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Certified Payroll Professional (CPP)

Certified Payroll Professional (Cpp)

by marlowe30, Mar. 2015

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487 Cards in this Set

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What obligations are created when an employer/employee relationship is established?	Begin withholding income tax, remitting both income and employment tax. The employer is also responsible for unemployment insurance, worker's compensation and will be subject to penalties for under withholding or misclassification
What are the penalties for worker misclassification?	Federal tax is assessed at 1.5% of wages paid (doubled to 3% if no 1099-MISC was filed), 100% of employer share of Social Security & Medicare, 20% of employee share of Social Security & Medicare (doubled to 40% if no 1099-MISC was filed).
What is Form SS-8?	This form is used to determine worker classification. The form is completed and sent to the IRS for the IRS to make the determination. While waiting for a response, treat the worker as an employee and withhold all applicable taxes.
What is the Common Law test?	This test determines if a worker is an employee or independent contractor. Right to control is key for this test - Behavioral control, Financial control & the type of relationship are taken into account. The more control the employer has, the more likely the worker is an employee.	Control.
What is the Reasonable Basis test?	§530 protection for the employer when a worker is an employee under the Common Law test, but is classified as an independent contractor. It's based on court decisions or a long-standing recognized practice in a significant segment of the industry. It may also be based on past audits that began prior to 12/31/1996 and included an employment classification audit of the worker in question or a similar worker.
What are the factors considered for Financial Control as pertaining to the Common Law test?	Whether or not the worker has: unreimbursed business expenses, a substantial investment in the work, their services are available to the public, or if they can incur a profit or loss. How the worker is paid (by the job, by the hour) may be considered as well.
What are leased employees?	Employers may choose to lease highly skilled employees as a cost savings. The leasing company hires, trains & qualifies the workers and the client pays a fee to the leasing company in return. They are generally employed on a long term basis.
What are temporary employees?	Employers may choose to hire temporary employees as a cost savings. They are hired and screened by the temp agency and generally low skilled, short term workers.
What types of employees are specifically excluded from §530 protection?	Technical service specialists (engineers, computer programmers).
What categories are generally considered statutory non-employees?	Qualified, licensed (R)eal (E)states (A)gents & (D)irect (S)ellers	READS
What categories are generally considered statutory employees?	Agent (D)rivers, full time life (I)nsurance salespeople, traveling (S)alespersons & (H)omeworkers	DISH
How are statutory employees treated for tax purposes?	They are not subject to FITW, but their income is reportable in Box 1 of the W2, they are subject to Social Security & Medicare and the employer share of SS & Medicare is paid by the employer. They're all subject to FUTA except for a full time life insurance salesperson paid on a commission basis only.
What are the basic traits of a statutory employee?	All services are performed personally by the worker, the employee has no substantial investment in equipment or facilities, there is a continued relationship and they are not employees, but are treated as such for tax purposes.
What are the basic traits of a statutory non-employee?	Most of their compensation is directly related to sales or another output (not hours) and the work is generally performed under a contract (the contract should state that the worker is not treated as an employee for FIT, SS, Medicare or FUTA purposes).
What three details of a worker's employment are generally not useful in determining worker classification status?	Whether the work is part time or full time, the location of the work and the hours of the work.
What is the ABC test?	It's used for determining coverage under SUI: (A)bsence of control, (B)usiness is unusual or away and (C)ustomarily an independent contractor.
What is an MOU?	A memorandum of understanding. This is utilized by the IRS to share results of employment tax examinations with the appropriate state agencies in an effort to increase compliance with federal and state employment tax requirements. The state may work side-by-side with the IRS on an examination.
What are the reporting requirements for new hire reporting?	The employer should provide new hire name, address, SSN and hire date in addition to their name, address and FEIN. There should be 2 transmissions per month, 12-16 days apart.
What are the penalties for failing to report a new hire?	$25 per failure to comply with a $500 maximum.
How long must an employer retain a completed I9 on file after an employee terminates employment?	One year.
What types of employees do not need to complete an I9?	Employees hired before 11/7/1976 (as long as employment has been continuous & there is a reasonable expectation of employment at all times), workers employed for casual sporadic domestic work (the kid who mows laws on the weekend), election workers, employees providing employment through a leasing or temp agency (the leasing/temp agency completes the I9, not the client) and independent contractors.
What is the USCIS?	U.S. Citizenship & Immigration Services (formerly the INS).
By when must an employee complete form I9?	Within 3 days of hire, ideally immediately upon reporting to work. The employer is still responsible for retaining an I9 for an employee who does not show up again after their first day.
What are the fines for failure to comply with I9 verification requirements?	$110-$1100 per person for whom proper verification was not provided. Employers who exhibit a pattern and practice of violations may be subject to criminal penalties up to $3,000 and/or six months in jail.
What are the penalties for knowingly hiring or continuing to employ an unauthorized alien?	First offense: $375-$3200 per worker, Second offense: $3200-$6500 per worker, Third offense: $4300-$16,000 per worker.
What is the Davis-Bacon Act?	Secretary of Labor sets the prevailing minimum wage for laborers and mechanics working on a federally financed construction contract or $2,000 or more. It is applied to most federally aided construction and will be based on the wages and fringe benefits of similar workers in the locality of the contract.
What is the Walsh-Healy Act?	It governs the wages & hours of employees of manufacturers and dealers furnishing the government with materials, supplies and equipment under contracts exceeding $10,000. Employers may have to pay damages for breaches and barred from receiving a government contract for up to 3 years.
What kind of work can a minor age 14-15 do?	A limited number of non-hazardous jobs (retail, food service, gas station establishments). They cannot work during school hours. When school is in session, they cannot work more than 3 hours per day (18 hours per week). When school is out of session, they cannot work more than 8 hours per day (40 hours per week).
Can a minor under the age of 18 operate a box compactor?	No. Minors under 18 are prohibited from all dangerous jobs (no mining, logging, woodworking, meat packing, construction or operating potentially dangerous machinery). Employees ages 16 & 17 may load a baler or compactor, but they may not operate or unload the compactor. Exceptions are granted for children operating under the supervision of an adult relative or adult member of their religious sect.
What test is used to determine if a trainee is an employee?	Six factors to meet: Training is similar to what would be given in a vocational or educational institution. Training is for the benefit of the employee. Trainees do not displace regular employees. The employer providing the training receives no immediate advantage & operations may be impaired. The trainee is not necessarily entitled to a job at the end of training. The employer & trainees understand that trainees are not entitled to wages for time in training.	Six Factors
What is the FLSA?	Fair Labor Standards Act
What does the FLSA regulate?	(M)inimum wage, (R)ecord keeping requirements, (P)ublic contracts, (E)qual pay for equal work, (O)vertime, (C)hild labor	Mister Rogers Picks Equally Offensive Children
What does the FLSA not regulate?	FLSA does not require employers to restrict the hours of employees over the age of 16, when final pay is due to a terminating employee or require employers to provide paid vacation, sick, jury duty, holidays, lunch breaks or coffee breaks.
What is the white collar exemption?	Administrative, executive, professional, computer related professional and outside sales - all exempt from FLSA. The determinations will depend on the primary duty of the employees, the level of discretion the employee has and whether or not minimum wage requirements are met.
What are the general rules to qualify an employee as exempt from FLSA as a Professional employee?	Primary duty of the employee should be office work that requires advanced knowledge and (in recognized fields of artistic or creative endeavors) invention, imagination, originality and talent. Employees must receive a salary of at least $455/week.
What are the general rules to qualify an employee as exempt from FLSA as an Administrative employee?	Primary duty of the employee should be office (non manual) work directly related to management or general business operations of the employer or its customers. They must primarily exercise discretion and independent judgement regarding matters of significance. Employees must receive a salary of at least $455/week.
What are the general rules to qualify an employee as exempt from FLSA as a Executive employee?	Primary duty of the employee is management of the enterprise, and they customarily direct the work of 2 or more employees (whom they have the right to hire/fire or their recommendations are given a particular amount of weight). Employee must receive a salary of at least $455/week.
What are the general rules to qualify an employee as exempt from FLSA as a computer professional?	Primary duties consist of application of systems analysis technique & procedural (including consulting with users). Responsibilities should include the design, development, documentation, analysis, creation, testing or modification of computer systems or the creation, design, documentation, testing or modification of a computer system.
What are the general rules to qualify an employee as exempt from FLSA as an outside salesperson?	Primary duty must be making sales of tangible or intangible items (goods, insurance, stocks, bonds or real estate) or obtaining orders or contracts for services or the use of facilities. Employee must customarily work away from the employer's place of business. There are no salary requirements.
What is individual employee coverage (relating to FLSA)?	One of two ways to determine an employer's obligation to cover employees under the FLSA. Individual employees are covered if they are engaged in interstate commerce or in the production of good intended for interstate commerce.
What businesses are specifically covered by FLSA regardless of sales volume?	Hospitals, nursing homes, elementary schools, secondary schools, colleges (whether public or private) and public (government) agencies.
What is enterprise coverage (relating to FLSA)?	One of two ways to determine an employer's obligation to cover employees under the FLSA. All employees are covered if: at least two employees are employed in closely related jobs & directly essential to interstate commerce or the production of goods intended for interstate commerce or the business has gross sales of at least $500,000.
What are the salary caveats to exempt/non exempt status under FLSA?	Any employee earning less than $455/week ($23,660/year) is automatically non exempt. Employees paid more than $100,000/year only have to meet one prong of duty test to qualify as exempt.
In what cases are retail & service industry employees qualified as exempt from FLSA?	Their regular rate of pay must be at least 1.5 times the federal minimum wage and more than half of their pay for any representative period of at least one month is derived from commission. For service employees, this is service charges only, not voluntary tips received.
What is compensatory time?	The time an employee is being compensated for.
What questions should be answered before calculating overtime?	What is the work week? What are the total hours worked? What additional compensation counts toward regular rate of pay? What is the regular rate of pay?
What is not included in the regular rate of pay calculation?	Gifts, paid time off, reimbursed business expenses, discretionary bonuses, benefit plan contributions (ex: ER match on 401(k)), stock options, premiums for extra days worked, premiums paid under a union contract for extra hours.
Does paid time off count toward the overtime calculation?	No. If an employer chooses to count paid time off toward the overtime calculation, they may. However there is no requirement to do so.
What is a non discretionary bonus?	Any contractual or agreed-upon bonus or incentive related to production, efficiency, attendance, quality or some other measure of performance. This includes bonuses that may have been paid to an employee by a vendor.
What is a discretionary bonus?	Bonuses paid for services performed, where the employer has the discretion to either pay or not pay the bonus. Not based on contractual agreement.
What is a workweek?	Any regularly recurring period of 168 hours (7 consecutive 24 hour periods).
What is the federal minimum wage?	$7.25/hour
In what instances may an employer make a deduction from a salaried, exempt from FLSA employee?	Absences for personal reasons, sickness or disability, offsetting amounts paid for jury duty or military LOA, penalties for safety rule infractions, workplace conduct rule violations, FMLA time taken and during the first and final weeks of work.
What are the salary requirements for employees who are exempt from FLSA as computer professionals?	Employee is paid either at least $455/week or $27.63/hour if paid by the hour.
What exemptions to adhering to a work week are granted to hospitals and nursing homes?	8/80 rule - they may use a 14 day period for overtime calculations. The agreement between the employee and employer must be made in advance of any work performed (in writing or specially recorded). The employee receives 1.5 time their regular rate of pay for all hours worked over 8 in a day or 80 in the 14 day period, whichever results in higher pay to the employee.
