CPS Payroll Compliance & Reporting 2

Question 1

An employer fails to deposit payroll taxes by the required due date. Which IRS penalty structure applies for deposits that are 1 to 5 days late?

Accepted Answer

2% of the unpaid tax

Answer

The IRS assesses a 2% failure-to-deposit penalty for employment tax deposits that are 1 to 5 days late.

Question 2

Which form must employers use to reconcile annual Social Security and Medicare wages reported on Forms W-2 with quarterly 941 filings?

Accepted Answer

Form W-3

Answer

Form W-3 is the transmittal that summarizes all W-2 wages and tax amounts, allowing reconciliation against quarterly 941 totals.

Question 3

A company hires a contractor and pays them $650 during the year. What is the 1099-NEC filing requirement?

Accepted Answer

No 1099-NEC is required because the amount is below $600

Answer

The 1099-NEC threshold is $600; payments below that amount do not require a 1099-NEC filing.

Question 4

Under the FLSA, which record must employers retain for at least three years?

Accepted Answer

Payroll records including hours worked and wages paid

Answer

The FLSA requires employers to keep payroll records such as time cards and wage payment records for a minimum of three years.

Question 5

Which IRS deposit schedule applies to an employer whose total tax liability in the lookback period was $50,000 or less?

Accepted Answer

Monthly depositor

Answer

Employers with $50,000 or less in employment tax liability during the lookback period are classified as monthly depositors.

(CPS) Certified Payroll Specialist Practice Test