Certified Payroll Professional > MODULE 1 - Payroll Concepts > Flashcards

MODULE 1 - Payroll Concepts Flashcards

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1
Q

What is Form W-4P?

A

Withholding Certificate for Periodic Pension or Annuity Payments, allow retirees to request the amount of federal income tax to withhold from pensions or annuity payments

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2
Q

What is Form SS-8?

A

Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding, is filed with the IRS to obtain a determination of a worker’s status.

Memory Tool: Worker St8tus

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3
Q

What is Form W-9?

A

Request for Taxpayer Identification Number and Certification, is used by a payee to provide it’s taxpayer identification number (TIN) which can be a SSN or EIN

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4
Q

What is the tipped employee’s hourly rate?

A

Under the FLSA, tipped employees may be paid no less than $2.13 per hour.

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5
Q

What is the federal minimum wage?

A

$7.25 per hour

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6
Q

What is the FLSA tip credit?

A

$5.12 per hour

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7
Q

What is an exempt executive employee’s primary duties?

A

-Management of the business
-Direct 2 or more full-time employees (or equivalent)
-Authority or recommendation to hire and fire employees

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8
Q

What is Form W4-S?

A

Request for Federal Income Tax Withholding from Sick Pay, allows employees the ability to request income tax withholding from third-party sick pay.

Memory Tool: S for Sick Pay

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9
Q

What is an exempt professional employee’s duties?

A

Must be either a learned (requires advanced knowledge) or creative professional (work that involves invention or talent).

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10
Q

The traits of an employee include the following:

A

-Taxes withheld from wages
-Work is done personally
-Employer instructs about when, where, and how to work
-Reimbursed for expenses
-Performs services under company’s name

Memory Tool: T.W.E.R.P

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11
Q

What is the regular rate of pay used for?

A

To calculate a nonexempt employee’s overtime premium

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12
Q

What are child labor rules for employees under the age of 14?

A

Employment is prohibited, unless the minor works for a parent or in some situation, actors and bat/ball boys or girls.

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13
Q

What are the child labor rules for employees under the age of 18 but over the age of 15?

A

None, except prohibits working in a job that has been declared hazardous by the Department of Labor (DOL).

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14
Q

What are the types of exempt employees?

A

-Administrative
-Executive
-Professional
-Outside Sales

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15
Q

What does the FLSA stand for?

A

Fair Labor Standards Act

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16
Q

What does the FLSA cover?

A

Establishes rules about the following:
-Child labor rules
-Minimum wage
-Overtime pay
-Record keeping
-Equal pay rules

(Memory Tool: Child labor rules and M.O.R.E)

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17
Q

What is Form W-4?

A

Employee’s Withholding Certificate, is completed by employees, submitted to the employer, and is the basis of the federal income tax withholding on employee’s taxable wages.

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18
Q

What is engaged to be waiting?

A

Compensable time because the employer requires the employee to wait to begin work.

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19
Q

What is the minimum weekly exempt salary and which professions are exempt from it?

A

$684 per week, excluding teachers, lawyers, doctors and outside sales

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20
Q

What is a statutory nonemployee?

A

Qualified real estate agent or direct seller.

Memory Tool: R.E.A.D.S

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21
Q

What are the IRS penalties for the intentional misclassification of an employee as an independent contractor?

A

100% of Federal Income Tax (FIT), social security tax, and Medicare tax (both employee and employer share)

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22
Q

What is E-Verify?

A

Free online tool that allows verification of a new hire’s identity and eligibility to work in the U.S.

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23
Q
A
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24
Q

