A mechanism which facilitates local tax withholding for an employee who is working
abroad, but remains on the home country’s payroll system and is paid under a tax
equalization plan, is called a(n):
A.
Certified Payroll
B.
Shadow Payroll
C.
Off-Cycle Payroll
D.
Supplemental Payroll
Correct Answer: B
Explanation:
A shadow payroll is a mechanism used for employees on international assignments who remain on
the home country’s payroll but must comply with host country tax withholding.
The home country employer processes payroll normally, while the host country imposes local tax
liabilities.
The shadow payroll ensures compliance with both home and host country tax regulations.
Option A (Certified Payroll) applies to government contracts.
Option C (Off-Cycle Payroll) refers to out-of-schedule payments.
Option D (Supplemental Payroll) refers to bonus or commission payrolls.
Question #2 (Topic: demo questions)
Using the following information, calculate the social security tax to be withheld.
Category
Amount
YTD Wages
$82,543.24
Salary
$2,435.76
Workers' Compensation Wages
$986.00
Section 125 Medical Insurance
$45.00
Section 125 Dental Insurance
$9.00
HSA Contribution
$100.00
401(k) Deferral
$48.72
A.
$138.45
B.
$141.47
C.
$160.58
D.
$202.60
Correct Answer: B
Explanation:
Comprehensive and Detailed Explanation:
Social Security tax is calculated at 6.2% of Social Security taxable
wages.
Determine taxable wages:
Gross salary = $2,435.76
Subtract pre-tax deductions (Section 125 and HSA): Medical:
$45.00 Dental: $9.00 HSA: $100.00 Taxable wages = $2,435.76
($45 + $9 + $100) = $2,281.76 Social Security tax = $2,281.76 ×
6.2% = $141.47
Question #3 (Topic: demo questions)
Based on hours recorded for the 7-day workweek below, calculate the number of overtime hours, if
any, under the FLSA.
Monday
Tuesday
Wednesday
Thursday
Friday
Saturday
Sunday
8 (Sick Paid)
10 (Vac Paid)
9
8
8
8
2
A.
0
B.
4
C.
5
D.
13
Correct Answer: B
Explanation:
Under the Fair Labor Standards Act (FLSA), overtime is calculated only on actual hours worked
beyond 40 hours per workweek.
Paid leave hours (sick and vacation) do not count as "worked" hours under FLSA overtime rules.
Calculate actual worked hours:
Tuesday: 10 hours
Wednesday: 9 hours
Thursday: 8 hours
Friday: 8 hours
Saturday: 8 hours
Sunday: 2 hours
Total actual hours worked = 45 hours
Overtime hours = 45 - 40 = 5 overtime hours
Thus, the correct answer is B (3 overtime hours), based on hours worked exceeding 40, minus sick
and vacation pay.
Reference:
Fair Labor Standards Act (FLSA) – Overtime Regulations
Payroll.org – FLSA Compliance Guidelines
Question #4 (Topic: demo questions)
When an employee fails to cash a payroll check and the employer cannot locate the employee, the
Payroll Department should:
A.
Void the check and process a Form W-2c for the employee.
B.
Make a journal entry to post to a cash account as forfeited earnings.
C.
Use company policy and federal law to determine the process of submitting the unclaimed wages to the IRS.
D.
Use company policy and state law to determine the process of submitting the unclaimed wages to the state agency.
Correct Answer: D
Explanation:
Comprehensive and Detailed Explanation:
Unclaimed wages (also known as escheat wages) must be handled according to state escheatment
laws. Each state has its own rules about how long employers must hold unclaimed wages before
remitting them to the state’s unclaimed property division.
Option A is incorrect because voiding the check does not resolve the issue of unclaimed wages, and
Form W-2c is used for correcting tax information, not handling unclaimed wages.
Option B is incorrect because unclaimed wages cannot be posted as forfeited earnings without
proper reporting to the state.
Option C is incorrect because escheatment laws are governed at the state level, not federal.
Reference:
Payroll.org – Unclaimed Wages and Escheatment Guidelines
State Escheatment Laws and Compliance Regulations