CPP Bootcamp 2025 > Module 2 > Flashcards

Module 2 Flashcards

(91 cards)

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1
Q

Standard Procedure In A Merger

A

Predecessor will pay final wages and furnish Form W-2 for all wages paid

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2
Q

Alternate Procedure in a merger

A

Predecessor will pay final wages and furnish the successor with all wages paid and taxes withheld.
The successor will pay wages after the transaction and furnish form W-2 for wages in the year.

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3
Q

White Collar Exemption

A

Bona fide administrative, executive, professional and computer-related professional employees, as well as outside sales employees, are exempt “white collar” employees under the FLSA. This emans they are not covered by the minimum wage, overtime and certain recordkeeping requirements.

Depends on:
Primary Duties
Discretionary authority, and
Minimum salary

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4
Q

Pubilc Sector Exempt Employees

A

Employees of public ERs are only subject to SS tax when covered by a Section 218 agreement or not eligible for a public EE retirement plan meeting certain requirements.
- publicly elected
- elected official’s personal staff
- elected official’s appointment with policy making powers
- Immediate advisors to elected officials
- persons employed by a stat or local legislative branch

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5
Q

Common Paymaster

A

When EE works for one or more related companies concurrently, the wages & taxes are combined and reported by common paymaster.
Single Wage Base

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6
Q

Common paymaster requires

A

That all wages for employees working for one or more
related companies concurrently are combined, taxed,
paid, and reported by the common paymaster as a
single transaction for each employee

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7
Q

What is the minimum wage?

A

$7.25 per hour

Was increased in three stages by the Fair Minimum Wage Act of 2007. It rose to $7.25 per hour on July 24, 2009.

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8
Q

What is the lower “opportunity” wage for teenagers?

A

The minimum wage for newly hired employees under the age of 20 is $4.25 per hour of the first 90 consecutive calendar days after they are hired.

If the employee reaches age 20 during the 90-day period, the employee must be paid at least the federal minimum wage in effect as of the employee’s birthday.

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9
Q

Is the minimum wage required if any work performed is not covered by FLSA?

A

Yes, in any workweek in which employees do some work that is covered by the FLSA and some that is not covered, they must be paid at least the minimum wage for all work done.

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10
Q

What is a workweek?

A

Regularly recurring period of 168 hours or 7 consecutive 24 hour periods.

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11
Q

What are wages other than cash included in minimum wage calculations?

A

In addition to wages paid in cash or check, employees may be paid in noncash forms as well. The my be paid partly in room, board or other facilities provided.

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12
Q

Training Wages

A

Where time spent by employees in employer-provided training is considered hours worked.

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13
Q

What is the minimum wage for tipped employees?

A

$2.13 per hour

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14
Q

What is the tip credit that employers can take?

A

$5.12

Note: $7.25 - $2.13 = $5.12

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15
Q

Are service charges considered an employee’s tip?

A

No

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16
Q

What are the conditions that must be met for an employer to take advantage of the tip credit?

A
  1. the tipped employee must receive the $5.12 in tips
  2. the employee must be informed about the tip provisions of the law
  3. all tips received by the employee must be kept by that employee
  4. Credit Card tips must be given to the employee by next payday
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17
Q

Regular rate of pay (RROP) formula

A

(Hourly wages for all wages + supp wages, premiums, on call, etc) / number of hours worked

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18
Q

Overtime Premium Rate

A

RROP x .50

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19
Q

What is considered part of Regular Rate of Pay?

A
  • Shift differentials
  • Nondiscretionary/Performance Bonuses
  • Payments in non-cash form
  • Retroactive pay
  • On-Call Pay
  • Supplemental Disability Payments
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20
Q

What is NOT considered Regular Rate of Pay?

A
  • Gifts
  • Paid Time Off
  • Discretionary Bonuses
  • Benefit plan contributions
  • Stock Options
  • Overtime Compensation
  • Premium Pay for extra days worked
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21
Q

How do you calculate the regular rate of pay for an employee being paid more than one rate?

A

This done by a weighted average,

total regular pay form all jobs / total hours worked = regular rate of pay

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22
Q

How do you calculate the regular rate of pay for a salary non exempt employee?

A

Calculate the employee’s yearly salary and then divide by the number of hours to be compensated in a year.

For employees who normally work a 40-hour-per-week schedule, the number of hours worked per year is 2,080.

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23
Q

How do you calculate the regular rate and overtime for pieceworkers?

A

Method 1: First determine RROP:
(regular piecework earnings + bonus(es) / total hours worked

Next determine OT Prem:
RROP x .50

Then determine the total earnings for the workweek,
Regular rate of pay + overtime premium

Method 2: 1.5 times piece rate (requires prior agreement)

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24
Q

How do you calculate the regular rate and overtime of pay for tipped employees?

