1
Certified Payroll Professional Exam (CPP) Part 1
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. wage.requires 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
1
, 2
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. State and/or Gov workers can have the comp time
rather than OT pay if; the EE agreees to it, ees are given reasonable time to
use it, Can accumulate 240 hours of comp time OR 160 hours of OT. Above
must be paid. As for public safety ees, they can have a max comp time of 480
and 320 OT hrs comp. CHANGING WORK WEEK- Is whn the workweek
changes from M-SUN to SUN-SAT. OT is paid on the greater of the 2.
WHITE COLLAR are: administrative, executives, professionals, learned
professionals, creative professionals, computer professionals, outside sales.
WORK WEEK- determines the 7 consecutive 24 hour period and when OT is
calculated. COMPENSABLE TIME- Non Ex. ees must be
Employement Taxes - -Correct Answer-Exams administered from September
15, 2018 through September 13, 2019, feature questions based on federal
laws and regulations in effect as of January 1, 2018. FIT all employees are
subject to FIT. ER are responsible to pay. Taxable wages is all comp. not
specifically excluded from taxable income. Fringe benefits are usualy taxable.
SEE WAGE BRACKET METHOD and PERCENTAGE METHOD tables. See
SUPPLEMENTAL TAX Methods wage bracket and aggregate. FUTA WAGE
BASE. EEs only are subject to FUTA. Rate is 6% but credit is 5.4% leaving
the tax at .6% pay on the first 7,000 in taxable wages. Exclusions to FUTA
are sick or disabilty paid more than 6 months after the last month of employ.
Workers comp pay, payments to Cafe 124 plan, non cash payments, qualified
moving expenses, dealth or disabily payments, edu reimb., GTL, meals and
lodging, wages paid after death, tips not reported to ER. SS Wage base is
128,400 and is 6.2% of earnings. ER pay match. MEDICARE-There is no
2
Certified Payroll Professional Exam (CPP) Part 1
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. wage.requires 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
1
, 2
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. State and/or Gov workers can have the comp time
rather than OT pay if; the EE agreees to it, ees are given reasonable time to
use it, Can accumulate 240 hours of comp time OR 160 hours of OT. Above
must be paid. As for public safety ees, they can have a max comp time of 480
and 320 OT hrs comp. CHANGING WORK WEEK- Is whn the workweek
changes from M-SUN to SUN-SAT. OT is paid on the greater of the 2.
WHITE COLLAR are: administrative, executives, professionals, learned
professionals, creative professionals, computer professionals, outside sales.
WORK WEEK- determines the 7 consecutive 24 hour period and when OT is
calculated. COMPENSABLE TIME- Non Ex. ees must be
Employement Taxes - -Correct Answer-Exams administered from September
15, 2018 through September 13, 2019, feature questions based on federal
laws and regulations in effect as of January 1, 2018. FIT all employees are
subject to FIT. ER are responsible to pay. Taxable wages is all comp. not
specifically excluded from taxable income. Fringe benefits are usualy taxable.
SEE WAGE BRACKET METHOD and PERCENTAGE METHOD tables. See
SUPPLEMENTAL TAX Methods wage bracket and aggregate. FUTA WAGE
BASE. EEs only are subject to FUTA. Rate is 6% but credit is 5.4% leaving
the tax at .6% pay on the first 7,000 in taxable wages. Exclusions to FUTA
are sick or disabilty paid more than 6 months after the last month of employ.
Workers comp pay, payments to Cafe 124 plan, non cash payments, qualified
moving expenses, dealth or disabily payments, edu reimb., GTL, meals and
lodging, wages paid after death, tips not reported to ER. SS Wage base is
128,400 and is 6.2% of earnings. ER pay match. MEDICARE-There is no
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