CPS Tax Planning & Compliance 3

Question 1

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

Accepted Answer

Group-term life insurance up to $50,000

Answer

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

Question 2

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

Accepted Answer

$200,000

Answer

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

Question 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?

Accepted Answer

37% mandatory flat rate

Answer

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

Question 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?

Accepted Answer

$85 per month is taxable wages

Answer

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

Question 5

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

Accepted Answer

July 1, 2022 – June 30, 2023

Answer

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

(CPS) Certified Payroll Specialist Practice Test

(CPS) Certified Payroll Specialist Practice Test

CPS Tax Planning & Compliance 3