What is included in the regular rate of pay calculation?	Non discretionary bonuses, shift differentials, payments for hours worked in a form other than cash, retroactive pay, on-call pay, supplemental disability pay, sick leave buy-back payments and per diem payments.
What is the amount of tip credit and employer can deduct from a tipped employee's wages?	$5.12/hour (EE to be paid $2.13/hour). If tips do not equate to $5.12/hour in the work week, the employer must make up the difference so the employee is paid $7.25/hour. The tip credit may not be increased for overtime hours worked.
What conditions must be met before an employer takes a tip credit?	The employee must be a tipped employee (earning at least $30/month regularly in tips), all tips must be kept by the employee, credit card tips must be given to the employee by the next pay day and the employee must earn enough in tips to be paid minimum wage for hours worked.
How is overtime calculated for an employee who works at two jobs for the same employer, paying different rates?	It is paid on a weighted average. Total regular pay from all jobs/total hours worked = regular rate of pay. RRP x 0.5 = Overtime premium.
How is regular rate of pay calculated for salaried non exempt from FLSA employees?	Annual salary/hours intended to compensate for one year. Example: EE works a 35 hour week and is paid $31,200 annually. 52 (weeks) x 35 = 1820 31,200 / 1820 = $17.14/hour
What is a fluctuating workweek?	An agreement between employers and employees to pay the employee a fixed salary even though hours vary from week to week. The regular rate of pay must be calculated when the employee works greater than 40 hours. The employee should receive the OT premium due to them for each hour over 40 worked. Their fixed weekly salary must be high enough to ensure the employee will not fall below minimum wage, regardless of hours worked.
What is a Belo plan?	A plan guaranteeing a fixed salary for irregular hours worked, including overtime. The plan must be agreed to by the employee, either via contract or collective bargaining agreement. The employee must work irregular hours (fluctuating both above and below 40 hours). The guaranteed straight time of at least the statutory minimum overtime at 1.5 x RRP. Cannot be for more than 60 hours/week.
Can an employee receive comp time in another week after overtime is worked?	Under certain circumstances, yes. The time off must be granted within the same pay period & the OT must be paid for OT worked in the beginning of the pay period. The employee can be granted time off equal to 1.5 x the number of OT hours worked (unpaid to offset the OT calculation).
What exceptions exist for comp time off and public sector employees?	Time off is equal to 1.5x the number of OT hours worked, it is agreed upon prior to work being performed, the time is taken within a reasonable period, the employee may be required to use their comp time, the employee is paid all comp time upon termination, maximum accruals are allowable and caps out at 480 hours for public safety, emergency response and seasonal employees.
When can an employer legally fail to pay unauthorized overtime?	When they were unaware any additional hours were worked or when an employee has been forbidden to work the overtime by a direct supervisor or another manager. The threat must be documented and backed by threats of disciplinary action, up to and including termination.
What is "engaged to be waiting"?	Engaged to be waiting is generally compensable because it is typically short, spent on employer premises and insufficient for the employee to use for their own purposes.
What is "waiting to be engaged"?	Waiting to be engaged is generally non work time because the employee is freed from all duties & responsibilities for a definite period of time & has time to pursue personal business before returning to work.
What are the penalties for employing children who cannot legally be employed?	$11,000 per violation. $50,000 per violation that causes death or serious injury to the child.
In what cases are training sessions considered non-compensable time?	When the session is voluntary, the session is unnecessary in the performance of duties, the session is not during working hours and the employee performs no productive work during the session.
How do you calculate the includable fringe benefit?	IFBA = FMV - (EPA+AEL) IFBA (Includable Fringe Benefit); FMV (Fair Market Value); EPA (Employee Paid Amount); AEL (Amount Excluded by Law) *Benefits provided to dependents or spouses are included in income
What are some examples of "fringe benefits"?	Employer provided cars, vacations, flights on employer provided air craft, free/discounted commercial flights, discounts of property or services, qualified tuition reductions, dependent care assistance, tickets to entertainment or sporting events, qualified moving expenses, employer paid memberships to country/social clubs, no-additional-cost services, working condition fringes, de minimis fringes.
How does the IRC define gross income?	Compensation for services, including fees, commissions, fringe benefits & similar benefits.
What kinds of fringe benefits are non taxable under §132?	No-additional-cost services, qualified employee discounts, working condition fringe benefits, de minimis fringe benefits, qualified transportation benefits, on-premises athletic facilities, qualified retirement planning services, qualified moving expenses.
What is a no-additional-cost service?	A service regularly offered to customers in the normal course of business, the employer bears no substantial additional cost by offering to employees, offered to employees (and former employees who left due to retirement or disability, their widow(er)s, spouses and dependent children) and is available on equal terms to all employees without discrimination toward highly compensated.
At what point is an employee considered highly compensated?	If the employee owned 5% (or greater) of stock at any time during the current or preceding calendar year, or received more than $115,000 in compensation during the previous year.
What are the traits of a qualified employee discount?	The discount on goods cannot exceed the gross profit percentage, cannot exceed 20% (or amounts above 20% are taxable), discounted goods are offered for sale to customers in the normal course of business, discount is available on equal terms to all employees and does not favor the highly compensated, the term employee includes all current and former employees who left due to retirement or disability, their widow(er)s, spouses and dependent children. Real estate, stocks, bonds and currency do not qualify for employee discounts.
What are the conditions that allow working condition fringe benefits as non taxable?	The use of property or services relates to the employer trade or business, the employee could take a business deduction on their personal tax return if it was employer paid (exceptions for club dues or spousal travel) and the required records are retained to substantiate the benefit. If the benefit is cash, the employer must require beforehand that the payment be used for business activities and the excess returned in a reasonable period of time.
What are some examples of "working condition fringe benefits"?	Business use of a company vehicle, chauffeur/body guard for security purposes, dues & memberships to professional organizations, employee subscriptions to business periodicals, job-related education, goods used for product-testing by employees, use of a demo car by a full time car salesperson, outplacement services.
Is employee use of business cell phones a taxable fringe benefit?	Generally, no, but specialized heightened substantiation rules apply: the employer must have a need to contact the employee at all times for work-related emergencies, the employer must require that the employee is available to clients at times when the employee is not in the office and the employee must need to talk to clients in time zones outside of their normal workday.
What does de minimis mean?	The value of the benefit is so small that accounting for it would be unreasonable or impractical, the employer must also take into account the frequency with which it provides the benefit to al its employees & the term "employee" means anyone to whom the benefit is provided. CASH IS NEVER DE MINIMIS
When may an employer provide transportation fringe benefits without including the FMV in income?	When the employer provides a transportation vehicle, it must seat at least six adults excluding the driver, 80% of mileage is used for commuting, it is limited to 50% of seating capacity to be used by employees and it's limited to $130/month. Employers may provide transit passes up to $130 per month. Parking on/near employer premises can be up to $250/month.
Can personal mileage on an employer provided vehicle be considered de minimis?	Yes, if used on infrequent side trips.
What is a qualified non personal use vehicle?	A vehicle unlikely to be used for personal travel because of special design. Marked police cars, fire and public safety officer vehicles, school buses, ambulances.
What is the written policy necessary to use the exclusion of fringe benefits from full time car salespeople using a demo vehicle?	Prohibits the use of the vehicle outside of normal business hours, prohibits the use of the vehicle for personal vacations, prohibits storage of personal items in the vehicle and limits the total use (by mileage) outside normal working hours to commuting between home and work (10 miles or less per day).
What are the records required to satisfy full exclusion of personal use of a demo vehicle by a sales person?	A copy of the written policy and evidence it was communicated to the employee and records that establish the sales person's personal use was calculated at least once each calendar month.
What does Annual Lease Value (ALV) mean?	This figure is necessary for calculating taxable income for personal use of a company car. The employer must know the FMV of the vehicle and the IRS provides a table with the current ALV based on FMV.
How are personal miles calculated to include in employee income?	ALV multiplied by the percentage of personal miles used.
When can the employer use the "cents per mile" method of calculating imputed income for personal use of a company car?	When the vehicle is regularly used for business purpose or driven at least 10,000 miles per year and the FMV is less than $16,000.
What is the business standard mileage rate for 2014?	$0.56/mile - You cannot use the cents per mile method if the FMV of the car exceeds $16,000.
What is the IRS approved rate for calculating the value ER provided fuel?	$0.005/mile (five and a half)
Can a company value an average FMV to determine ALV?	Under certain circumstances, yes. They must have a fleet of 20 or more vehicles, they must recalculate the average at least once every two years and none of the vehicles can go over the maximum values for the year ($21,300 for passenger cars, $22,600 for passenger trucks or vans).
What are the record-keeping requirements for company provided vehicles?	The employee must log the business use of the vehicle for each trip. Records must include the date, business purpose and mileage used.
What is SIFL?	Standard Industry Fare Level. It relates to calculating taxable income for an employee on company aircraft with a company provided pilot. The IRS provides a table for rates per mile & the terminal charge.
How is taxable income for personal use of company aircraft calculated?	[(SIFL * mileage) * weight-based aircraft multiple] + terminal charge = value. Multiply the value by the amount on the chart provided based on whether or not the EE is a control or non control EE. Example: Non control EE takes a 3,000 mile flight to Jamaica on company aircraft with a certified take-off weight of 30,000 lbs. (5000.2654) + (1000 .2024) + (1500 * .1946) = 627.00. 627 * .313 = 196.25. 196.25 + 48.53 = $244.78 included in income.
What types of organizations are exempt from the definition of a club?	Business leagues, trade associations, chambers of commerce, boards of trade, real estate boards, professional organizations, civic or public service organizations.
When is employer provided group term life insurance included in income?	The value of the coverage in excess $50,000 minus the amount the employee pays after taxes. IRS provides a table for the FMV of GTL per $1,000. Multiply the rate by each $1,000 above $50,000 in coverage that is provided.
What are two factors taken into account regarding employer paid moving expenses?	Length of time of the assignment and the distance away from the original destination.
What is the distance test (relating to employer paid moving expenses)?	The new work place must be 50 miles farther from the employee's old residence than the previous work place was.
What is the time test (relating to employer paid moving expenses)?	During the 12 month period following the move, the employee must work full time for at least 39 weeks. Exclusions: Death, disability or involuntary termination (except in cases of willful misconduct) of the employee, or another transfer for the employer's benefit.
What are the two types of deductible moving expenses?	Transportation - including the in-transit storage of household goods and personal effects. Traveling from the old residence to the new residence - includes lodging, but not meals.
What is the mileage rate for moving expenses?	$0.235 cents per mile
What are some common relocation expenses that are non deductible (included in income)?	Cost of meals while traveling from old home to new home, pre-move house hunting expenses, temporary living expenses after starting work in a new location and real estate expenses incurred in selling old residence/buying new residence.
What conditions exist to classify educational expenses as job related?	The courses are not necessary to meet minimum requirements of the current job, the courses are not taken to qualify the employee for a promotion or transfer to a different type of work and the education is related to the current job & helps maintain/improve the knowledge & skills required for the job.
What is the amount of excludable non job related educational reimbursement?	In accordance with §127, $5,250.00
What are the requirements for travel expenses to be excluded from income as an expense reimbursement?	Travel is away from home & temporary - meaning it is realistically expected to last one year or less. Travel that was once expected to be less than a year, then extended: Begin including in income when the length of time is decided to be longer.
Under what kind of plan must business expenses be reimbursed from to be excluded from income?	A accountable plan. There must be a business connection and substantiation (amounts over $75) is required for accountable plans. All lodging is reimbursable, but hotel bills must include the full itemized bill to remain sheltered from tax.
