendance—must be included in the regular rate of pay for FLSA overtime calculations.

  3. A client establishes a Health Reimbursement Arrangement (HRA) for employees. What is the tax treatment of employer contributions to an HRA?

    Answer: Employer contributions are tax-deductible and excluded from employees' taxable income

    Employer HRA contributions are fully tax-deductible to the employer and excluded from employees' gross income and FICA wages when used for qualified medical expenses.

  4. When a client pays tipped employees, what is the minimum cash wage the employer must pay under federal law before the tip credit is applied?

    Answer: $2.13 per hour

    The federal minimum cash wage for tipped employees is $2.13 per hour, with employers allowed a tip credit of up to $5.12 to reach the $7.25 federal minimum wage.

  5. A client's employee has a domestic partner who is not a tax dependent. The employer pays $400/month in health insurance premiums for the domestic partner. How should this be treated?

    Answer: Included in the employee's taxable wages as imputed income for federal tax purposes

    Employer-paid health premiums for a domestic partner who is not an IRS tax dependent are imputed income, taxable for federal income tax and FICA purposes.

  6. A client asks how to handle an employee's final paycheck when the employee is involuntarily terminated in a state that requires immediate payment. What should the payroll advisor recommend?

    Answer: Issue the final paycheck on the date of termination or within the state-required timeframe

    Many states require immediate or next-business-day payment of final wages upon involuntary termination; payroll advisors must follow the applicable state law, which overrides company policy.

  7. A client wants to offer employees a commuter parking benefit. What is the maximum monthly amount that can be excluded from an employee's income under IRC Section 132(f) for 2024?

    Answer: $315

    For 2024, the monthly exclusion limit for employer-provided qualified parking under IRC Section 132(f) is $315 per employee.