Your FREE CPP Flashcards 2026 – 150+ Cards

Fair Labor Standards Act — the federal law setting minimum wage, overtime, recordkeeping, and child-labor standards.

An employee not entitled to FLSA overtime — must meet the salary-basis, salary-level, and duties tests.

An employee owed at least minimum wage and overtime (1.5× the regular rate) over 40 hours in a workweek.

To be exempt, an employee must earn at least the standard salary level — currently $684/week ($35,568/year).

The job-duties requirement (executive, administrative, or professional) an employee must meet to be exempt, beyond salary.

An employee earning at least $107,432/year who faces only a minimal duties test for exemption.

A fixed, recurring 168-hour period (seven consecutive 24-hour days); overtime is figured by the workweek, not the pay period.

All compensation for the workweek (including nondiscretionary bonuses) divided by total hours worked; the base for overtime.

Income is taxable when credited or made available to the employee, even if not physically received.

A worker whose employer controls what is done and how — gets a W-2 and has taxes withheld.

A self-employed worker who controls how the work is done, gets a Form 1099-NEC, and pays self-employment tax.

Three categories of evidence — behavioral control, financial control, and relationship of the parties — used to classify workers.

A worker treated as an employee for FICA (and sometimes FUTA) by statute, such as certain drivers and home workers.

Federal Insurance Contributions Act — Social Security (6.2%) and Medicare (1.45%) taxes, shared equally by employee and employer.

6.2% on wages up to the annual wage base, paid by both employee and employer.

$184,500 — the maximum 2026 earnings subject to the 6.2% Social Security tax (up from $176,100 in 2025).

1.45% on all wages with no wage cap, paid by both employee and employer.

An extra 0.9% the employer withholds on an employee's wages over $200,000; employee only, no employer match.

Federal Unemployment Tax Act — a 6.0% employer-only tax on the first $7,000 of wages, net 0.6% after the state credit.

State Unemployment Tax Act — state unemployment tax, usually employer-paid at an experience-rated rate on a state wage base.

An illegal scheme to manipulate an employer's experience rate to lower state unemployment tax.

Pay for services in a form other than cash (e.g., personal use of a company car); taxable unless specifically excluded.

A benefit so small that accounting for it is unreasonable or impractical — excluded from wages.

The taxable value of a noncash benefit (e.g., group-term life over $50,000) added to an employee's wages.

The cost (per IRS Table I) of employer-provided group-term life coverage over $50,000, taxable to the employee.

Compensation an employee earns now but receives later, such as a 401(k) deferral or a nonqualified plan.

The IRC rule governing nonqualified deferred compensation; violations trigger immediate tax plus a 20% penalty.

Pre-tax commuter/parking benefit excludable up to the monthly IRS limit.

Employee's Withholding Certificate — tells the employer how much federal income tax to withhold.

Employment Eligibility Verification — confirms a new hire's identity and authorization to work in the U.S.

Request for Taxpayer Identification Number — collects a contractor's TIN for 1099 reporting.

Application for an Employer Identification Number (EIN).

Turning unclaimed wages over to the state after a dwell period when a paycheck goes unclaimed.

State-mandated insurance paying for job-related injuries; premiums are based on payroll by job class code.

Employer's Quarterly Federal Tax Return — reports wages, FIT withheld, and both shares of Social Security and Medicare.

Employer's Annual Federal Unemployment (FUTA) Tax Return, filed once a year by January 31.

Annual federal return for the smallest employers, filed instead of quarterly 941s when notified by the IRS.

Wage and Tax Statement reporting an employee's annual wages and taxes to the employee and the SSA.

Transmittal of Wage and Tax Statements — summarizes all W-2s sent to the SSA.

ACA reporting forms Applicable Large Employers file to report offers of health coverage.

Electronic Federal Tax Payment System — the free Treasury system employers use to deposit federal payroll taxes.

The four quarters ending June 30 of the prior year, used to set the federal deposit schedule.

An employer with $50,000 or less of lookback liability; deposits by the 15th of the following month.

An employer with over $50,000 of lookback liability; deposits Wednesday or Friday based on payday.

If accumulated tax liability reaches $100,000 on any day, the deposit is due the next business day.

Withheld income tax and the employee FICA share the employer holds in trust for the government.

A 100% penalty assessed against a responsible person who willfully fails to remit trust fund taxes.

A graduated penalty (2%–15%) on late federal tax deposits, increasing with how late the deposit is.

Family and Medical Leave Act — up to 12 weeks of unpaid, job-protected leave for eligible employees of covered employers.

Uniformed Services Employment and Reemployment Rights Act — protects reemployment rights of returning service members.

Requires employers to report newly hired and rehired employees to a state directory, generally within 20 days.

Requires equal pay for equal work regardless of sex for jobs of substantially equal skill, effort, and responsibility.