What is the "fixed date method" (pertaining to safe-harbors for reporting substantiation and the return of excess funds)?	If an advance is provided no more than 30 days before an expense was incurred, and is substantiated by the employee within 60 days of being paid (incurred), and the excess amount is returned to the employer within 120 days, the reasonable period requirement is met.
What is the "periodic statement method" (pertaining to safe-harbor for requiring substantiation and return of excess funds)?	The employer issues a periodic statement to the employee (at least quarterly), detailing the amounts paid but not substantiated. The employer also requires the employee to substantiate the excess amount or return it to the employer.
Are continuing advances for business expenses taxable income?	Yes, any employee provided with a fixed amount prior to expenses being incurred and receiving reimbursement when the expense occurs should be taxed on the amount provided up front. These types of payments do not generally provide amounts reasonably calculated to match expenses and do not require the return of excess amounts.
Employers that regularly fail to comply with the requirements of an Accountable business expense plan are said to have established a pattern of abuse. How is this determined?	The expense allowance arrangement has no mechanism or process to determine when an allowance exceeds the amount that may be deemed substantiated. Arrangements routinely pay allowances in excess of the amounts substantiated and do not require substantiation or repayments of excess amounts. Failure of the arrangement to treat excess allowances as wages.
Are spousal travel expenses ever excluded from income?	Yes, under certain conditions: The spouse, dependent or other person is also an employee of the employer providing the reimbursement. The travel of the spouse, dependent or other person is for a bona fide business purpose or the expense would otherwise be deductible as a business expense by the spouse, dependent or other person.
When are employer provided meals excluded from income?	Meals are furnished on the employer's premises and they are furnished for the convenience of the employer.
What is the maximum that can be excluded from income for adoption assistance in 2014?	$13,190 of amounts provided for the adoption of an eligible child. These amounts are not taxable under Federal, but they are for Social Security and Medicare purposes.
How should an overpayment that crosses tax years be handled?	The amount should be reported in Boxes 1, 3 & 5 (with applicable taxes withheld) in the year it was overpaid. The employer cannot collect a previous year's tax amounts, so it is generally a good idea to collect the gross amount in the subsequent tax year. The employer can receive credit for the Social Security and Medicare amounts. It would be acceptable to either reduce the amount the employee pays by this amount or issue a separate check. This transaction will require a W2c for the tax year the overpayment occurred.
Are length of service or safety awards taxable income?	Generally, no, but they must be tangible property and presented in a meaningful presentation. In addition they cannot be disguised as compensation. Length of service awards must be for five years of service or more. For safety awards, once 10% of the employees have received the award, it becomes a taxable item.
Are civic and charitable awards considered taxable income?	Generally, yes. In order to exclude from income, the recipient must not actively seek the award and it must not be conditioned on performing future services. In addition, the recipient must turn award over to a government or charitable organization designated (in writing) before the recipient is able to use it.
Are Death Benefits taxable income?	Generally, yes. They are not reported on the W2, but on a 1099-MISC when paid under a qualified or non qualified plan. They are reported on a 1099-R when they are not paid under a plan. They are not subject to Social Security or Medicare.
What is the exclusion rate for employer provided Dependent Care Assistance?	$5,000 ($2,500 for married filing separate couples)
Are employer paid taxes taxable income?	Yes
What is the gross up calculation?	Desired net pay \ (100% - total tax %) = Gross Income
What kinds of gifts are considered de minimis?	Low value Holiday gifts (except cash or gift cards), popular items are hams or turkeys for holidays.
What is a Golden Parachute payment?	An amount paid to a key executive if they are terminated by a new owner. It is taxed at the supplemental rates applicable to other bonuses, but an additional 20% excise tax is applied to any amounts greater than $700,000.
Are loans to employees treated as taxable income?	The principle balance of the loan is not taxable income, however if the total outstanding loans from the employer to the employee exceeds $10,000, the difference between the interest rate charged by the employer and the applicable federal interest rate is taxable income.
How are wages paid after the employee's death taxed?	Any checks with an original check date after the employee's date of death within the same year are not subject to Federal tax. They are subject to Social Security, Medicare and FUTA. The amounts paid are reported in Boxes 3-6 of the W2 and Box 3 of the 1099-MISC. Wages paid the year after death are subject to no tax withholdings and are reported only in Box 3 of the 1099-MISC.
What methods may be used to withhold Federal income, Social Security and Medicare taxes from non cash fringe benefits?	Add the imputed income to the employee's regular wages and calculate the withholding on the total amount or treat the included fringe benefit amount as supplemental income and withhold based on the supplemental rates.
What special rule exists for fringe benefits incurred in November or December?	Under certain conditions, they may be treated as next year's income. This would apply ONLY to benefits PROVIDED in these two months. The employer must notify the employee they are doing so (timeframe: between the last check of the year and the issuance of their W2). This must be applied to all employees that receive the benefit. It cannot be personal property normally held for investment or real property, they cannot be for reimbursed moving expenses or GTL income.
How can an ISO (Incentive Stock Option) qualify for favorable tax treatment?	Plan must be approved by shareholders. The options must be exercised within ten years and the option price should be equal to the FMV of the stock on the date the option was granted. They are not transferrable unless due to death and the employee may not own more than 10% of the voting stock. The employee cannot sell the stock within two years of the grant date or one year of exercising. They must be exercised within the term of the employee's employment, or within three months of employment ending. The amount cannot exceed $100,000 of options exercisable, any amount above that is treated as a non qualified stock option.
When an ISO fails to meet all requirements for tax shelter, how is the transaction handled?	The difference between the option price and the exercise price becomes taxable income, classified as a Disqualifying Disposition.
What is a non qualified stock option?	Non qualified stock options give an employee the opportunity to buy employer stock at a fixed price for a certain period of time, without the same conditions as an ISO. The employee is taxed on the excess of the value of the stock and the price paid by the employee.
What are allocated tips?	Food and beverage establishments with ten or more employs "allocate" tips if the amount reported by the employees is less than 8% of gross sales. The difference between the amount reported and the 8% is allocated to any employees who reported less than 8% in their tips. It is reported on the W-2 in Box 8, but not subject to Federal, Social Security or Medicare tax.
What is the maximum amount of group term life insurance an employer can provide for an employee's spouse or dependent that is excluded from income?	$2,000
In what instances are out placement services considered excluded from income for laid off employees?	The employer derives a substantial business benefit from providing the out placement service other than providing compensation (positive corporate image), the employees do not have choice of accepting cash or the out placement service, the employees would be able to deduct the out placement service on their personal tax return
With regard to bonuses, what is "push money exception"?	A manufacturer paying a bonus to sales employees to "push" its product. These are not wages, they're paid by a third party, they are not subject to withholding taxes and they must be included as income on the sales employee's personal tax return.
What must restaurant employers desiring to participate in a TRDA (tipe rate determination agreement) do?	They must agree with the IRS on a certain tip percentage based on the charge tips reported & on an IRS formula to determine cash tips and 75% of employees must agree to report the tip percentage agreed upon.
With regard to non-deductible moving expenses & the time test, must the employee be employed full time for 39 consecutive weeks?	No, it must be 39 weeks but they need not be consecutive.
How is GTL insurance over $50,000 treated if an employee terminates due to permanent disability?	It is not included in income.
For what travel expenses may an employer use the high-low per diem rate instead of the individual federal per diem rate of the locality?	Lodging, meals and incidental expenses. The travel must be within the continental US (CONUS).
How is an employee contribution toward GTL treated?	It is deducted from the end result figure of the GTL calculation.
What is a control employee (private sector)?	A corporate officer earning at least $105,000 in 2014, a director, anyone who earns at least $210,000 in 2014 or a 1% owner.
What is a control employee (public sector)?	Elected officials, anyone who earns more than a federal employee at Executive Evel V ($147,000 in 2014).
Why might an employer choose self-insurance over purchasing a policy from an insurance company?	Such plans are less regulated than third party plans and give the employer more direct control over plan reserves & health care cost containment. They pay benefits out of their own insurance funds & either administer the plan themselves or contract with a third party to administer.
What is "stop loss" insurance?	Insurance purchased to pay claims once the employer has paid a certain amount, limiting the liability in the event of catastrophic medical expenses.
Who must provide "affordable" health insurance (to full time employees) that provides "minimum essential coverage" under the Affordable Care Act (ACA)?	Applicable Large Employers (ALE), these are businesses that have an average of at least 50 employees during the preceding calendar year.
What is the penalty for not providing affordable coverage?	Equal to the number of the employer's full time employees for one month, multiplied by 1/12 of $2,000. For the purpose of making the calculation, the number of full time employees during the month is reduced by 50.
When are employer paid premiums excluded from income?	When they are paid through a valid salary reduction plan under IRC §125.
When are mandatory salary reduction contributions excluded from income?	When made by current employees to pre-fund a trust created by their union to pay for accident or health coverage for retired employees, their spouses & dependents (IRC §106).
When the Supreme Court struck down §3 of the Defense of Marriage Act, what was the result?	Health insurance plan contributions & benefits would be excluded from income if made or received on behalf of an employee's same sex spouse. It does not apply to registered domestic partnerships, civil unions or other formal relationships recognized under state law.
Employers must provide written notice to employees of their options on the Health Insurance Marketplace (The Exchange). What must this notice contain?	It must inform the employee of the existence of the Marketplace (as well as a description of the services it provides) & how to contact the Marketplace. If the employer plan's share of the total allowed costs is less than 60%, it must notify the employee that the employee may be eligible for a premium tax credit if they purchase insurance through the Marketplace. In addition, if the employee purchases coverage elsewhere, they must be notified that they may lose the benefit of an employer contribution & that it may be excluded from income.
Can an employee purchase insurance for a child under age 26 and married?	Yes, however the plan is not required to allow coverage to the child's spouse or any children the child has. If the child under 26 has an option to purchase their own insurance through their own employer, the plan is not required to provide coverage.
What are examples of the kinds of procedures/items may not be reimbursed to an employee by an FSA, HSA, HRA or Archer MSA?	Teeth whitening procedures performed by a dentist to whiten teeth discolored by age, dietary supplements (vitamins) purchased to improve general good health or diet foods purchased as part of a weight-loss program, substituting other foods normally consumed.
Can an employee receive reimbursement through an FSA, HRA, HSA or Archer MSA for gender reassignment surgery?	An individual's costs for gender reassignment surgery & hormone therapy are deductible if they are based on a diagnosis of gender identity disorder. However, breast augmentation surgery may not be, as it is considered cosmetic surgery.
What are the requirements to exclude FSA, HRA, HSA or Archer MSA plan contributions from income?	The plan must be written or otherwise known to the employees, the plan must be referred to in an employment contract, the employees contribute to the plan or employer contributions are made to a fund that is separate from the employee's direct deposit account and if employer contributions are made, it's based on requirement to do so.
What is the penalty for a self-insured plan that discriminates toward highly compensated employees?	$100 per day per individual it discriminated against.
In order for a self-insured plan to be deemed non discriminatory, what requirements must it meet?	It must benefit: at least 70% of all employees and at least 80% of all the employees that contribute to the plan. In addition, it must benefit a classification of employees that the Secretary of Treasury finds to be not discriminatory.
If a self-insured plan is found to be discriminatory, how are taxes applied?	Amounts paid to highly compensated employees divided by (all amounts paid to HCEs divided by all amounts paid to employees). Example: Company provides dental benefits to only HCEs. An HCE receives $300 in dental benefits. All HCEs received $700. In addition, the employee was paid $4500 of medical expenses, total expenses paid to all employees is $51,000. The $300 in dental benefits is taxable. 4500 multiplied by (31,000 minus (300+700) divided by 51,000 minus (300+700) equals $2700. Add the $300, a total of $3,000 is taxable.