A

The full minimum wage is used in determining the employee’s regular rate of pay.

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25
What effect does Day Light Savings time have on overnight employees?
In spring when the clocks are set forward one hour at 2:00 am, employees whose shift includes the change over will work one less hour than usual. When the clocks are turned back on hour to standard time at 2:00 am in the fall, the same employee will work one extra hour.
26
Compensatory Time Off
- Time off in the same pay period | - Public sector employers can provide comp time instead of cash
27
What are Compensable Time Issues?
- unauthorized overtime - still must be paid - Meal and rest periods - at least 30 minutes to be considered a break - travel time - On Call time - must prevent an employee from personal time - Waiting Time - business reasons only - Meetings and Training Sessions - Preliminary and Postliminary Activities - changing clothes, security procedures, cleaning up, etc - Receiving medical attention - if at employer's facility waiting, it is considered compensable worktime
28
What are the child labor restrictions for minors under age 18?
no minor under age 18 can work in a job that has been declared hazardous
29
What are the child labor restrictions for minors age 14 to 15?
non hazardous jobs cannot work during school hours limited to 3 hours a day between 7 am and 7 pm (7 am - 9p June 1st - Labor Day)
30
What are the child labor restrictions for minors under age 14?
Minor can work for a parent in a non hazardous job
31
What is the PPACA?
The Patient Protection and Affordable Care Act
32
Gross Up Formula
Net Pay* / (100% - Total Tax Rates) *Desired Amount
33
Social Security Tax Age Limit
None 6.2% up to $176,100
34
Medicare Tax Wage Base
None
35
Supplemental Tax Rate
22% up to 1 million 37% over 1 million YTD supplemental wages
36
Methods to calculate FIT withholding
5 Methods 1 - Wage Bracket for regular wages 2 - Percentage Method for regular wages 3 - Optional Flat Rate for supplemental wages 4 - Mandatory Flat Rate for supplemental wages 5 - Aggregate Method for supplemental wages
37
Constructive Payments
When wages have been made available to the employee without substantial limitation or restriction. When an amount becomes taxable
38
What is the time limit on filing an flsa complaint with wage and hour division?
Two or three years
39
Social Security is comprised of what?
1 - old age and survivors insurance 2 - disability insurance OASI & DI
40
Social Security Max wage base and withholding total
Max withholding - $10,918.20 Wage base - $176,100
41
Social Security tax rate age limit
6.2% Employee and employer both pay 6.2% No age limit
42
Medicare tax rate
1.45% both employee and employer pay 1.45% Employees with wages and excess of $200,000 pay additional 9%
43
Imputed income
Value of benefits employees receive from employer and must be included in income Examples: Educational assistance Personal use of company car Gym Adoption assistance Moving expenses
44
How often should you impute income
At least once a year, ideally as often as possible
45
What two worksheets from the IRS publication 15-t use wage bracket method?
Worksheet 2 - for forms W4 2020 and later Worksheet 3 - for forms 2019 and earlier Both same annual payrolls
46
What to do if wages exceed highest wage and wage brackets
Use the percentage method
47
How to calculate taxes based on wage bracket
1- Find corrected worksheet based on W4 year 2- find table based on filing status and pay frequency 3- determine the withholding * 2019 or earlier have different amounts for number of withholdings
48
W-4 Step 1: A-C
Personal Information a) name and address b) social c) filing status -single or married filing separately -married filing jointly or qualifying survivor spouse -head of household
49
W-4 Step 2: A-C
Multiple jobs or spouse works check box if more than one job
50
W-4 Step 3
Claim dependents and other credits -Multiply # of qualifying children under age of 17 by $2k -Multiply # of other dependents by $500 -Add together for total allowances
51
W-4 Step 4: A-C Step 5
4. Other Adjustments a) other income not from jobs b) deductions c) extra withholdings 5. Signature and date
52
Computational Bridge
Option to treat 2019 and earlier W-4 forms as if they were 20/20 or later for purposes of figuring federal income tax withholding
53
Should employer withhold that optional flat rate if an employee has marked exempt?
No - should not withhold at any method as long as supplemental wages do not exceed 1 million
54
Aggregate method
Used for supplemental wages when employee has no federal income tax withheld from regular wages 1) combine supplemental wages with wages paid during most recent pay period 2) use percentage or wage method to determine amount of federal income tax to withhold 3) subtract them out withheld for regular wages from Step two. Difference is amount to withhold from supplemental wages
55
Regular rates of pay formula
56
Can final pay be held back if an EE has not returned their equipment?
No, you cannot withhold final payment
57
Are tips taxed at regular rates or supplemental?
The ER can decide to tax at regular or supplemental
58
Section 218 Agreement
Agreement prior to 1986 made between states and the SSA. Under some circumstances EEs may be excluded from SS or Medicare, or both.
59
When was Social Security expanded to public sector employees?
July 2nd, 1981 for employees who were not subject to a section 218 agreement or another Public Employee Retirement system. Regardless of when hired
