Certified Payroll Professional (CPP) Exam Preparation – Comprehensive Study Guide

Certified Payroll
Professional
Form SS-8 - Correct Answer-Determination of worker status for purpose of federal
employment taxes and income tax withholding. Can be filled out by the business or
worker.


Form W-4 - Correct Answer-Employees withholding allowance certificate.
Documents the amount of federal tax withholding.


Form SS-4 - Correct Answer-Application for employer identification number.


Form 8233 - Correct Answer-Exemption from withholding on compensation for
independent personal services of a nonresident alien individual. The purpose is to
claim an exemption from the withholding requirements.


Form 1096 - Correct Answer-Annual summary and transmittal of U.S. information
returns. It is used to summarize each type of information return. A separate 1096 is to
be filed with each group of returns. Forms 1097,1098,1099.


Form 1042-T - Correct Answer-Annual summary and transmittal of forms 1042-S.
Summarize the income and taxes withheld amounts from all corresponding forms.


Form 1042-S - Correct Answer-Foreign person's U.S. source income subject to
withholding. To report income subject to withholding for foreign persons such as non
resident aliens, foreign partnerships, foreign corporations, foreign estates and foreign
trusts. Interests, rents, and royalties. Certain natural resource gains and certain gains
on certain intellectual property.


Form 1042 - Correct Answer-Annual withholding tax return for U.S. source income
of foreign persons.To report the amount of income tax withholding on certain income
paid to non resident aliens, foreign partnerships, foreign corporations, foreign estates
and foreign trusts.Form 1042 must be filed in any of the following criteria are met:

,Form 1042 is required to be filed or Gross investment income is paid to taxable
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foreign private foundations or Specified federal procurement payments are paid to any
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g foreign person. g




Form SS-5 - Correct Answer-Application for a Social Security Card. Apply for a new
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g card or a replacement card or to make an existing card.
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Form 1099-R - Correct Answer-Distributions From Pensions, Annuities Retirement or
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g Profit-Sharing Plans, IRA's Insurance Contracts ($10 or more) g g g g g g g




Form 1099-MISC - Correct Answer-Miscellaneous Income is to report to each
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recipient and the IRS. -Royalties no less than $10 -Payments $600 or more for Rents,
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g Services, Prizes and Awards, Other income payments and Attorneys.
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Form W-9 - Correct Answer-Request for Taxpayer Identification Number and
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Certification. The purpose is for the payer to obtain the correct identification number.
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Form W-2C - Correct Answer-Correct errors on W-2's. Only update incorrect fields.
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Form W-3 - Correct Answer-Essentially the "Cover Sheet" for the transmittal of
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Forms W-2.*250 or more forms, you must file electronic (Form W-3 is not required
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for electronic filing)
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Form W-3C - Correct Answer-Required whenever a Form W-2C (Copy A) is filed in
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g paper form. g




Employee(Common Law Employee) - Correct Answer-Anyone who performs g g g g g g g g




services for you is your employee if you can control what will be done and how it can
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g be done
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Independent Contractor - Correct Answer-The general rule is that an individual is an
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g independent contractor if the payer has the right to control or direct only the result
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of g the work and not what will be done and how it is done.
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, Temporary Agency/Leased Employee - Correct Answer-Employees are hired by
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temporary help services and send the workers to companies who need employees. A
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g leased employee is an employee whose service is leased from a company that
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specializes in recruitment. All temp agency employees are leased employees but the
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g converse is not necessarily true. g g g g




Worker Status - Correct Answer-Independent Contractor, Employee (Common Law
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g Employee), Statutory Employee, Statutory Non-Employee g g g g




Obligations for Temporary Agency /Leased Employee - Correct Answer-Payroll.
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Bookkeeping,Tax Deductions, Workers Comp and Fringe Benefits g g g g g g




Common Law Test - Correct Answer-The keys are to look at the entire relationship.
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g Consider the degree or extent of the right to direct and control.Document each of
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the g factors used in coming up with determination.
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Reasonable Basis Test - Correct Answer-Safe Harbor Rules Sec 530 Revenue Act of
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g 1978. Employees vs. Independent Contractors for tax purposes.
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Judicial Precedent Safe Haven - Correct Answer-Taxpayers using previous legal
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rulings (within reason for employee classification)
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Past Audit Safe Haven - Correct Answer-Taxpayer relying on an audit by IRS for
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employment taxes due. (Employee classification) g g g g




Industry Practice Safe Haven - Correct Answer-Recognized industry practices.
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(Employee classification) g




Other Reasonable Bases - Correct Answer-Not meeting other Safe Haven rules, but
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still having a reasonable basis to consider a worker a contractor.
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Common Law Rules - Correct Answer-Behavioral-Does the company control what
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the worker does and how the worker does their job? Financial-Are the business
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aspects of the workers job controlled by the payer?(How the worker is paid? Expenses
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