Certified Payroll Professional Exam
(CPP) Part 1 Questions and Answers
Updated 2026
PayrollBConceptBWorkersBStatusB-
BAnswerFormBSS8BisBtheBIRSBdeterminationBofBEEBorBICBstatus.BReasonalBBasisBTestBakaBSafe
BHarborBRulesBSecB530-
AllsBeeBtoBbeBtreatedBlikeBaBICBforBspecificBreasonsBsuchBasBaBcourtBorder,BIRSBauditBresults
,BAttorneyBorBCPABadvisement,BorBlongBstandingBindustryBstandardBforBthatBjobBrole.BCommo
nBLawBTest-
BseeBchartBforBexampleBEEBisBrequiredBtoBcomplyBwithBERBinstructionsBaboutBwhenBwhereBa
ndBhowBtoBwork.BICBsetsBownBhoursBdeterminesBownBsequenceBofBwork.BFormBW9Brequest
BfromBERBonBICBtoBsupplyBFEINBorBSSNBwithBCompanyBName.BBackupBWithholding-
BSomeBICBareBrequiredBtoBwithholdB24%BofBearningsBthisBisBreportedBonBFormB945.BStatutor
yBees-
BnotBeesBunderBtheBcommonBlawBtestBbutBareBtreatedBlikeBeesBforBtaxBpurposes.BEx.BAgent
BorBcommissionBdrivers,BFullBtimeBlifeBinsuranceBsalesBpeople,BhomeBworkers,BandBtravelingB
salespersons.BStatutoryBNon-EEs-
BQualifyBasBeesBnderBcommonBlawBtest,BbutBtheyBareBtreatedBasBIC.BNoBtaxesBw/hBfromBpa
y.BEx:BRealBEstateBagents,BdirectBsellers.BIncomeBmustBbeBdirectlyBrelatedBtoBsales,BIncomeBr
eportedBonB1099BBoxB7BNon-EEBcomp.
FLSAB-BAnswerFLSAB-
BSetsBmin.Bwage.requiresBrecordBkeeping,BplacesBrestrictionsBonBtypesBofBworkBminorsBcanBd
o.BItBDOESBNOTBgovernBvacation,Bsick,BjuryBduty,Bholiday,BlunchBbreaks.BFreqBofBpayBorBrestr
ictionsBonBhoursBrequiredBtoBwork.BThisBareaBisBhandledBbyBstateBlaw.BFederalBMinBWageB=
B7.25Bhour.BOTBHOURS--
BeverythingBoverB40BhoursBinBtheBworkBweek.BExemptBeesBmustBbeBpaidBatBleastB$455BaBw
eekBsalaryBorBfeeBbasis.BPrimaryBdutiesBmustBconsistBofBperformingBnonBmanualBorBofficeBw
orkBrelatedBtoBtheBgeneralBbusinessBoperations.BORBPermitingBworkBthatBisBdirectlyBrelatedBt
oBacademicBinstruction.BTips-
B2.13/HRBhourlyBrateBandBtipsBmustBmeetBminBwageBrequirementBinBfed/state.BMustBalsoBre
ceiveB$30BinBtipsBperBmonth.BTIPBCREDIT-
B5.12BallowedBcreditBbyBtheBemployerBwhenBtipsBareBatBleastB5.12/hr.BREGBRATEBOFBPAY-
BcalculationBisBRegBrateBofBpay=totalBregBpayBdividedBbyB#BofBhoursBworked.BFluctuatingBWo
rkBWeek-
BChangeBofBscheduleBbasedBonBbusinessBneed.BokBasBlongBasBeesBareBpaidBforBOT.BFixedBw
klyBsalaryBisBhighBenoughBthatBtheyBdontBfallBbelowBminBwage.BCompBTimeBPrivateBSector-
BAllowedBasBlongBasBtheBtimeBoffBisBinBtheBsameBpayBperiod.B11/2BhoursBgivenBforBeverBho
urBofBOTBworked.BStateBand/orBGovBworkersBcanBhaveBtheBcompBtimeBratherBthanBOTBpayBi
f;BtheBEEBagreeesBtoBit,BeesBareBgivenBreasonableBtimeBtoBuseBit,BCanBaccumulateB240Bhour
sBofBcompBtimeBORB160BhoursBofBOT.BAboveBmustBbeBpaid.BAsBforBpublicBsafetyBees,BtheyB
canBhaveBaBmaxBcompBtimeBofB480BandB320BOTBhrsBcomp.BCHANGINGBWORKBWEEK-
BIsBwhnBtheBworkweekBchangesBfromBM-SUNBtoBSUN-
SAT.BOTBisBpaidBonBtheBgreaterBofBtheB2.BWHITEBCOLLARBare:Badministrative,Bexecutives,Bpro
, fessionals,BlearnedBprofessionals,BcreativeBprofessionals,BcomputerBprofessionals,BoutsideBsales.
