CPS Client Advisory Services 2

Question 1

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

Accepted Answer

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

Answer

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.

Question 2

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

Accepted Answer

$2,700 cash wages threshold for FICA

Answer

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

Question 3

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

Accepted Answer

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

Answer

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

Question 4

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

Accepted Answer

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

Answer

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

Question 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?

Accepted Answer

February 15

Answer

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.

(CPS) Certified Payroll Specialist Practice Test

(CPS) Certified Payroll Specialist Practice Test

CPS Client Advisory Services 2