Practice Test Geeks(CPS) Certified Payroll Specialist Practice Test
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Tax Planning & Compliance 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 Tax Planning & Compliance flashcards as text

  1. Which of the following fringe benefits is excluded from federal income tax withholding?

    Answer: Group-term life insurance up to $50,000

    The cost of employer-provided group-term life insurance coverage up to $50,000 is excluded from the employee's gross income.

  2. The Additional Medicare Tax of 0.9% applies to wages exceeding which threshold for a single filer?

    Answer: $200,000

    Employers must withhold the 0.9% Additional Medicare Tax on wages paid to an employee in excess of $200,000 in a calendar year.

  3. A supplemental wage payment of $8,000 is made to an employee who has already received more than $1 million in supplemental wages this year. What withholding rate applies?

    Answer: 37% mandatory flat rate

    Supplemental wages exceeding $1 million in a calendar year are subject to mandatory withholding at the highest income tax rate of 37%.

  4. An employer pays $400 per month toward a qualified parking benefit for an employee. For 2024, the monthly exclusion limit is $315. How much is taxable?

    Answer: $85 per month is taxable wages

    Only the portion of employer-paid qualified parking exceeding the monthly exclusion limit ($315 in 2024) is included in the employee's taxable wages.

  5. Which IRS lookback period determines a 2024 employer's deposit schedule?

    Answer: July 1, 2022 – June 30, 2023

    The lookback period for 2024 is July 1, 2022 through June 30, 2023, covering the four quarters of that 12-month window.

  6. An employee repays $8,500 in wages originally paid in a prior year that were over-reported. How should the employer handle the tax correction?

    Answer: File Form W-2c and Form 941-X to correct the prior-year return

    Prior-year wage over-payments require a corrected W-2c and an adjusted return on Form 941-X to correct both income and FICA taxes.

  7. Which federal tax law requires employers to withhold income taxes on wages paid to nonresident alien employees at a flat 30% unless a tax treaty applies?

    Answer: Chapter 3 withholding under the Internal Revenue Code

    Chapter 3 of the Internal Revenue Code governs withholding on U.S.-source income paid to nonresident aliens, including wages, at a 30% default rate.