Practice Test Geeks(CPS) Certified Payroll Specialist Practice Test
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Payroll Compliance & Reporting 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.

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  1. An employee claims exempt status on their Form W-4. Under IRS rules, how long is a W-4 claiming exemption from withholding valid?

    Answer: Until February 15 of the following year

    A W-4 claiming exempt status expires on February 15 of the year following submission, requiring the employee to file a new form to maintain exempt status.

  2. For federal income tax withholding purposes, supplemental wages paid separately from regular wages may be withheld at a flat rate. What is the current optional flat rate for supplemental wages up to $1 million?

    Answer: 22%

    The IRS optional flat withholding rate for supplemental wages (such as bonuses) paid separately is 22%.

  3. Which agency administers the Federal Unemployment Tax Act (FUTA) and oversees the federal-state unemployment compensation system?

    Answer: Department of Labor (DOL)

    The U.S. Department of Labor administers the federal-state unemployment compensation system, while FUTA tax is collected by the IRS.

  4. A non-exempt employee works 46 hours in a workweek and earns $18/hour. What is their gross pay for that week under FLSA?

    Answer: $882.00

    Regular pay: 40 × $18 = $720; overtime pay: 6 × $27 = $162; total = $882.

  5. Which IRS form is used to report non-employee compensation (e.g., freelancer payments) starting with tax year 2020?

    Answer: Form 1099-NEC

    Starting with tax year 2020, the IRS reintroduced Form 1099-NEC specifically for reporting non-employee compensation of $600 or more.

  6. An employer is subject to backup withholding because a vendor provided an incorrect TIN. What is the backup withholding rate?

    Answer: 24%

    The backup withholding rate is 24% and applies when a payee fails to provide a correct TIN or is notified by the IRS of underreported income.

  7. Under the Affordable Care Act (ACA), what does the employer shared responsibility provision (ESRP) require of Applicable Large Employers (ALEs)?

    Answer: Offer minimum essential coverage to full-time employees or potentially face a penalty

    ALEs (50+ full-time equivalent employees) must offer affordable minimum essential coverage to full-time employees or face an employer shared responsibility payment.