Requires prevailing wages on federally funded construction contracts.

Requires public-company CEOs and CFOs to certify the accuracy of financial information, including payroll.

Worker Adjustment and Retraining Notification Act — requires 60 days' notice of mass layoffs or plant closings.

Requires Applicable Large Employers (50+ FTEs) to offer coverage and report it on Forms 1094-C/1095-C.

An employer with 50 or more full-time-equivalent employees, subject to ACA coverage and reporting rules.

Payroll records must be kept at least 3 years; records used to compute pay (time cards) at least 2 years.

Employment-tax records must be kept at least 4 years after the tax is due or paid.

PayrollOrg's comprehensive reference text and the primary study resource for the CPP exam.

The employer's tax guide — deposit rules, withholding, and reporting; the payroll professional's core IRS resource.

Federal Income Tax Withholding Methods — the percentage and wage-bracket withholding tables and formulas.

Employer's Tax Guide to Fringe Benefits — which fringe benefits are taxable and how to value them.

Total earnings before any deductions: regular wages, overtime, bonuses, commissions, and taxable benefits.

Take-home pay — gross pay minus all taxes and other deductions.

The sequence converting gross pay to take-home pay: subtract pre-tax deductions, taxes, then post-tax deductions.

The wage base each tax is figured on after pre-tax deductions; FIT, Social Security, and Medicare bases can differ.

The extra half-time owed on overtime hours — 0.5× the regular rate above the straight-time already paid.

1.5× the regular rate for hours worked over 40 in a workweek (non-exempt employees).

A non-exempt salaried employee's weekly salary divided by the hours it is intended to compensate (often 40).

An IRS withholding method that reads federal income tax from a table by wage range, status, and pay frequency.

A formula-based IRS withholding method that works for any wage amount; built into payroll software.

Pay other than regular wages — bonuses, commissions, severance — with special withholding rules.

A 22% flat federal income tax withholding option for supplemental wages paid separately.

Federal income tax must be withheld at 37% on annual supplemental wages exceeding $1 million.

Withholding on supplemental wages by combining them with regular wages and taxing the total per the W-4.

A deduction taken before tax is figured, lowering taxable wages — e.g., a traditional 401(k) or Section 125 premium.

A deduction from already-taxed pay, such as a Roth 401(k), garnishment, or union dues.

A plan letting employees pay for certain benefits with pre-tax dollars, reducing both income-tax and FICA wages.

Reduces federal income tax wages but is still subject to Social Security and Medicare tax.

Contributed with after-tax dollars — no reduction to taxable wages; qualified withdrawals are tax-free.

$24,500 — the 2026 employee elective-deferral limit for 401(k)/403(b) plans.

An additional $8,000 catch-up contribution allowed for employees age 50 and older in 2026.

Calculating a higher gross so the employee nets a target amount: gross = net ÷ (1 − total tax rate).

A deduction required by law or court order — taxes, garnishments, child support, and tax levies.

A court- or agency-ordered deduction from pay to satisfy a debt; limited by the CCPA.

An ordinary garnishment is limited to the lesser of 25% of disposable earnings or the amount over 30× minimum wage.

Pay left after legally required deductions (taxes); the base for most garnishments — voluntary items are not subtracted.

An involuntary deduction with priority over most garnishments; CCPA allows up to 50–65% of disposable earnings.

An IRS deduction from pay to collect unpaid taxes; the exempt amount comes from a published IRS table.

Wages owed for a prior period (e.g., a late raise), paid in a later period as supplemental wages.

Qualified transportation deductions that reduce taxable wages up to the monthly IRS limit.

The recurring loop: collect time → calculate → approve & fund → distribute pay → report & deposit taxes.

The records (W-4, time cards, authorizations) that establish the basis for payroll calculations and withholdings.

A report listing each employee's earnings, deductions, taxes, and net pay for a pay period.

The deadline for submitting time so payroll can be processed on schedule.

Cumulative earnings, taxes, and deductions for the year through the current pay period, shown on the pay stub.

A system that captures hours worked and feeds the gross-pay calculation.

A Human Resource Information System that integrates employee, benefit, and payroll data.

Technology that accurately captures and reports employee work hours for payroll calculation.

A portal letting employees update personal/tax data and view pay stubs, reducing payroll errors.

Electronic delivery of net pay to an employee's bank account via ACH; cuts check processing time and cost.

A reloadable card used to deliver net pay to employees without a bank account.

The earnings statement (stub) most states require each payday, showing earnings, deductions, and net pay.

Running a new payroll system alongside the old to confirm identical results before go-live.

Access controls, edit/validation checks, and audit trails that protect payroll data and accuracy.

Securing employee financial data (e.g., direct-deposit details) during transmission and storage.

A historical record of payroll transactions and changes, used for review and verification.