What is a Medical Loss Ratio (MLR)?	A requirement that insurance companies spend a specified percentage of money received in premiums on medical care and quality improvement activities. Those that do not are required to provide rebates to their consumers. Not applicable to self-insured plans.
Are MLR rebates taxable?	Yes. If the employee receives the rebate in the form of a reduction in premiums, the employer must calculate the amount the employee's pre-tax premium is reduced by and include it in taxable income. If it is cash provided to the employee, cash is always taxable.
Should an employer provide a W2C for corrections to Box 12, Code DD of the W2?	If changes to coverage are made after the close of the calendar year (example: employee is late in notifying the coverage provider of a divorce in a previous year), then no. If it's a miscalculation or other cause, then yes.
How is employer paid health insurance reported?	Effective for 2013 W2s, employers filing more than 250 W2s must report the amounts paid toward health insurance for each employee in Box 12 (Code DD) of the W2. Other exclusions: Forms W2 provided to terminated employees prior to the close of the calendar year, multi-employer plans, HRAs, self-insured dental & vision plans, self-insured plans not subject to COBRA, coverage under an employee assistance program or on-site medical clinic or wellness program.
What is an Archer MSA?	A plan for employees to contribute pre-tax funds to an account specifically for medical expenses. The plan is only available to employees of small employers (50 or less employees), it must be covered by a high deductible plan and the employer may make contributions on the employee's behalf that are not included in income.
What is considered a "high deductible plan" for Archer MSAs?	It has an annual deductible of $2,200 - $3,250 for individual coverage, $4,350 - $6,550 for family coverage. The maximum amount of out-of-pocket expenses can be no more that $4,350 for individuals, $8,000 for families.
How are Archer MSA contributions treated for tax purposes?	They are excluded from federal, Social Security, Medicare and FUTA wages. Deduction cannot exceed employee compensation and the deduction must exceed 65% of plan deductibles for individual coverage, 75% for family coverage.
Can both employers and employees contribute to an Archer MSA?	No.
Can an Archer MSA be part of a cafeteria plan?	No.
How are employer contributions to an employee's Archer MSA reported?	Box 12, code R on the W2.
How are distributions from an Archer MSA reported?	Form 1099-SA.
How are contributions to an Archer MSA reported?	Form 5498-SA.
How are payments under long-term care insurance contract treated for tax purposes?	They are excluded from income as long as: it provides only for coverage of qualified long-term care services, which are prescribed by a licensed health care practitioner or the covered individual is chronically ill & unable to perform at least two activities of daily living or has severe cognitive impairments requiring substantial supervision.
What is COBRA?	Consolidated Omnibus Budget Reconciliation Act of 1985. This requires health care plan sponsors to provide employees and dependents continued group health coverage following the loss of coverage due to a qualifying event. This applies only to employers with 20 or more employees. Coverage is provided for 18-36 months depending upon the qualifying event. An option to switch to individual coverage is provided prior to the group coverage provided, and it provides the same coverage the employee and dependents formerly enjoyed.
What is considered a "qualifying event" for COBRA purposes?	Death of a covered employee, termination of employment (other than for gross misconduct - the kind that includes jail time), the divorce/separation of a covered employee, the entitlement of Medicare to a covered employee, a covered child losing status or bankruptcy proceedings causing a retired employee or dependents to lose coverage.
What are the penalties for non compliance with COBRA?	$100 per day of non compliance for each qualified beneficiary (maximum of $200/day per family affected). Unintentional failures due to reasonable cause (not willful neglect) impose a maximum of the lesser of 10% of the amount the plan trust paid to obtain medical care during the taxable year or $500,000.
What is an HRA?	Health Reimbursement Arrangement. It is paid into solely by the employer, not provided pursuant to salary reduction election or a cafeteria plan. Reimburses for medical expenses incurred by the employee or covered spouse/dependents. Any unused portion at the end of the coverage period may be carried forward.
What is an HSA?	Health Savings Account. It is for use only by employees covered under a high deductible health plan (HDHP). It is for medical care expenses and can be offered as an option under a cafeteria plan.
What is a "high deductible health plan" for HSAs?	A plan that has an annual deductible of $1,250 for individuals, $2,500 for families. The maximum out-of-pocket expense is $6,350 for individuals, $12,700 for families.
How are contributions toward an HSA treated for tax purposes?	They are excluded from income up to the maximums allowed by law (the maximum includes both employee and employer contributions). Any contributions to an Archer MSA will reduce the maximum allowable contributions to an HSA. An excise tax of 6% each tax year is imposed for excess individual or employer contributions.
What is the maximum allowable contribution limit for an HSA?	$3,300 for individuals, $6,500 for families. Additional "catch-up" contributions are allowable for those 55 or older, but the catch-up is not applicable to individuals with Medicare coverage.
What is FMLA?	Family Medical Leave Act. It applied to employees in workplaces of 50 or more (or 50 employees within a 75 mile radius), allowing up to 12 weeks of unpaid leave in any 12 months to be with a newly born or adopted child, or to care for a seriously ill son, daughter, spouse or parent (or themselves). During leave, the employee's job and benefits are guaranteed to be continued. The employer must also have 50 employees within a 50 miles radius of where the leave was requested.
What employment requirements must an employee meet in order to be eligible for FMLA?	They must be employed by the employer for at least 12 months and worked at least 1,250 hours within the previous 12 month period.
What is the maximum amount of time an employee can take off to care for a covered service member with a serious injury or illness under FMLA?	26 weeks. The employee requesting the leave must be a son, daughter, spouse, parent or the next of kin to the servicemember.
Can an employer require an employee to take FMLA?	Yes, if the employee has a serious health condition making them incapable of performing their job duties.
Can an employer require that the employee pay benefit premiums with the consequence of cancelled coverage due to non payment?	Yes. Employees who fail to pay may lose coverage after 30 days. The employer must provide written notice that coverage will be cancelled at least 15 days prior to cancellation.
What options do employees have to pay their benefit premiums?	Pre-pay, catch-up or pay-as-you-go (with pay-as-you-go, the employee will lose the pretax benefits if no wages are being paid).
What are the variables involved when determining tax treatment of "sick" pay?	Who makes the payments, who bears the insurance risk, who paid the premiums on the insurance involved and whether or not the employee is temporarily or permanently unable to work.
Are benefits paid that are attributable to employer contributions to premiums paid on a sick plan taxable to the employee?	Yes.
For a self-insured sick plan, how long are Social Security and Medicare taxes withheld?	For the first six months of disability (must be consecutive, any breaks in absence will restart the six month period).
How are payments made under a disability plan made to employees who are not expected to return to work treated for tax purposes?	They are subject to federal withholding by the party making the payment. They are not subject to Social Security, Medicare or FUTA.
How are payments made as worker's compensation payments treated for tax purposes?	Payments that are due to injury or illness on the job are not taxable.
How are premiums for worker's compensation determined?	It depends on the state, they each have their own laws regarding the setting of premium rates, benefits, assignment of classification codes and determining what types of compensation are included in the premium calculation. Four categories: National Council states, Non-National Council states, Monopolistic states and Competitive State Funds.
What is a National Council state (in relation to worker's comp)?	A large majority of states are considered National Council states. They adhere to classification codes in the Basic Manual for Worker's Compensation - published by the National Council on Compensation Insurance.
What is a non-National Council state (in relation to worker's comp)?	Twelve states use independent worker's comp manuals, many of their classification codes are the same as those used in National Council states. They are considered Independent Bureau states.
What is a Monopolistic state (in relation to worker's comp)?	Four states administer their own worker's comp premiums and benefits through a state fund. They prohibit employers from purchasing worker's comp from a private insurance carrier. Premiums are deposited and reported in a manner similar to employment taxes.
What is a Competitive State Fund (in relation to worker's comp)?	Fourteen states allow private insurance carriers to compete with a state worker's comp fund. If handled through the state fund, premiums are deposited and reported in a manner similar to employment taxes.
What types of compensation are generally excluded from the worker's comp premium calculation?	Overtime PREMIUM only, reimbursed travel expenses, third party sick pay, reimbursed moving expenses, tips, personal use of a company vehicle, GTL over $50,000, severance pay, educational assistance and employer contributions to pension/insurance plans.
What are cafeteria plans?	They are popular among large-sized employers. They give the employee a choice from a "menu" of cash compensation and (qualified) non taxable benefits. They are not "flexible benefit plans", they are a specific kind of plan authorized by §125 of the IRC.
What are some examples of qualified benefits for a cafeteria plan?	Coverage under accident & health insurance plans, dependent care assistance plans, GTL insurance on employees, qualified adoption assistance, premiums for COBRA, accidental death and dismemberment insurance, long term disability, short term disability, 401(k) plans and HSAs.
What kinds of status changes can an employee have that allow for revocations of §125 benefits?	Marital status changes, changes in the number of dependents, employment status changes, changes in dependent or adult child status, residence changes or adoptions. These apply only if the status change is a result of the employee or covered dependent losing coverage.
Can FSA contributions be rolled over into the next plan year?	Generally, no, however some plans may allow a 2.5 month "grace period" into the next plan year for employees to use for reimbursement. There are special provisions that allow an employer to carryover $500 to a subsequent plan year, however they may not elect to do so if they allow the "grace period". Either choice must be written into the plan and there is no requirement that the employer choose either method.
What is a "qualified reservist distribution" (QRD)?	This is a special allowance for reservists to cash out their FSA. The employee must be a reservist called to active duty for 180+ days or an indefinite period. The QRD must be made during the period beginning with the date of the call to duty and ending on the last day of the FSA coverage period. If the employee returns unexpectedly before the 180 day mark is met, the cash-out stands.
What is an ODFI?	Originating Depository Financial Institution. Relates to direct deposit, the ODFI prepares the ACH file, ensures it is prepared correctly.
What is an ACH?	Automated Clearing House Network. Relates to direct deposit, the ACH processes the file prepped by the ODFI to the RDFI.
What is an RDFI?	Receiving Depository Financial Institution. Relates to direct deposit, the RDFI is the financial institution that holds the employee's account.
What is an IAT?	International ACH Transaction. Rules surrounding the IAT are designed to identify IATs that may be used to fund criminal activities. Financial institutions will block any IATs that are not coded properly as IATs. The transaction requires a permanent address for both payer and payee.
Can an employer reverse a direct deposit?	Yes, the debit entries through ACH can be initiated via oral or written agreement. Oral agreements must be followed up with the agreement in writing.
What is a pre-note?	Pre-notes send $0 amounts via ACH as a test. They are not required and must be sent 6 banking days before any actual pay is sent through the network.
What is a Pay card?	This is an option available to pay an employee on a debit card that operates similar to a typical debit card. State laws vary in their use (restrictions in allowing fees, or forced Pay card usage). The only federal restriction to a Pay card is that the Pay card cannot be the only way for an employee to be paid.
What happens to an uncashed paycheck?	After a length of time determined by the state the employee resides in, funds are escheated to that state. There must be a reasonable attempt to contact the employee prior to escheatment.
Can an employer reduce wages due to an extra payday caused by the calendar?	Yes, but it must be done prior to the beginning of the year. Generally employers do not reduce pay due to the fact that this will lower employee morale and that some exempt employees have been promised a specific weekly or biweekly pay. Caution should be taken surrounding benefit deductions - they should not be over withheld for the year.