BWORKBWEEK-
BdeterminesBtheB7BconsecutiveB24BhourBperiodBandBwhenBOTBisBcalculated.BCOMPENSABLEB
TIME-BNonBEx.BeesBmustBbe
EmployementBTaxesB-
BAnswerExamsBadministeredBfromBSeptemberB15,B2018BthroughBSeptemberB13,B2019,Bfeature
BquestionsBbasedBonBfederalBlawsBandBregulationsBinBeffectBasBofBJanuaryB1,B2018.BFITBallBe
mployeesBareBsubjectBtoBFIT.BERBareBresponsibleBtoBpay.BTaxableBwagesBisBallBcomp.BnotBspe
cificallyBexcludedBfromBtaxableBincome.BFringeBbenefitsBareBusualyBtaxable.BSEEBWAGEBBRACK
ETBMETHODBandBPERCENTAGEBMETHODBtables.BSeeBSUPPLEMENTALBTAXBMethodsBwageBbrac
ketBandBaggregate.BFUTABWAGEBBASE.BEEsBonlyBareBsubjectBtoBFUTA.BRateBisB6%BbutBcredit
BisB5.4%BleavingBtheBtaxBatB.6%BpayBonBtheBfirstB7,000BinBtaxableBwages.BExclusionsBtoBFUT
ABareBsickBorBdisabiltyBpaidBmoreBthanB6BmonthsBafterBtheBlastBmonthBofBemploy.BWorkers
BcompBpay,BpaymentsBtoBCafeB124Bplan,BnonBcashBpayments,BqualifiedBmovingBexpenses,Bde
althBorBdisabilyBpayments,BeduBreimb.,BGTL,BmealsBandBlodging,BwagesBpaidBafterBdeath,Btips
BnotBreportedBtoBER.BSSBWageBbaseBisB128,400BandBisB6.2%BofBearnings.BERBpayBmatch.BM
EDICARE-
ThereBisBnoBlimitBonBtheBamountBofBwagesBsubjectBtoBtheBotherBportionBofBtheBFICABtax,Bt
heB1.45%BMedicareBtaxBadditionalB.9%BmustBbeBw/hBfromBtheBeeBforBtaxableBearningsBover
B200,000.BERBdoesBnotBmatch.BBackupBwithholdingBrequirements-
BBackupBWithholdingBRateBDropsBinB2018.BAsBaBresultBofBtheBrecentlyBpassedBtaxBreformBbil
l,BtheBTaxBCutsBandBJobsBAct,BtheBbackupBwithholdingBrateBwillBbeBreducedBfromB28%BtoB2
4%BeffectiveBJanuaryB1,B2018.UnderBCodeB§B3406,BpayorsBareBrequiredBtoBdeductBbackupBwi
thholdingBonBcertainBnon-
wageBpaymentsBmadeBtoBpayeesBforBwhomBanBinformationBreturnBwasBfiledBwithBeitherBaB
missingBorBincorrectBTIN.BTheBbackupBwithholdingBrateBunderB§3406(a)(1)BisBtheBfourthBlowe
stBrateBofBtaxBunderB§1(c),BtaxBratesBforBsingleBindividuals.BTheBRailroadBRetirementBSystemB
RailroadBemploymentBtaxesBconsistBofBemployerBandBemployeeBtaxes.BTheBemployerBandBem
ployeesBpayBcer
EEBBenefitsB-BAnswerTaxableBbenefits-
BsubjectBtoBFITBandBallBotherBempBtaxes.BSuchBasBbonuses,Bcommissions,BpersonalBuseBofBc
