CPS Client Advisory Services 3

Question 1

A client's employee is subject to both a child support withholding order and a creditor garnishment. Which obligation takes priority under federal law?

Accepted Answer

The child support withholding order, regardless of receipt date

Answer

Federal law under Title III of the Consumer Credit Protection Act and CCPA give child support and alimony orders priority over other garnishments.

Question 2

When a client terminates an employee who has an outstanding payroll advance, what is the correct payroll treatment?

Accepted Answer

The employer may deduct the outstanding balance from the final paycheck subject to state law limits

Answer

Employers may generally recover outstanding advances from the final paycheck, but state wage payment laws may restrict deductions below minimum wage.

Question 3

A client wants to provide employees with a $150 monthly transit pass benefit. How should this be treated for payroll tax purposes?

Accepted Answer

Excluded from income up to the monthly IRS transit benefit limit

Answer

Employer-provided transit passes are excluded from income up to the IRS qualified transportation fringe benefit monthly limit (e.g., $315/month in 2024).

Question 4

A payroll advisor is helping a client calculate the Additional Medicare Tax. Who is responsible for withholding the 0.9% Additional Medicare Tax?

Accepted Answer

The employer must withhold it once wages to an employee exceed $200,000 in the calendar year

Answer

Employers must withhold the 0.9% Additional Medicare Tax on wages paid to an individual employee exceeding $200,000 in a calendar year; there is no employer match.

Question 5

Which IRS form must a client file to report backup withholding on payments made to vendors who failed to provide a valid TIN?

Accepted Answer

Form 945

Answer

Form 945 is used to report and remit backup withholding and other nonpayroll federal income tax withholding to the IRS.

(CPS) Certified Payroll Specialist Practice Test

(CPS) Certified Payroll Specialist Practice Test

CPS Client Advisory Services 3