What days of the week occur 53 times from 2013-2018?	2013: Sunday, 2014: Wednesday, 2015: Thursday, 2016: Friday & Saturday, 2017: Sunday, 2018: Monday
How are pre-tax contributions to a cafeteria plan reported?	On Form 940, Part 2, Line 3 & Part 2, Line 4 as exempt payments. Box 4a should be checked as well.
How are contributions to a 401(k) or deferred arrangement treated for tax purposes?	They are not subject to federal with holding, but they are subject to Social Security and Medicare. They are reported on the W2 in Box 3 & 5, amounts with held in Box 4 & 6 as applicable. They are also reported in Box 12, preceded by Code D. In addition, they are reported on the 941 in Lines 5a, 5c & 5d since they are subject to Social Security & Medicare. They will also be reported on the 940 on Line 3.
What is the annual limit for Health FSA in 2014?	$2,500
What is the annual limit for Dependent Care FSA?	$5,000
How are contributions to a Dependent Care FSA reported?	Box 10 of the W2.
What is a defined benefit plan?	A type of retirement plan funded by an employer. Generally, benefits are based on employee age, compensation level and length of service. These are geared toward retirement benefits, not contributions. Certain benefits are insured by the government through the Pension Benefit Guaranty Corp. Early termination is subject to special rules. In addition, contributions and benefits forfeited by employees who leave before vesting are used to reduce future employer contributions.
What is a defined contribution plan?	A tpye of retirement plan funded by specific contributions by either employee or employer (or both). The amount the employee receives upon retirement is based on the account balance. The plan has a formula involving employer or employee. Employer contributions are made annually, but can be made more often. The employees tend to understand this kind of plan better because they can look at an account and know how much they have. There are no actuarial calculations and annual reports are filed with the IRS and DOL.
What is a "profit-sharing" plan?	A defined contribution plan to which the company agrees to make "substantial and recurring" contributions. Amounts are for eventual distribution at a specific time (retirement, fixed number of years, after certain events - death, disability, separation of employment).
What is the compensation limit for defined benefit or defined contribution plans for 2014?	$260,000
What is the annual benefit for total contributions to a defined benefit or defined contribution plan for 2014?	Total of all employee and employer contributions cannot exceed $52,000 or 100% of employee's total annual compensation.
What is a retirement "catch-up" contribution?	Employees over age 50 can defer an additional $5,500 (in 2014) toward 401(k), 403(b) and state & local government 457(b) plans. For SIMPLE and SEP plans, they may contribute an additional $2,500 (in 2014).
How are catch-up contributions treated when a plan limits participation for non discrimination reasons?	They are not affected. If an employee is limited to $10,000 deferrals for non discrimination reasons and they will be 50 or old in the plan year, they may defer $15,500 (in 2014).
When are payments from pensions and other retirement plans considered taxable?	Generally, when received by the employee. Limitations exist with regard to amounts contributed on an after-tax basis. Any payments made to an employee under age 59.5 are subject to a 10% excise tax.
What is the maximum that can be deferred by an employee for 2014?	$17,500 ($5,500 catch-up for employees over 50). Total employer and employee contributions cannot exceed $52,000 or 100% of the employee's compensation. The maximum compensation limit is $260,000.
Do you have to stop a deduction for retirement when the wage base reaches the maximum?	No, the maximum wage base is applicable to the employer match.
When must an employer fund the employee's retirement account after deferrals are made?	Ideally, ASAP. The employer must fund by the 15th business day of the month (30th for SIMPLE) according to DOL.
What is the actual deferral percentage (ADP)?	This is used in discrimination testing. (Employee annual elective deferral divided by employee annual compensation) multipled by 100. Employer matching contributions and employee after tax contributions may be included when testing for non discrimination.
How does an employer ensure their 401(k) plan is not discriminatory toward highly compensated employees?	First, ADP must be calculated for all employees. The employer then finds an average of ADP for non HCE and HCE. The average ADP for HCE cannot be greater than 1.25 average ADP for non HCE or the lesser of: (1) 2x the average ADP for non HCE or (2) 2% more than the average ADP for non HCE.
How are distributions from a retirement plan reported to the employee?	Form 1099-R.
What happens in an employer fails a non discrimination test?	All participants must be taxes on their deferrals unless corrective action is taken (this may include mandatory distributions to HCEs, reportable on a 1099-R).
What kinds of plans meet the requirements of IRC §403(b)?	Retirement plans for schools, tax exempt charities and religious organizations. They purchase tax sheltered annuities. The annuity contracts cannot be purchased through §401(a), §403(a) or §457(b). Employee rights are nonfofeitable unless the employee fails to pay premiums. The plan must meet non discrimination requirements (except churches). The plan offers all employees to defer at least $200 annually if one employee is given the opportunity. The elective deferral limits are met if the plan provides for salary reduction agreement.
Can employees participating in a §403(b) plan exceed annual limits in contributions?	Under certain circumstances, yes. The employee must have at least 15 years of service and the additional amount is equal to the least of: (1) $3,000 in contributions, (2) $15,000 reduced by any amounts contributed under the special provision in previous years or (3) ($5,000 minus years of service) minus total elective deferrals in previous years.
What kinds of retirement plans are covered under §457(b)?	State and local government employers and tax exempt organizations other than churches use this kind of plan. There are no requirements for this plan to meet non discrimination rules.
What special rule exists for §457(b) participants and the catch-up contribution?	It is not available to participants during their last 3 years before reaching the plan's normal retirement age if the special rule provides a higher maximum contribution. They may defer the lesser of twice the deferral plus the catch-up or deferral limits added together over years of employment minus contributions made by the employee.
In what instance may a participant in a §403(b) plan contribute to a §401(k) plan?	If the plan existed prior to the Tax Act of 1986.
What are the three nondiscrimination tests cafeteria plans must satisfy to qualify for preferential tax treatment?	Eligibility test, Concentration test and Contribution/Benefit test.
What are the three major health plans offered by employers to employees?	Fee-for-service, HMO & PPO.
What conditions must be satisfied for employer provided health coverage to qualify for preferential tax treatment?	Plan must benefit: at least 70% of all employees, at least 80% of all eligible participants and a classification of employees deemed non discriminatory by Secretary of Treasury.
What must an employer provide to a third party sick agent making payments to an employee?	The total wages paid so far this year, the last month the employee worked for the employer and employee after tax contributions to premiums.
What are exemptions based on classification codes (in terms of worker's comp)?	When an employer with a particularly dangerous type of work reclassify an employee based on job duties. Example: a mining employee has a different classification code than an office worker employed by the same company.
What is a §501(c)(18)(D) Employee Funded plan?	A pension plan created before 6/25/59, funded solely by employee contributions. They have preferential federal income tax treatment if they are not discriminatory toward highly compensated employees & meet certain contribution limits (limited to the lesser of $7,000 or 25% of employee salary). Reported in Box 1 of the W2, the deduction is taken on the employee personal tax return.
What is the limit for IRA contributions for 2014?	$5,500 with a catch-up contribution for those 50+ of $1,000
What is the limit for employee contributions to a §408(k) SEP for 2014?	$17,500 with a catch-up contribution for those 50+ of $5,500
What is a §408(k) Simplified Employee Pension?	For employers without the means to offer qualified pension or profit-sharing plans. Employers contribute for all employees over age 21, working for the employer for at least 3 of the past 5 years, earning at least $550 in 2014. Contributions are limited to the lesser of 25% of compensation or $52,000. Through the end of 1996, employers could set up a SEP that allowed employee contributions. At least 50% of employees must contribute or no one can contribute.
What preferential tax treatment is allowed to a §408(k) SEP?	Employee elective deferrals are not subject to federal income tax. Contributions are reported in Box 12, preceded by Code F.
What is a §408(p) SIMPLE plan?	A simplified tax-favored retirement plan for employees of small employers. It has less burdensome non discrimination & administrative requirements than other plans.
What are the limits to a §408(p) SIMPLE plan for 2014?	$12,000 with a catch-up contribution for those 50+ of $2,500.
What is the concept of constructive receipt?	Wages are considered paid when funds are actually made available to an employee. This is important for tax reasons, someone who earned wages 12/16/14-12/31/14 and was paid on 1/4/15 is subject to 2015 withholding. In addition, any HSA or FSA deductions for 2014 are not allowed.
What is SSNVS?	SSN Verification Services. This is provided by the SSA as a way to verify an employee's name and SSN. The name and SSN should match exactly what is on the card.
What are some characteristics of a SSN?	New and replacement Social Security cards will have an "issue date" and the first and last names will be on separate lines. The SSA will never issue: SSNs beginning with a "9", SSNs with the numbers "666" or "000" in positions 1-3, SSNs with "00" in positions 4-5, SSNs with "0000" in positions 6-9 or the SSN 123-45-6789.
Is the requirement of having a TIN/SSN for employment purposes religious discrimination?	No. The SSN/TIN requirement is one imposed by the IRS, not the employer.
What is the penalty for an incorrect name/SSN on Form W2?	$100 for each incorrect W2.
What are the two methods for verifying a SSN via SSNVS?	1. Verify up to ten names online & receive immediate results or 2. Upload batch files of up to 250,000 names & SSNs and usually see results the next day.
What is Form SS-5?	A form completed by an individual to change their name on their Social Security card.
Why must the name & SSN on Form W2 and the Social Security card match exactly?	This is the only way to be 100% sure Social Security & Medicare wages and associated taxes paid are credited correctly.
What is Form W-4?	The form an employee provides to the employer to direct federal income tax withholding.
What if Form W-4 is not provided to an employer?	Withhold at the rate of single with zero allowances.
When is Form W-4 effective?	For a new hire: the first payroll period after the form is filed. For current employees: No later than the beginning of the first payroll period within 30 days after the form is filed.
When must an employee claiming exempt on Form W-4 file a new form?	Exempt status must be renewed for each new year by February 15. If they do not, the employer must begin withholding based on the last Form W-4 filed that did not claim exempt. If no such form exists, the employer should begin withholding at the default single with zero allowances.
Can a W-4 be rejected by an employer?	Yes. Some common reasons for rejection: the form is altered, the form is incomplete (missing name, address, SSN, signature/date or no marital status has been marked), the employee claims a number of allowances and exempt, the employee indicates in some way that information on the form is false or the employer has received a "lock-in letter" and the employee is attempting to claim more allowances than the IRS allows on the notice.
Can employees claim a flat amount or percentage of withholding?	No. Line 6 is for employees to withhold an additional amount or a nonresident alien to write "NRA".
When must Form W-4 be submitted to the IRS?	When the IRS directs the employer to do so in written notice or via published guidance (revenue procedure). If the IRS does request the forms, ensure Boxes 8 & 10 (employer information) are complete. The requirement to submit if an employee claims exempt or greater than 10 allowances ended April 2005, this change was made permanent in July 2007.
Is a "lock-in letter" valid for a US citizen working abroad under the foreign earned income exclusion?	No.
Can an employer require that an employee file Form W-4 electronically?	Yes, however the employer must make available paper W-4s to employees with serious objections to using the online system and those whose access/ability to use the system is seriously limited (disability, no access to computer/Internet).
What is Form W-4P?	Withholding Certificate for Pension or Annuity Payments.
What is Form W-4S?	Request for Federal Income Tax Withholding From Sick Pay.
What is the Payroll Period?	The frequency an employer pays employees.
Is rounding taxable wages to the nearest dollar allowed?	Yes. The rounding must be performed correct (as dictated by mathematical rules about rounding) and the employer must be consistent.
What are the two main methods used for calculating income tax withholding?	The wage bracket method and the percentage method. Employers may choose either, but they must be consistently applied. There is a maximum dollar amount limit on the wage bracket tables. If the employee's income exceeds this amount, the percentage method must be used.