ompanyBvehicle,BseveranceBpay,BERBpaidBparkingBgreaterBthanB$245/mo.,BERBpaidBcommuter
BfeesBinBexcessBofB$245/mo.,BGTLBoverB50,000BandBTips.BNonBTaxableBbenefitsBareBcompany
BvehicleBusedBforBbusinessBuseBonly,BGTLBunderB50,000,BMed,BDentalBandBhealthBplans,BQua
lifiedBmovingBexpenses.BQualifiedBPlans-BareBretirementBplans,Bawards.BQualifiedBTransportion-
BexcludableBfromBincomeBifBtheBvehicleBisBprovidedBbyBER.BTransitBpassesBreimb.BbyBER,BPar
kingBonBorBnearBworkBpremises.BQualifiedBMovingBexpenses-
BMovingBexpensesBpaidBorBreimbursedBareBnon-
taxableBfringesBifBtheBmovingBexpensesBqualifyBforBaBdeductionBANDBtheBEEBdidBnotBdeduct
BthemBinBaBpreviousByear.BToBbeBexcludedBfromBincomeBtheBexpsenseBmustB1.BDistanceBTest
-
BNewBworkplaceBmustBbeB50BmilesBfartherBfromBtheBEEBoldBresidence.B2.BTimeBTestBduringB
aB12BmoBperiodBimmdiatelyBfollowingBtheBmoveBtheBERBmustBexpectBtehBEEBtoBworkBFTBfor
BatBleastB39Bwks.BatBtheBnewBworkplace.BIfBtheseB2BtestsBFAILBthenBtheBexpensesBareBtaxab
(CPP) Part 1 Questions and Answers
Updated 2026
PayrollBConceptBWorkersBStatusB-
BAnswerFormBSS8BisBtheBIRSBdeterminationBofBEEBorBICBstatus.BReasonalBBasisBTestBakaBSafe
BHarborBRulesBSecB530-
AllsBeeBtoBbeBtreatedBlikeBaBICBforBspecificBreasonsBsuchBasBaBcourtBorder,BIRSBauditBresults
,BAttorneyBorBCPABadvisement,BorBlongBstandingBindustryBstandardBforBthatBjobBrole.BCommo
nBLawBTest-
BseeBchartBforBexampleBEEBisBrequiredBtoBcomplyBwithBERBinstructionsBaboutBwhenBwhereBa
ndBhowBtoBwork.BICBsetsBownBhoursBdeterminesBownBsequenceBofBwork.BFormBW9Brequest
BfromBERBonBICBtoBsupplyBFEINBorBSSNBwithBCompanyBName.BBackupBWithholding-
BSomeBICBareBrequiredBtoBwithholdB24%BofBearningsBthisBisBreportedBonBFormB945.BStatutor
yBees-
BnotBeesBunderBtheBcommonBlawBtestBbutBareBtreatedBlikeBeesBforBtaxBpurposes.BEx.BAgent
BorBcommissionBdrivers,BFullBtimeBlifeBinsuranceBsalesBpeople,BhomeBworkers,BandBtravelingB
salespersons.BStatutoryBNon-EEs-
BQualifyBasBeesBnderBcommonBlawBtest,BbutBtheyBareBtreatedBasBIC.BNoBtaxesBw/hBfromBpa
y.BEx:BRealBEstateBagents,BdirectBsellers.BIncomeBmustBbeBdirectlyBrelatedBtoBsales,BIncomeBr
eportedBonB1099BBoxB7BNon-EEBcomp.