True or False: Government contractors are required to use E-Verify

A

True

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25
When is an employee's W-4 considered to be invalid?
-Requests for flat dollar or percentage withholding -Employee indicates the form is false -Alterations, additions, or deletions have been made to the form -Missing signature or date Memory Tool: R.E.A.M
26
What is excluded from regular rate of pay?
-Gifts -Reimbursed expenses -Paid time off -Overtime paid in excess of FLSA requirements -Discretionary bonuses -Stock options Memory Tool: Gifts, Reimbursements, and P.O.D.S.
27
What does FMLA stand for?
Family and Medical Leave Act
28
What does FMLA guarantee?
12 weeks of unpaid leave in a 12 months period to an eligible employee and requires group health benefits to be maintained during the leave.
29
What is backup withholding?
24% Federal Income Tax Withholding (FITW) on reportable non-payroll payments when a Tax Identification Number (TIN) is not provided or the organization is notified by the IRS to withhold.
30
On what annual Form is backup withholding reported?
Form 945
31
When is overnight travel considered time worked?
If the travel time coincides with the employee's regular working hours, whether on scheduled or non-scheduled work days.
32
What is the federal wage and hour law also known as?
Fair Labor Standards Act (FLSA)
33
What is a nondiscretionary bonus?
A contractual or agreed-upon bonus or incentive.
34
True or False: Nondiscretionary bonuses paid to nonexempt employees are included in regular rate of pay.
True
35
What is SSNVS?
Social Security Number Verification Service, which is SSA's system that allows employers to verify if an employee's name and SSN match SSA's records.
36
What is an IRS Lock-In Letter?
Directs employers to calculate federal income tax withholding in a certain manner, overriding the employee's Form W-4.
37
Who is a statutory employee?
-Full-time life insurance salesperson -Homeworker -Agent-driver or commission-driver -Traveling or city salesperson Memory Tool: F.H.A.T.
38
What is the 8/80 Rule?
Authorized by the FLSA, allows for a workweek exception for hospitals and nursing homes where overtime is paid for work over 8 hours in a day or 80 hours in a 14-day period.
39
When are meal periods considered time worked?
When they are not at least 30 minutes of uninterrupted time
40
Employees are covered under FLSA by one of two tests. What are they?
Enterprise coverage test or individual employee coverage test.
41
Exempt employees are determined by what?
Primary job duties and weekly salary.
42
When is an amended W-4 implemented?
With the first payroll no later than 30 days after the form is submitted.
43
What are the traits of an independent contractor?
-Works for multiple organizations -Works by the job -Employs assistants -Determines own sequence of work -Sets own hours -Self-employed Memory Tool: W.W.E.D.S.S
44
Who uses economic realities factors and why?
The Department of Labor uses it to determine an employer-employee relationship where the worker is economically dependent on the employer.
45
What are an exempt administrative employee's duties?
-Performing nonmanual or office work directly related to the management of business operation of the employer or customers -Must be able to exercise discretion and independent judgment regarding matters of significance
46
What varies in a fluctuating workweek?
Employee's hours vary while the employee's salary remains constant. An overtime premium must be paid for time worked over 40 hours in a workweek.
47
True or False: Form I-9 can be completed either electronically or on paper
True
48
What is the Reasonable Basis Test?
Allows employers to treat individuals as independent contractors, if there is a reasonable basis for doing so.
49
What is a workweek?
Any seven 24-hour periods totaling 168 consecutive hours.
50
What does 'waiting to be engaged' mean?
Non compensable time where the employee is free to pursue personal business
51
What are the IRS penalties for the unintentional misclassification of an employee?
Penalties of 1.5% of wages and 20% of the employee's share of social security and Medicare taxes.
52
What is a highly compensated employee under the FLSA?
An employee who meets at least one or more of the exempt duty tests for an executive, administrative, or professional employee AND has an annual compensation of $107,432 or higher.
53
What does an exempt Form W-4 mean?
Indicates the employer is NOT to withhold federal income tax from an employee's compensation.
54
When does an exempt Form W-4 expire?
February 15th of the year following the form's submission.
55
What are the child labor laws for employees at the age of 14 and 15?
-May only work in a nonhazardous job -May only work 3 hours per day and 18 hours per week when school is in session -May only work up to 8 hours a day and 40 hours a week when school is not in session
56
Who is an exempt employee?
Employees who perform job duties meeting certain requirements and are paid a weekly salary of at least $684 per week.
57
When must a Form W-4 be completed?
New employees complete one before their first payroll is calculated. Existing employees must complete any time their tax liabilities increase.
58
Under what law does it state that the employer is responsible to verify an employee's eligibility to work?
The Immigration Reform and Control Act of 1986 (IRCA)
59
What is the Enterprise Coverage Test?
EmployER-level test - Determines that ALL employees are covered by FLSA if these two requirements are met: -At least two employees work in interstate commerce -Business' annual gross sales of at least $500,000
60
What is the Individual Employee Coverage Test?
EmployEE-level test. Determines that an individual employee is covered by FLSA if they are engaged in interstate commerce
61
By what date should an employer remind employees to revise their Forms W-4 if their anticipated filing status or dependents have changed
December 1
62
What does FAN stand for?
Further Action Notice
63
What is the backup withholding percentage for an independent contractor who has not provided a TIN?
24%
64
Which type of employee can accrue up to 480 hours of compensatory time off in lieu of receiving overtime pay?
Police Officers
65
When an employer receives a lock-in letter from the IRS, the employer must provide a copy of it to the employee within how many business days?
10
66
Under the FLSA, employers can pay employees under the age of 20 a rate as low as $_______ per hour for their first _______ calendar days of employment.
$4.25, 90 calendar days
67
Employers must report a new hire within how many calendar days of the first day of service?
20
68
A tipped employee must earn at least $______ per month in tips to be paid the tipped minimum wage.
$30
69
Once Form SS-8 is completed, which government agency should it be sent to for a ruling?
Internal Revenue Service (IRS)
70
Under the FLSA, what are the restrictions on hours worked (both total hours and time of day) for an employee who is 16 or 17 years old?
There are none.
71
The earliest an employee getting married on June 15th can amend Form W-4 is what date?
June 15th
72
E-Verify can match an employee's photo from which type of documents?
-Permanent Resident Card -Employment Authorization Card -Passport or Passport Card Memory Tool: P.E.P.
73
If an employee's spouse dies, the employee must submit an amended Form W-4 by when?
January 1 of the following year
74
Certified Payroll Professional
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