What if an employer uses the wage bracket method and an employee claims more than 10 allowances?	There are two ways to handle this. 1. Treat the employee as though they claimed 10 allowances or 2. multiply the number of allowances over ten by the value of one allowance for the period. Subtract this figure from the wages and use the resulting figure to calculate the tax withheld claiming 10 allowances.
What are some other withholding methods that are not commonly used but an employer may find useful?	Annualized wage method, average estimated wage method, cumulative wage method and part year employment method.
What is the supplemental tax rate for 2014?	25%, except in cases where supplemental wages exceed $1,000,000. Once the 1 million threshold is reached, the employer must withhold at 39.6%.
If commissions are the only earnings an employee will receive, does the employer withhold at the supplemental rate?	Only if the employer has withheld income tax from regular wages paid in the current or preceding calendar year.
What is the de minimis exception with regard to amounts paid by a third party agent to an employee?	If less than $100,000 has been paid to an individual employee, the payment cannot be considered de minimis ($99,999.99 can be de minimis). This rule will not apply to employers in situations where the employer made the arrangement or when an employer participates in arrangements with 5 or more agents.
What are the restrictions to allowing an employee to decline withholding from a pension or annuity payment?	The recipient has payments sent outside the US, the recipient has not provided a residence address, the recipient has not provided their SSN or the IRS has indicated that the SSN supplied is incorrect.
What is backup withholding?	A mandatory 28% (in 2014) withholding from payments made to individuals and others who are not employees. The employer will received a "B" notice from the IRS and they must submit a copy of the notice along with Form W-9 (Request for Taxpayer Identification Number & Certification).
What must an employer do if they receive a completed Form W-9 after receiving a "B" notice?	If it is returned before 30 days have passed since receipt of the "B" notice, backup withholding is not required. If received after withholding has begun, it must cease deducting within 30 days. If 2 incorrect SSN/TINs have been obtained by the employer within a 3 year period, a W-9 is not acceptable to stop the withholding.
What is FICA?	A tax to fund Social Security and Medicare programs. It is paid by employees and matched penny for penny by the employer.
What is the Social Security tax rate for 2014?	6.2% for the employee, 6.2% for the employer up to the wage base of $117,000.
What is the Medicare tax rate?	1.45% for the employee, 1.45% for the employer, until wages reach $200,000. Wages in excess of $200,000 are subject to an additional 0.9% Medicare tax for a total of 2.35% . There is no maximum on Medicare withheld.
What if an employee has exceeded the annual wage base for Social Security and quits to move on to a new employer?	The wage base restarts, the employee will receive a refund when they file. The new employer will not receive a refund.
What is a successor employer?	Successor employers may credit wages from a previous employer if certain conditions are met. The successor must have acquired all or substantially all of the property used by the predecessor and immediately before and after the succession the employee in question must have been employed by the predecessor and successor respectively. In addition, the employee must have received wages paid by the predecessor during the calendar year of the acquisition.
What is a "Common Paymaster"?	A member of a group of related organizations paying wages to employees working for two or more corporations. They are responsible for all payroll responsibilities. Common paymasters may credit wages for Social Security and Medicare for employees transferring between corporations.
What is self-employment tax?	Individuals acting as their own employer must pay employee and employer share of Social Security and Medicare.
What special withholding requirements for Social Security and Medicare are for state and local government employees?	Social Security tax may not be withhold if the public employee retirement system provides a minimum level of benefits similar to Social Security benefits. Employees must participate in the system and accrue benefits or receive an allocation in their account. Temporary or seasonal employees will have the tax withheld. Federal employees have no exemption and are subject to Social Security and Medicare.
What is Form SSA-1945?	Statement Concerning Your Employment in a Job Not Covered by Social Security. It is provided to employees of state and local governments who are not subject to Social Security.
What types of employers must pay FUTA tax?	1. Nonfarm employers paying $1500 or more in covered wages in any calendar quarter, 2. nonfarm employers employing at least 1 employee for at least part of the day in 20 different weeks, 3. farm employers paying $20,000 in covered wages in any calendar quarter, 4. farm employers employing at least 10 employees for part of the day in 20 different weeks, 5. employers paying domestic employees $1,000 or more in any calendar wuater for work performed.
What entities are not subject to FUTA?	Federal, state and local government employers, Native American tribes and nonprofit religious, charitable and educational organizations that are tax exempt.
What is the FUTA tax rate and wage base for 2014?	6.0% of the first $7,000 of wages. However, employers may earn a credit of up to 5.4% if SUI is paid in full and timely (known as 90% credit).
When is FUTA tax due?	Quarterly if more than $500. Q1 due 4/30, Q2 due 7/31, Q3 due 10/31, Q4 due 1/31. If liability is less than $500 for a quarter, the amount can be carried over until the $500 liability is reached. If it is never reached in the year, FUTA is paid with 940 filing.
States may borrow money to meet unemployment obligations from the federal government. What happens if the loan is not repaid by the end of the year?	FUTA credits for employers in that state will receive an automatic reduction in the 90% credit. It will be reduced by 0.3% for each year the state does not repay the loan. However, if the loan is repaid by 11/10 in the year the credit reduction is to take place, the credit reduction will not take place.
What is Form 940?	Employers Annual Federal Unemployment Tax Return.
What is Schedule R of the 940?	Allocation Schedule for Aggregate Form 940 Filers. This allows for home care service recipients to designate an agent to report, file and pay FUTA. The agent files one 940 and lists the details of the recipients on Schedule R.
What is Form 2678?	Employer/Payer Appointment of Agent. This is used to allow home health care recipients file an aggregate Form 940.
When is Form 940 due?	January 31 of the following year that liability was incurred. There is an automatic extension to February 10 if FUTA was paid in full and on time. Special extensions may be granted if they are for good cause and the request for extension was filed by the due date of the form. Special extensions are usually 90 days.
How is an ammended 940 filed?	By filing a new Form 940 for the year beings ammended and checking Box a.
What is Form 843?	Claim for Refund and Request for Abatement.
How is it handled if an employer has not been issued an EIN by the time Form 940 is being completed?	The employer should write "Applied For" in the space provided for EIN.
What is an EIN (FEIN)?	Employer Identification Number. It may be referred to as FEIN by organizations to provide the federal distinction.
What is Schedule A (Form 940)?	Multi-State Employer and Credit Reduction Information. This form is filed with Form 940 if the employer checked the box on Part 1, Line 1b (indicating they are a milti-state employer) or Part 1, Line 2 (indicating they are in a credit reduction state. The schedule details the states the employer pays SUI in and how much credit reduction is applicable for the employer.
What is Form 940-V?	Form 940 Payment Voucher. The voucher is only completed if the employer is sending payment in with the Form 940. Note: Much like a personal tax return, forms with payments attached go to a different address than those without.
How can a payment being made with Form 940 be paid?	The employer can pay via EFTPS or via debit/credit cared over the Internet. There are only three service providers that are authorized to take an Internet payment
What is the penalty for a late filed Form 940?	Additional tax of 5% of tax showed on the return (up to 25%) for each month, or fraction of month, the return is late. If the tax shown on the form is fraudulent, the penalty goes up to 15% (up to 75%).
What are the penalties for failure to pay FUTA timely?	Paid within 5 days: 2% of undeposited amount. Paid within 6-15 days: 5% of undeposited amount. Paid more than 15 days late: 10% of undeposited amount. If notice is received from IRS, paid within 10 days: 15% of undeposited amount. If notice is received from IRS demanding payment immediately and amount is not paid on the same day notice is received: 15%. The 10% penalty applies for employers required to use EFTPS and the pay via coupon.
What is SUTA dumping?	When an employer makes an organizational change to move all employees to an entity with a lower SUI rate, dumping the higher rate.
Is Unemployment Insurance solely an employer tax?	No. While it is generally paid only by an employer, AK, NJ and PA require employee contributions as well.
How long must time sheets be retained for?	Two years.
How long must FLSA/FMLA paperwork be retained for?	Three years, but it also must be available within 72 hours when requested.
How long must information on hours worked each day/week, amounts paid & pay date and amounts earned for straight/overtime pay be retained for?	Three years.
How long must Form I-9 be retained for?	Three years after hire or one year after termination whichever is longer.
How long must tax documents, including returned W2s be retained for?	Four years.
How long must a pay statement be retained for?	Four years.
How long must OSHA documents be retained for?	Five years.
If Form W-4P is not submitted, how must withholding be calculated?	Married with 3 allowances.
Can taxes be withheld from sick pay?	Yes, but the employee must request it.
What kind of compensation is exempt from Social Security/Medicare?	Worker's Comp payments, sick/disability pay, §125 payments, student nurses, certain types of VISAs and work study student payments.
What types of records must be retained for 3 years after their last date of entry?	Name, address, DOB, Gender & occupation (for Equal Pay Act compliance), workweek, regular rate of pay & how it was calculated, hours worked each day/workweek, straight time and overtime premium earnings, additions to & deductions from income, total wages paid and the date of payment & period payment covered.
What records must be kept for 3 years from their last date in effect?	Collective bargaining agreements, certificates authorizing the employment of industrial home workers, minors, learners, students, apprentices & handicapped workers and records showing the total sales volume & goods purchased.
What types of records must be retained for at least two years after their last date of entry?	1. Basic employment & earnings records supporting data for each employee's hours of work, basis for determining wages and wages paid (time sheets), 2. order, shipping and delivery records, customer billings and 3. records substantiating additions to or deductions from income.
What kinds of records need to be kept for tipped employees?	Some notation showing wages are determined in part by tips, the amount reported as tips by the employee (Form 4070), the tip credit taken by the employer, and hours worked as a tipped and non-tipped employee (separately).
What kinds of records need to be kept for an employee receiving remedial education?	Time spent receiving remedial education and wages paid for that time.
What are the penalties for failure to keep FLSA records?	Willful violations: criminal penalties of up to $10,000, second and subsequent offenses may include 6 month jail sentence.
Can an employer blame their payroll service provider for failing to keep records appropriately?	No. Ultimately, it is the employer's responsibility.B45
What are the penalties for failure to keep records under the IRC?	Willful failure to comply: $25,000 ($100,000 for corporations) and/or imprisonment for up to 1 year, plus costs of prosecuting.
How long must a job application/resume received for a job posting be kept on file?	One year from the date of the personnel action they relate to.
What happens to an uncashed paycheck?	Cancel it, issue the money to yourself and buy as much jewelry as possible. I'm kidding, the funds are escheated to the state after a specified period of time (determined at state level).
How long must a direct deposit be retained for?	Two years after revocation/termination of direct deposit.
What are acceptable methods of record keeping?	Paper storage, micro media storage, media imagining or electronic vaulting. No matter how the employer chooses to store the information, it must be legible.
How does an employer dispose of records?	The employer must take reasonable measures to protect against unauthorized access to or us of the information after disposal. Do not sell, abandon, or donate any medium that stores records (including any computer equipment, it must be destroyed).
What is HIPAA?	Health Insurance Portability & Accountability Act. It limits the disclosure of individual's past, present or future health conditions. Authorizations for disclosure must be in writing and specific about the information being disclosed.
What is a permitted disclosure under HIPAA?	Use and disclosure of protected health information without authorization from an individual is permitted in the following situations: To the individual themselves, when required by law, treatment, payment and health care operations, emergencies, disclosures incidental to a permitted disclosure, public interest and benefit activities and providing limited data for research/public health.
How long must a HIPAA disclosure authorization be retained for?	The later of 6 years after creation date or six years after effective date.