FLSAB-BAnswerFLSAB-
BSetsBmin.Bwage.requiresBrecordBkeeping,BplacesBrestrictionsBonBtypesBofBworkBminorsBcanBd
o.BItBDOESBNOTBgovernBvacation,Bsick,BjuryBduty,Bholiday,BlunchBbreaks.BFreqBofBpayBorBrestr
ictionsBonBhoursBrequiredBtoBwork.BThisBareaBisBhandledBbyBstateBlaw.BFederalBMinBWageB=
B7.25Bhour.BOTBHOURS--
BeverythingBoverB40BhoursBinBtheBworkBweek.BExemptBeesBmustBbeBpaidBatBleastB$455BaBw
eekBsalaryBorBfeeBbasis.BPrimaryBdutiesBmustBconsistBofBperformingBnonBmanualBorBofficeBw
orkBrelatedBtoBtheBgeneralBbusinessBoperations.BORBPermitingBworkBthatBisBdirectlyBrelatedBt
oBacademicBinstruction.BTips-
B2.13/HRBhourlyBrateBandBtipsBmustBmeetBminBwageBrequirementBinBfed/state.BMustBalsoBre
ceiveB$30BinBtipsBperBmonth.BTIPBCREDIT-
B5.12BallowedBcreditBbyBtheBemployerBwhenBtipsBareBatBleastB5.12/hr.BREGBRATEBOFBPAY-
BcalculationBisBRegBrateBofBpay=totalBregBpayBdividedBbyB#BofBhoursBworked.BFluctuatingBWo
rkBWeek-
BChangeBofBscheduleBbasedBonBbusinessBneed.BokBasBlongBasBeesBareBpaidBforBOT.BFixedBw
klyBsalaryBisBhighBenoughBthatBtheyBdontBfallBbelowBminBwage.BCompBTimeBPrivateBSector-
BAllowedBasBlongBasBtheBtimeBoffBisBinBtheBsameBpayBperiod.B11/2BhoursBgivenBforBeverBho
urBofBOTBworked.BStateBand/orBGovBworkersBcanBhaveBtheBcompBtimeBratherBthanBOTBpayBi
f;BtheBEEBagreeesBtoBit,BeesBareBgivenBreasonableBtimeBtoBuseBit,BCanBaccumulateB240Bhour
sBofBcompBtimeBORB160BhoursBofBOT.BAboveBmustBbeBpaid.BAsBforBpublicBsafetyBees,BtheyB
canBhaveBaBmaxBcompBtimeBofB480BandB320BOTBhrsBcomp.BCHANGINGBWORKBWEEK-
BIsBwhnBtheBworkweekBchangesBfromBM-SUNBtoBSUN-
SAT.BOTBisBpaidBonBtheBgreaterBofBtheB2.BWHITEBCOLLARBare:Badministrative,Bexecutives,Bpro
, fessionals,BlearnedBprofessionals,BcreativeBprofessionals,BcomputerBprofessionals,BoutsideBsales.
