Certified Payroll Professional Exam (CPP) Part 1 questions with correct answers

Payroll Concept Workers Status Correct Answer-Form SS8 is the IRS determination of EE or IC status. Reasonal Basis Test aka Safe Harbor Rules Sec 530-Alls ee to be treated like a IC for specific reasons such as a court order, IRS audit results, Attorney or CPA advisement, or long standing industry standard for that job role. Common Law Test- see chart for example EE is required to comply with ER instructions about when where and how to work. IC sets own hours determines own sequence of work. Form W9 request from ER on IC to supply FEIN or SSN with Company Name. Backup Withholding- Some IC are required to withhold 24% of earnings this is reported on Form 945. Statutory ees- not ees under the common law test but are treated like ees for tax purposes. Ex. Agent or commission drivers, Full time life insurance sales people, home workers, and traveling salespersons. Statutory Non-EEs- Qualify as ees nder common law test, but they are treated as IC. No taxes w/h from pay. Ex: Real Estate agents, direct sellers. Income must be directly related to sales, Income reported on 1099 Box 7 Non-EE comp. FLSA Correct Answer-FLSA - Sets min. res record keeping, places restrictions on types of work minors can do. It DOES NOT govern vacation, sick, jury duty, holiday, lunch breaks. Freq of pay or restrictions on hours required to work. This area is handled by state law. Federal Min Wage = 7.25 hour. OT HOURS-- everything over 40 hours in the work week. Exempt ees must be paid at least $455 a week salary or fee basis. Primary duties must consist of performing non manual or office work related to the general business operations. OR Permiting work that is directly related to academic instruction. Tips- 2.13/HR hourly rate and tips must meet min wage requirement in fed/state. Must also receive $30 in tips per month. TIP CREDIT- 5.12 allowed credit by the employer when tips are at least 5.12/hr. REG RATE OF PAY- calculation is Reg rate of pay=total reg pay divided by # of hours worked. Fluctuating Work Week- Change of schedule based on business need. ok as long as ees are paid for OT. Fixed wkly salary is high enough that they dont fall below min wage. Comp Time Private Sector- Allowed as long as the time off is in the same pay period. 11/2 hours given for ever hour of OT worked. Sta