What are the penalties for failure to comply with HIPAA?	$100 per failure up to $25,000. If the violation is due to reasonable cause or did not involve willful disclosure & is corrected in 30 days, no penalty will be assessed. The individual who disclosed the information faces a fine of $50,000 and up to 1 year imprisonment. If the disclosure involves false pretenses, the fine is raised to $100,000 and 5 years imprisonment. If the disclosure involves intent to sell or transfer information, for personal gain or malicious intent, the fine is raised to $250,000 and 10 years imprisonment.
What additional records are kept for hospital employees?	For those who work a 14 day schedule: the employer must retain when the 14 day period begins and ends, hours worked each day and in the 14 day period, straight time and overtime premiums paid and a copy of the agreement to the 14 day period.
How long must a log of occupational injuries & illnesses be kept under the Walsh-Healey Public Contracts Act?	5 years.
How does an employer obtain an Employer Identification Number (EIN)?	By completing Form SS-4 and mailing or faxing it. In addition, employers who are not federal, state or local government agencies, real estate investment conduits or an employer with a foreign address can apply online. Only foreign employers may apply over the phone.
How long will it take to get an EIN if applying via fax?	Within 4 business days.
How long will it take to get an EIN if applying via mail?	About 4 weeks.
When should an employer apply for an EIN?	Ideally, prior to starting to pay employees, but no later than 7 days after the employer first pay wages.
What is a look back period for taxes associated with Form 941?	Monthly/semi-weekly depositing determinations is based on a look back period. If tax liability is $50,000 or less then the employer is a monthly depositor. If tax liability is over $50,000 then the employer is a semi-weekly depositor. The look back period starts July 1 of the second previous year and ends June 30 of the previous year (Example: 2015 look back period is 7/1/13-6/30/14).
Is a 941x taken into account when considering the look back period?	Only in the month it was filed (Example: a 941x filed in April of 2015 for Q1 2014 would not be part of the 2015 look back period. Instead, it would be part of the 2017 look back period).
What special rules apply to employers who file Form 944?	The look back period will be the second preceding calendar year (Example: 2014 look back is 1/1/12-12/31/12). This applies if the employer has filed a Form 944 in either of the two preceding calendar years.
What is Form 945?	Annual Return of Withheld Federal Income Tax. It reports withholding on non payroll payments.
What special rule applies to railroad and farm employers when it comes to the look back period?	They are a look back period of the second preceding calendar year (Example: 2014 look back is 1/1/12-12/31/12). If the employer files both 941 & 943 forms, they must abide by both rules regarding look back period and depositing for 941 & 943.
When are taxes due for a monthly depositor?	The 15th of the month following the deduction.
When are taxes due for semi-weekly depositors?	Wages paid Wednesday - Friday are due the following Wednesday. Wages paid Saturday - Tuesday are due the following Friday.
What is the one-day depositing rule?	If accumulated tax liability exceeds $100,000, then it is due the following day.
What happens when a semi-weekly depositor has a period that bridges two quarters?	The employer has two separate deposit obligations and must make two separate deposits.
What is the quarterly "de minimis" deposit rule?	Employers with accumulated tax liability of less than $2500 for any quarter, they may pay the liability with their 941. This also applies if the liability is less than $2500 in the preceding quarter.
What is the exception for Form 944 depositors?	Employers with annual employment tax liability of $1,000 or less may pay with a timely filed Form 944.
How is "legal" holiday defined when it comes to tax depositing rules?	It is limited to legal holidays in DC, state holidays do not count.
What is the "short-fall" rule?	Employers are not penalized for depositing a small amount less than the entire amount of their obligation. The short fall must be no more than either $100 or 2% of the entire amount due (whichever figure is larger).
How are deposits made?	Generally, via EFTPS. New employers are required to use EFTPS starting in 2011. There may still be some businesses using an FTD Coupon, however it is uncommon.
How does an employer enroll in EFTPS?	By submitting Form 9779 (Business Enrollment form for EFTPS) or online at eftps.gov.
What happens when an employer enrolls in EFTPS?	Within 15 business days, they will receive Form 9787 (Business Confirmation/Update Form) and an EFTPS instructional booklet. The PIN will be mailed separately.
What are the grounds for penalty abatement?	Abatement is only granted in cases where there is a bank failure to initiate the deposit. New employers do not have leeway when it comes to depositing tax liability.
What are the penalties for failure to deposit on time?	2% of undeposited amount if paid within 5 days. 5% of the undeposited amount if paid within 6-15 days. 10% of undeposited amount if paid more than 15 days after due. The 10% penalty applies to amounts paid to the IRS within 10 days after receiving their first IRS delinquency notice. 15% of undeposited amount if the employer receives a delinquency notice and does not pay within ten days, or if they receive a demand for immediate payment and do not pay on the same day.
Can an employer blame service provider for failure to deposit?	No. It does not matter if the employer delegated employment tax responsibility to the agent, contracts do not relieve employer of obligations.
Can financial difficulty be made as an excuse to fail to deposit taxes?	Possibly, but federal courts have ruled both ways on this kind of issue.
How long does an employer have to request abatement for penalties due to underpayment of taxes?	90 days from the date of the penalty notice.
What is the averaged failure to deposit penalty?	This kind of penalty is assessed on a monthly depositor who completed sections of their 941 incorrectly or they failed to attach Schedule B. It is calculated by taking the employer's total tax liability shown on the 941 and distributing it equally throughout the tax period.
Who must file Form 941?	Generally it is filed by any employer who withholds taxes from employee wages. The only exemptions apply to seasonal employers who are not employing anyone for the quarter, businesses only withholding on non-payroll items, employers that only report withholding on domestic workers, employers who report only in a US territory, an agricultural employer with only agricultural employees and employers who file Form 944.
What is Schedule D of the 941?	Report of Discrepancies Caused by Acquisition, Statutory Mergers or Consolidations. It is filed when an employer acquired another company and has discrepancies between the W3 and Form 941s.
What is the automatic extension for filing Form 941?	If there are timely deposits for all tax liability, the employer receives an automatic 10 day extension on the due date. No further extensions are typically granted.
When is Form 941 due?	The last day of the month following the close of the calendar quarter.
What is Schedule B of the 941?	Report of Tax Liability for Semi-weekly Schedule Depositors. It records the tax liability only, not the taxes paid. The totals must match Line 10 of the 941.
When would Schedule B be filed with Form 941x?	If the employer had a tax increase or if the employer were to be assessed a failure to deposit penalty.
What is Schedule R of the 941?	Allocation Schedule for Aggregate 941 filers. The agent reports: (a) Client EIN, (b) wages, tips and other compensation, (c) federal tax withheld, (d) total Social Security and Medicare taxes, (e) §3121(g) Notice & Demand Tax Due, (f) Total taxes after adjustment and (g) total deposits.
What is Form 941 SS?	Employers Quarterly Federal Tax Return - it is used by employers who operate in: American Samoa, Guam, Northern Mariana Islands and the Virgin Islands.
What is Form 943?	Employer's Annual Federal Tax Return for Agricultural Employers. It's basically the same as a 941, but for agricultural employers and it's filed annually instead of quarterly.
What is Form 943 A?	Agricultural Employer's Record of Federal Tax Liability. It's filed with the 943 when tax liability exceeds $100,000 or if the employer is a semi-weekly depositor.
What is Form 941 PR?	Employers Quarterly Federal Tax Return - it is used by employers operating in Puerto Rico.
What special requirements must be met to qualify and employee for filing Form 944 instead of Form 941?	For small employers, the form is used by those with employment tax liability of $1,000 or less. Employers who expect to have less than $1,000 in liability can request to file Form 944 instead of Form 941 by April 1 (for callers, those requesting in writing must do so by March 15).
When is Form 944 due?	By the last day of the first month after the year reported on the form (January 31). Employers with timely tax deposits are entitled to a ten day extension, similar to the extension granted to 941 filers.
How are adjustments and corrections to Form 941 accomplished?	By filing Form 941x.
When is Form 941x due?	It depends on when the error is discovered. The 941x is due the last day of the month following the end of the calendar quarter in which the error was discovered (Example: For an error uncovered in March, the 941x would be due April 30).
What is the period of limitations for 941x?	Generally, tax corrections to the 941 must be within 3 years of filing the original 941 (or two years from the date the tax was reported on the 941, whichever is later).
What are the penalties for late filing of employment tax returns?	It is an "addition to tax" penalty: 5% of the amount of tax required to be shown on the return (reduced by timely deposits and credits) for each month or each fraction of a month the return is late (25% maximum). If the late filing is fraudulent, penalties increase to 15% per month with a maximum of 75% of unpaid tax.
What are the penalties for failure to pay employment taxes (as pertaining to Form 941x)?	It is an "addition to tax" penalty: 5% of the amount of tax required to be shown on the return (reduced by timely deposits and credits) for each month or each fraction of a month the return is late (25% maximum). An additional 0.5% is assessed if the IRS has issued a notice & demand and it is not paid within 21 calendar days. It will increase to 1.0% each month 10 days after the employer receives an intent to levy or the day after immediate payment is demanded with intent to levy.
What criminal penalties may apply when employment taxes are not paid and returns are not filed?	Willful failure: $25,000 ($100,000 for corporations) and/or imprisonment for up to 1 year. Delivery of a known fraudulent return: $10,000 ($50,000 for corporations) and/or imprisonment for up to 1 year. Attempt to evade: $100,000 ($500,000 for corporations) and/or imprisonment for up to 5 years. For signing a documents knowing it to be untrue: $100,000 ($500,000 for corporations) and/or imprisonment for up to 3 years.
What penalties exist for return preparers?	First tier penalties are from $250-$1,000 (or 50% of income derived from form preparation). Second tier penalties are from $1,000-$5,000 (or 50% of income derived from form preparation).
Who files Forms W2 after a merger or consolidation?	The surviving corporation typically provides the W2, discrepancies being noted on the respective 941s filed by the absorbed company and surviving company (Schedule D).
When is Copy A of Form W2 due to the SSA?	On the last day of February following the year in which the form applies to.
When are employee copies of the W2 due?	They must be post-marked by January 31 of the year following the year the forms apply to.
Can a terminated employee demand an early copy of their W2?	Yes. If the request is made in writing, it must be furnished within 30 days (some states have a shorter length of time).
Can Form W2 be provided electronically?	Yes. The employee must provide active consent, however active consent is not required to store all W2s online.
What accelerated due dates apply to employers going out of business?	The final 941 is due by the end of the month following the close of the calendar quarter in which business ceased. W2s are due by the same date to the employees. Copy A is due to the SSA by the last day of the following month (not applicable to employers who file Form 944).
What is Form 8809?	Application for Extension of Time to File Information Returns. It is due by the original form due date to apply for an extension.
What is Code "A" for Box 12 of the W2?	Uncollected Social Security or RRTA tax on tips.
What is Code "B" for Box 12 of the W2?	Uncollected Medicare tax on tips.
What is Code "C" for Box 12 of the W2?	Taxable Cost of group term life coverage over $50,000.
What is Code "D" for Box 12 of the W2?	Elective deferrals under a §401(k) cash or deferral arrangement.
What is Code "E" for Box 12 of the W2?	Elective deferrals under a §403(b) cash or deferral arrangement.
What is Code "F" for Box 12 of the W2?	Elective deferrals under a §408(k)(a) salary reduction SEP.
What is Code "G" for Box 12 of the W2?	Elective deferrals and employer contributions (including non-elective deferrals) to any government or non government §457(b) deferred compensation plan.
What is Code "H" for Box 12 of the W2?	Elective deferrals under a §501(c)(18)(D) tax-exempt organization plan.