BWORKBWEEK-
BdeterminesBtheB7BconsecutiveB24BhourBperiodBandBwhenBOTBisBcalculated.BCOMPENSABLEB
TIME-BNonBEx.BeesBmustBbe
EmployementBTaxesB-
BAnswerExamsBadministeredBfromBSeptemberB15,B2018BthroughBSeptemberB13,B2019,Bfeature
BquestionsBbasedBonBfederalBlawsBandBregulationsBinBeffectBasBofBJanuaryB1,B2018.BFITBallBe
mployeesBareBsubjectBtoBFIT.BERBareBresponsibleBtoBpay.BTaxableBwagesBisBallBcomp.BnotBspe
cificallyBexcludedBfromBtaxableBincome.BFringeBbenefitsBareBusualyBtaxable.BSEEBWAGEBBRACK
ETBMETHODBandBPERCENTAGEBMETHODBtables.BSeeBSUPPLEMENTALBTAXBMethodsBwageBbrac
ketBandBaggregate.BFUTABWAGEBBASE.BEEsBonlyBareBsubjectBtoBFUTA.BRateBisB6%BbutBcredit
BisB5.4%BleavingBtheBtaxBatB.6%BpayBonBtheBfirstB7,000BinBtaxableBwages.BExclusionsBtoBFUT
ABareBsickBorBdisabiltyBpaidBmoreBthanB6BmonthsBafterBtheBlastBmonthBofBemploy.BWorkers
BcompBpay,BpaymentsBtoBCafeB124Bplan,BnonBcashBpayments,BqualifiedBmovingBexpenses,Bde
althBorBdisabilyBpayments,BeduBreimb.,BGTL,BmealsBandBlodging,BwagesBpaidBafterBdeath,Btips
BnotBreportedBtoBER.BSSBWageBbaseBisB128,400BandBisB6.2%BofBearnings.BERBpayBmatch.BM
EDICARE-
ThereBisBnoBlimitBonBtheBamountBofBwagesBsubjectBtoBtheBotherBportionBofBtheBFICABtax,Bt
heB1.45%BMedicareBtaxBadditionalB.9%BmustBbeBw/hBfromBtheBeeBforBtaxableBearningsBover
B200,000.BERBdoesBnotBmatch.BBackupBwithholdingBrequirements-
BBackupBWithholdingBRateBDropsBinB2018.BAsBaBresultBofBtheBrecentlyBpassedBtaxBreformBbil
l,BtheBTaxBCutsBandBJobsBAct,BtheBbackupBwithholdingBrateBwillBbeBreducedBfromB28%BtoB2
4%BeffectiveBJanuaryB1,B2018.UnderBCodeB§B3406,BpayorsBareBrequiredBtoBdeductBbackupBwi
thholdingBonBcertainBnon-
wageBpaymentsBmadeBtoBpayeesBforBwhomBanBinformationBreturnBwasBfiledBwithBeitherBaB
missingBorBincorrectBTIN.BTheBbackupBwithholdingBrateBunderB§3406(a)(1)BisBtheBfourthBlowe
stBrateBofBtaxBunderB§1(c),BtaxBratesBforBsingleBindividuals.BTheBRailroadBRetirementBSystemB
RailroadBemploymentBtaxesBconsistBofBemployerBandBemployeeBtaxes.BTheBemployerBandBem
ployeesBpayBcer
EEBBenefitsB-BAnswerTaxableBbenefits-
BsubjectBtoBFITBandBallBotherBempBtaxes.BSuchBasBbonuses,Bcommissions,BpersonalBuseBofBc
ompanyBvehicle,BseveranceBpay,BERBpaidBparkingBgreaterBthanB$245/mo.,BERBpaidBcommuter
BfeesBinBexcessBofB$245/mo.,BGTLBoverB50,000BandBTips.BNonBTaxableBbenefitsBareBcompany
BvehicleBusedBforBbusinessBuseBonly,BGTLBunderB50,000,BMed,BDentalBandBhealthBplans,BQua
lifiedBmovingBexpenses.BQualifiedBPlans-BareBretirementBplans,Bawards.BQualifiedBTransportion-
BexcludableBfromBincomeBifBtheBvehicleBisBprovidedBbyBER.BTransitBpassesBreimb.BbyBER,BPar
kingBonBorBnearBworkBpremises.BQualifiedBMovingBexpenses-
BMovingBexpensesBpaidBorBreimbursedBareBnon-
taxableBfringesBifBtheBmovingBexpensesBqualifyBforBaBdeductionBANDBtheBEEBdidBnotBdeduct
BthemBinBaBpreviousByear.BToBbeBexcludedBfromBincomeBtheBexpsenseBmustB1.BDistanceBTest
-
BNewBworkplaceBmustBbeB50BmilesBfartherBfromBtheBEEBoldBresidence.B2.BTimeBTestBduringB
aB12BmoBperiodBimmdiatelyBfollowingBtheBmoveBtheBERBmustBexpectBtehBEEBtoBworkBFTBfor
BatBleastB39Bwks.BatBtheBnewBworkplace.BIfBtheseB2BtestsBFAILBthenBtheBexpensesBareBtaxab