60
Are students required to pay FICA taxes?
No, unless school is a public educational institution and has opted to have FICA tax for student employees
61
Employer Social Security liability
Total combined employee and employer shares
62
Is employer required to make up rounding differences on Social Security tax?
No, any small rounding differences will be reported quarterly on the form 941
63
Calculate employer's tax liability
Add employee withheld taxes (income, ss, and Medicare) to the employer paid taxes (ss, medicare, and Huda FUTA)
64
Child support deduction remittance time frame
Must be remitted within seven business days after the deduction is made
65
Max amount of child support if: no arrears no second family
60%
66
Max amount of child support if: Yes arrears No second family
65%
67
Max amount of child support if: No arrears Yes second family
50%
68
Max amount of child support if: Yes arrears Yes second family
55%
69
Maximum creditor garnishment
Under ccpa, lesser of 25% disposable earnings or amount that Weekly disposable earnings exceeds 30 times the minimum wage
70
Maximum federal agency garnishment
Under dcia, garn is lesser of 15% disposable earnings or the amount of weekly disposable earnings exceeds 30 times the minimum wage
71
Maximum student loan garnishment
Under h e a, maximum is lesser of 15% disposable earnings or the amount weekly disposable earnings exceeds 30 times minimum wage
72
What amounts are subject to federal tax levy?
Employees take home pay minus exempt amount in IRS publication 1494
73
What stops a levy deduction?
When the IRS issues form 668- d, release of Levy/release of property from Levy
74
What is form 668-w?
Notice of levy on wages, salary, and other income 668- D stops the levy
75
What parts of 668-w does the employee complete?
Three, four, and five. Return Parts 3 and 4 to employer within three working days of receiving form
76
What payment / wages are exempt from a federal tax levy?
Unemployment benefits Workers comp Annuity or pension plans under the railroad retirement tax act Certain armed service connected disability payments Certain Public Assistance payment Amounts order to be withheld under a previously issued court order for child support
77
Take home pay for federal tax levy purposes
Amount after all normal deductions in effect at time of Levy has been received Gross - voluntary and involuntary deductions - deductions that are condition of employment IE union dues = Take Home Pay
78
What act / legislations governs creditor garnishments?
Title three of the consumer credit protection act
79
How much can be withheld for garnishment if disposable earnings are below $217.50 per week?
According to CCPA limits, none
80
How much can be withheld for garnishment if disposable earnings are above $217.50 but less than $290 per week?
Amounts more than $217.50 but below 290
81
How much can be withheld for garnishment if disposable earnings are above $290 per week?
25% of disposable income
82
Allowable deductions under flsa that could bring an employee below minimum wage
Taxes Bored, lodging, and other facilities Loans to employees Salary advances and overpayments Docked pay for missed work Garnishments and wage assignments Union dues
83
Determining taxable wages
Determine the employee’s taxable wages by subtracting the pre-tax deductions from gross wages
84
FICA public sector exemption is
Employees of public employers are only subject to social security tax when covered by a §218 agreement or not eligible for a public employee retirement plan meeting certain requirements.
85
For FLSA, who is a tipped employee?
Under the FLSA, employees regularly receiving and reporting more than $30 of tips in a month are tipped employees.
86
Needed for charitable deductions:
To claim a tax deduction, employees must substantiate contributions made by payroll deductions with a document from the employer showing the amount withheld and a document from the charity.
87
What is nexus?
Nexus is created by the location of a business or where services are performed. An employer with nexus in a state is subject to the tax requirements of that state.
88
What is the primary state for SIT withholding?
The general rule is to withhold for the employee’s work state. However, nexus, reciprocal agreements, and the employee’s residence may require withholding in the resident state.
89
Who figures a bankruptcy deduction?
The Bankruptcy Trustee determines the amount of the bankruptcy deduction found on the bankruptcy order.
90
A form W-4 is valid if it contains, at minimum: A. Employee name, address, filing status, and signature B. Filing status and signature C. Signature only D. Filing status only
B. Filing status and signature A valid W-4 requires filing status and signature; other steps are optional inputs
91
An employer receives a child support order for an employee on September 8, 2024, demanding $400.00 be withheld each pay period. The employer determines that the maximum amount that can be withheld from the employee's pay under this state's law is $549.00. Another child support withholding order is received on February 17, 2025, demanding $550.00. The employee works in a state that uses the equal allocation method to allocate withholding for multiple child support orders. After February 17, 2025, how much must be paid on the FIRST support order?
Fifty percent of the maximum that can be withheld, $274.50 ($549.00 x 50%) is withheld for the first order.
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