What is Code "K" for Box 12 of the W2?	20% excise tax on excess golden parachute payments
What is Code "L" for Box 12 of the W2?	Substantiated employee business expense reimbursements.
What is Code "M" for Box 12 of the W2?	Uncollected Social Security or RRTA tax on the taxable cost of group term life insurance over $50,000 (for former employees)
What is Code "N" for Box 12 of the W2?	Uncollected Medicare tax on the taxable cost of group term life insurance over $50,000 (for former employees)
What is Code "P" for Box 12 of the W2?	Excludable moving expenses paid directly to the employee.
What is Code "Q" for Box 12 of the W2?	Nontaxable combat pay.
What is Code "R" for Box 12 of the W2?	Employer contributions to an Archer MSA.
What is Code "S" for Box 12 of the W2?	Employee salary reduction contributions under a §408(p) SIMPLE.
What is Code "T" for Box 12 of the W2?	Adoption assistance benefits.
What is Code "V" for Box 12 of the W2?	Employer contributions to an HSA.
What is Code "Y" for Box 12 of the W2?	Deferrals under a §409A non qualified deferred compensation plan.
What is Code "AA" for Box 12 of the W2?	Designated Roth contributions under a §401(k) plan.
What is Code "BB" for Box 12 of the W2?	Designated Roth contributions under a §403(b) salary reduction agreement.
What is Code "DD" for Box 12 of the W2?	Cost of employer sponsored health coverage.
What is Code "EE" for Box 12 of the W2?	Designated Roth contributions under a §457(b) plan.
What are the penalties for failure to file informational returns such as W2, W3, 1096 or 1099)?	$30 per return if corrected within 30 days (max. $250,000). $60 per return if corrected in more than 30 days, but before August 1 (max. $500,000). $100 per return if not corrected by August 1 (max. $1,500,000).
What is Form W3?	Transmittal of Wage & Tax Statements. It is filed with the SSA along with Forms W2. It contains the totals of all amounts reported on the W2s.
What format should the SSN be presented on the W2?	xxx-xx-xxxx
When should Form W2c be filed?	Form W2c is completed when incorrect information was reported on Form W2. It is necessary for financial changes or for SSN changes, but not necessary if the only change is to an address or Box 12DD.
What kinds of reconciliations should be performed before the year-end forms are filed?	Reconcile 941 amounts to amounts to be reported on W2 & W3. Amounts should include federal taxable wages, federal tax withheld, Social Security & Medicare wages, Social Security & Medicare tax withheld, plus the additional wages subject to the additional Medicare tax and the tax withheld.
Can Forms 1099-MISC be filed by magnetic media?	No. They can be filed on paper (less than 250) or electronically only.
What is Form 1099-R used for?	Distribution of Pension, Annuities, Retirement or Profit-Sharing Plans. Any distributions are reported on this form. Special codes are used to indicate the type of distribution or rollover.
What is the de minimis rule surrounding corrected informational returns and W2Cs?	Employers are not penalized for timely filed returns up to August 1, up to the greater of 10 returns or 0.5% of the total number of returns filed in the year. Insignificant errors are not penalized.
What types of errors are never considered insignificant?	Errors in: SSN or TIN, the employee or payee last name or any monetary amounts.
What is Form 668W?	IRS Federal Tax Levy.
What part of Form 668W must be completed by the employee?	Parts 3 and 4, the employee assertion of exemptions claimed on Form 1040. If it is not received by the employer, the employer is to assume the employee files Married, Filing Separately with 1 exemption. Part 3 is sent to the IRS with the first payment, Part 4 is retained by the employer.
What priority is given to Form 668W?	Generally tax levies have an extremely high priority, over all orders except child support orders received before the Form 668W.
Are tax levies subject to exemption rules provided by the Consumer Credit Protection Act (CCPA)?	No.
How does a federal tax levy differ from most other garnishments?	Most garnishments are either a percentage of disposable income or a flat amount (that does not exceed a percentage of disposable income). An IRS levy works off of the employee net pay on the date the levy was received. The IRS provides a dollar amount based on 1040 filing data and anything above that figures is remitted to the IRS.
Can an employee increase a deduction to effectively lower the amount subject to a federal levy?	No. If deductions change due to a change outside the employee's control (IE: an increase in medical premiums), this will reduce the amount sent to the IRS. However, a change to 401(k) or stock deductions will not change the amount subject to levy, it will only decrease the net pay the employee receives.
Does an employer take into account any income the employee receives outside their employment with that employer?	No.
When does an employer stop withholding for a federal tax levy?	Only when Form 668D is received. The employer is not to stop withholding when a limit is met, however they are permitted to call for pay off figures.
What is Form 2159?	Payroll Deduction Agreement. This is a form completed by the employee to halt or prevent levy progression. The employee agrees to withhold an amount and the employer agrees to deduct and remit that amount. This comes with a $120 user fee deducted from the employee's first payment.
What is the maximum that can be withheld for a child support order?	50% of disposable income if the employee supports another family (55% if employee is 12 weeks or more in arrears), 60% of disposable income if the employee does not support another family (65% if employee is 12 weeks or more in arrears).
What priority is given to child support orders?	Priority 1 (except orders received after a federal tax levy has been implemented). If the employer has multiple orders on one employee, the amounts are typically allocated by percentage if the amount of the orders exceeded the amounts allowable based on disposable income.
When are child support orders effective?	No later than the first pay period beginning after 14 working days after mailing notice to employee (unless otherwise stipulated in the order).
When are amounts deducted for child support due to the state disbursement unit?	Within 7 days of withholding.
What happens if an employer fails to withhold a child support deduction?	The employer is liable for the full amount of child support, plus any fines imposed by the state.
Can the court order an employer to provide medical coverage to the children of a non-custodial parent?	Yes, via a Qualified Medical Support Order.
What does the term "disposable earnings/income" mean?	Gross pay less all deductions required by law. Contributions for health insurance may be included if mandated by QMSO.
What are the limits for creditor garnishments as dictated by CCPA?	The lesser of 25% of disposable earnings or the amount by which disposable earnings exceeds 30x the federal minimum wage. This limit applies to all creditor garnishments.
How are creditor garnishments prioritized?	By date received, they are the lowest priority type of garnishment (behind levies and child support orders).
Can an employee be terminated because garnishments are causing an administrative burden?	No. If an employer is found to have terminated an employee over wages being garnished, they may be fined up to $1,000 and face up to one year in prison.
What happens if an employee files for bankruptcy with existing garnishments?	The handling of creditors is placed in the hands of a bankruptcy trustee. The employer should continue to withhold until notified to change the deductions by the trustee under a court-approved plan.
What priority is given to bankruptcy orders?	Bankruptcy orders take precedence over all orders (including tax levies) except child support.
Can child support arrearages be dismissed by filing for bankruptcy?	No.
What happens with a retirement plan loan when an employee files for bankruptcy?	The loan is discharged and the balance unpaid is taxable income to the employee.
What is the maximum that can be garnished for a student loan?	The lesser of 15% disposable income or the excess of the employee's disposable income over 30x the federal minimum wage. If an employee has multiple student loans garnishments, the total deduction cannot exceed 25% of disposable income.
When does a student loan garnishment go into effect?	The employee must have 30 days notice of impending garnishment.
Can an employer dock pay for missed work time?	Yes, but the amount docked cannot exceed the equivalent of the amount of time the employee missed.
What is general accounting with regards to payroll?	General accounting uses payroll data to record transactions in the books & for the preparation of financial statements.
What is cost accounting?	Cost accounting determines the cost of ordering a product or providing a service and showing ways of controlling these costs.
What is budgeting?	Budgeting is projecting costs and revenues associated with various business activity and trying to keep costs within target limits.
What is the business entity concept?	Each separate organization (operating separately) is treated as its own entity. This concept allows for each entity to have their own position on the balance sheet and profitability shown separately on the income statement.
What is the continuing concern concept?	The assumption that a business entity is a going concern and will continue to operate. If a business is for sale, assets are valued at fair market value, whereas one that is a going concern will value at cost.
What is the time period concept?	The idea of a fiscal year that runs differently than the calendar year.
What is the cost concept?	The value of assets at cost (minus depreciation).
What is the objectivity principal?	Transactions must be recorded objectively.
What is the matching principal?	Expenses and revenue are to be recorded in the accounting period the expense is incurred or revenue earned.
What is the realization principal?	The practice of recognizing revenue when earned (not necessarily when money & product exchange occurs).
What is the consistency principal?	Transactions must be recorded consistently.
What equation provides the basis for the Balance Sheet?	Assets - Liabilities = (Owner's) Equity (ALOE)
What equations provide the basis for the Income Statement and Statement of Retained Earnings?	Revenue - Expenses = Net Income & Net Income - Income Distributed + Contributed Capital = Equity
What does it mean to use the "double entry" method of accounting?	Any increase applied to one side of an equation is accompanied by a decrease to the other side (vice versa).
What are the five typed of accounts a business has?	Assets, Liabilities, Expenses, Revenue and Equity.
What is an asset account?	Any kind of account that is made up of something providing an economic benefit to the company.
What are the three types of asset accounts?	Current Assets, Tangible Assets (Property, plant and equipment) and Intangible Assets (Deferred).
What are expense accounts?	The accounts that detail the expenses incurred by the company.
What are liability accounts?	The accounts that detail company debts that must be paid at a future time.
What are the two types of liabilities?	Current Liabilities (due within a year) and Long Term Liabilities (liability will be outstanding for more than one year).
What are revenue accounts?	Accounts that detail amounts received for goods sold and services rendered.
What are equity accounts?	Accounts that detail the owner's investment in the company.
What are the two types of equity accounts?	Continued Capital and Retained Earnings.
What is the normal balance of an asset account?	Debit
What is the normal balance of a liability account?	Credit
What is the normal balance of an equity account?	Credit
What is the normal balance of a revenue account?	Credit
What is the normal balance of an expense account?	Debit
What is the normal balance of an income distributed account?	Debit
What is the normal balance of a contributed capital account?	Credit
What is the chart of accounts?	A listing of each account by name and number. The numbers and positioning of those numbers generally provide a great deal of identifying details of the account.
What is a journal entry?	An entry detailing something that occurred in the company accounts. There is always a debit and credit entry and the total amounts on each side will be equal.
What is a compound entry?	A journal entry with more than one debit or credit entry (most payroll entries are compound entries).
What is a subsidiary ledger?	Many companies use these in place of journals. Summaries of the subsidiary ledger are periodically posted to the general ledger.
What is the General Ledger?	The book of final entry. It keeps a running total of all entries and period-to-date balances for all of a company's accounts.
In terms of accounting, what type of accounts are employee deductions for taxes booked to?	Liability accounts.
What is an accrual entry?	An accrual is an estimation of expenses before it is paid. Example: Employer pays biweekly and has 5 days of payroll expense between the last day of the pay period and the close of a month. Accounting will estimate this figure and book it for the month. The entry is then reversed on the first of the following month to allow for the actual entry.
How is a Balance Sheet organized?	Assets posted first, liabilities posted next, then net worth (shareholder equity).
What is a current asset?	An asset that will be converted to cash or cash equivalents within one year.
What is a current liability?	A liability to be paid within one year.
What is an Income Statement?	A summary of organizational revenue and expenses that determines earnings.
What types of things are audited in the payroll department with regard to support of financial statements?	Generally, compliance tests. Auditors will ensure the appropriate back up exists for the creation of and each deduction of a paycheck. In addition, there will be audits on checks & balances that exist in payroll as well as security.
What are Internal Controls?	A system of checks & balances applied to ensure the accuracy of the company's financial statements.

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