CPS Study Guide 2026
Everything you need to pass the CPS exam in one place: the exam format, every topic to study, real practice questions with explanations, flashcards, and full-length practice tests. Free, no sign-up needed.
📋 CPS Exam Format at a Glance
📚 CPS Topics to Study (69)
✍️ Sample CPS Questions & Answers
1. A company pays an independent contractor $650 during the tax year. What is the employer's reporting obligation?
Form 1099-NEC is required only when a contractor is paid $600 or more in a tax year; $650 exceeds the threshold and must be reported.
2. Which state law concept requires employers to pay all wages due upon an employee's termination on a specific timeline that may differ from regular payday?
State final paycheck laws specify when terminated employees must receive their last paycheck, and the deadline often differs (sometimes immediately) from the regular pay schedule.
3. Which corrected form must an employer file to correct a previously filed Form 941 that understated wages and taxes?
Form 941-X (Adjusted Employer's Quarterly Federal Tax Return) is used to correct errors on a previously filed Form 941.
4. What differentiates fixed from variable costs in CPS?
Fixed costs (rent, salaries) remain constant; variable costs (materials, commissions) fluctuate with activity volume.
5. Which agency enforces the Employee Polygraph Protection Act (EPPA)?
The Wage and Hour Division of the Department of Labor enforces the EPPA, which generally prohibits employers from requiring lie detector tests.
6. Why is payroll compliance essential for businesses?
Compliance ensures that businesses meet all legal requirements, avoid penalties, and protect employee rights.