A third party that processes payroll for an employer, which usually keeps the tax liability.

An authorized agent that deposits and files payroll taxes on an employer's behalf.

A co-employer that handles payroll, taxes, and HR for client companies.

Linking benefits enrollment with payroll so deductions update automatically and accurately.

Verifying payroll calculations and deductions against the payroll records before pay is released.

A plan ensuring payroll can continue after a system failure or disaster.

Managing court-ordered deductions accurately within priority and CCPA limits — a system challenge at scale.

Splitting payroll into groups (by entity, location, or pay frequency) in complex organizations.

Documented rules (overtime approval, the payroll calendar, desk procedures) giving payroll consistency and continuity.

Restricting access to sensitive payroll data and following privacy laws.

Training multiple staff on payroll tasks to protect the function from knowledge loss.

Using payroll data for trend, cost, and forecasting insight to inform strategic decisions.

Comparing actual payroll results to budget or prior periods to spot problems.

Comparing payroll metrics against peers or industry standards to find improvement opportunities.

A measurable payroll metric such as payroll accuracy % or on-time pay %.

A defined service standard (e.g., response time) for the payroll department's customers.

An employee or department payroll serves with accurate, timely, confidential answers.

Planning and overseeing the transition to a new payroll system or process.

Methods ensuring payroll accuracy and compliance through verification and reconciliation.

Identifying, assessing, and mitigating risks in payroll processing and compliance.

Recovering wages overpaid to an employee under federal and state wage-deduction rules, often by written agreement.

An overpayment repaid in a later year; the employee repays the gross, and the employer corrects FICA via Form 941-X / W-2c.

Choosing a payroll system or provider by weighing compliance, scalability, integration, support, and cost.

Contracting payroll processing to a third party while managing the vendor against contracts and SLAs.

Managing payroll across countries with differing tax rules, currencies, and labor laws.

Payroll for employees working abroad, involving tax equalization, hypothetical tax, and host-country rules.

An arrangement keeping an expatriate's tax burden similar to what it would have been at home.

A review ensuring payroll processes comply with applicable laws and that records are accurate.

A procedure (segregation of duties, approval, reconciliation) that prevents and detects payroll error and fraud.

Splitting payroll tasks among different people so no one person controls a whole transaction.

An alternative control (independent review, reconciliation) used when duties cannot be fully separated.

A fictitious or terminated employee kept on payroll so someone can divert the pay — a key fraud control target.

Hours not actually worked, entered to inflate pay — a fraud internal controls aim to detect.

Requiring that payroll changes be properly approved before they take effect.

Matching one record to another (register to GL, 941s to W-2s) to confirm they agree.

Confirming the four quarterly 941 totals tie to the annual W-2/W-3; FICA on the 941s ≈ 2× the W-3 (both shares).

Verifying wages, withholdings, and deposits tie out across the 941s, W-2s, W-3, and GL before filing.

Sent when W-2/W-3 wages are LESS than the Forms 941, so the SSA cannot fully credit workers' earnings.

An audit checking whether payroll follows wage-and-hour, tax, and other laws.

An audit of payroll by class code that sets the workers' compensation insurance premium.

A review confirming Forms I-9 are complete and properly retained.

The payroll team's own review to catch errors before an external auditor or agency does.

Controls public companies must maintain over financial reporting, including payroll.

A report flagging unusual items (e.g., negative net pay) for review.

Every transaction has equal debits and credits, keeping the accounting equation in balance.

An entry that increases asset and expense accounts and decreases liabilities, revenue, and equity.

An entry that increases liability, revenue, and equity accounts and decreases assets and expenses.

The expense account, increased by a debit, recording gross wages in the payroll journal entry.

The expense account for the employer's own payroll taxes (employer FICA, FUTA, SUTA).

A liability account crediting taxes withheld plus the employer share until they are deposited.

The double-entry recording of a pay run; total debits (wages + employer tax) must equal total credits.

Wages employees have earned but not yet been paid at period-end — a liability recorded under the matching principle.

The rule that expenses are recorded in the period they help generate revenue — so wages accrue when earned.

Recording expenses when incurred and revenue when earned, regardless of when cash moves.

An entry at the start of a period that reverses a prior accrual so the actual payment records cleanly.

Earned vacation and sick leave accrued as a liability in the year earned, per the matching principle.

The financial statement reflecting total payroll expense for a period (wages and employer payroll taxes).

The financial statement showing taxes and deductions payable as liabilities until remitted.

Bonuses recorded as an expense in the period they are declared/earned.

Confirming taxes withheld and deposited match the payroll records and tax-agency filings.

The set of accounts where payroll is posted; wage and tax accounts must reconcile to the payroll register.

Debiting full gross wages, then crediting withholdings (liabilities) and net pay (cash).

Distributing payroll expense across departments, jobs, or cost centers for accurate reporting.