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FPC Exam
SS8 correct answer Determination of worker status for purposes of federal employment taxes and income tax withholding; requests clarification on worker status Acceptable work time rounding practices correct answer Can round to the nearest quarter hour or 15 minutes; 1 to 7 minutes can be rounded down, 8 to 14 minutes must be rounded up Exempt employee classification correct answer Not entitled to the benefits and protections of the FLSA. May not have to be paid minimum-wage White collar exemption classifications correct answer Executive, administrative, and professional 14 and 15-year-olds child labor restrictions correct answer Nonschool days less than eight hours; during the school week no more than 18 hours; no more than 40 hours when school is out FUTA Rate correct answer Rate is set at 6% of the first 7000$ and employer in a year FUTA Credit correct answer The credit claimed cannot exceed 5.4% whenever the maximum credit is applied against the federal rate, the effective rate will fall to 0.6% 2023 social security wage base correct answer $160, Medicare tax withholding rate correct answer 1.45% over $200,000 add extra 0.9% Back up withholding correct answer Withholding on taxes on certain type of income if the employee does not provide his or her Social Security number rate of 28%
Form 940 correct answer Employers annual federal unemployment tax return; to report the annual federal unemployment tax liabilities for employers subject to FUTA Form 941 correct answer Employers quarterly federal tax return; it's to report by employers to the IRS the total amount of wages paid, income taxes withheld, and Social Security and Medicare taxes due (both portions). Form 941 correct answer Due date is the end of the month which follows the end of each quarter. However, if all amounts due are timely deposited in the quarter, an automatic extension of 10 days is added. Schedule B correct answer Of form 941 is intended to reconcile the tax liability amount for so called semi weekly depositors. Form 943 correct answer Employers annual federal tax return for agricultural employees Form 944 correct answer Employers annual federal tax return those with A combined annual liability for income, Social Security and Medicare taxes of no more than $1000; IRS does not notify eligible employers Form 945 correct answer Annual return of withheld federal income tax, is for payers to report to the IRS the amount of federal income tax withheld on non payroll payments ex: pensions, military retirement, Indian gaming profits, voluntary withholding, back up withholding Form W3 correct answer Transmittal of wage and tax statements; to summarize the transmittal of paper copies of form W-2; only required when submitting via paper forms Decrease of allowances correct answer Must file new W4 within 10 days Form SS5 correct answer Application for a Social Security card
Assets correct answer Items of value owned by business. Example: cash accounts receivable, inventory for resale, buildings, machinery; typically debit Assets correct answer Liability plus equity equals Resources for Regulatory Changes correct answer Federal tax resources are provided by the Internal Revenue Service and include the following:
- Internal Revenue Code and Regulations
- Revenue Rulings, Revenue Procedures and Publications
- Internal Revenue Bulletins Federal statutory activity can be monitored via the following:
- Congressional Record
- Federal Register
- SSA/IRS Reporter (Social Security Administration, Internal Revenue Service) constructive receipt correct answer determines when wages are taxable pay frequency/method correct answer governance the process is left to regulation by each of the states. ACH process correct answer •Employer - initiates the electronic file containing the payment information.
- Originating Financial Institution - receives the file from the employer and initiates processing through the ACH network.
- ACH Network - settles the transactions between the financial institutions.
- Receiving Financial Institution - designated by the employee, receipt of funds is posted to the employee account.
- Employee - designates the receiving financial institution and accesses funds as required.
escheat laws correct answer Most states have an annual November 1 deadline for filing and remitting unclaimed property; states dictate how long employer must hold Common Law Test correct answer Worker classification criteria for establishing if worker is an employee or contractor Leased employee correct answer the workers generally are employees of the leasing company, which is responsible for all withholding and employment taxes as well as the administration and funding of any benefits 8/80 correct answer 14 day period instead of workweek; overtime after 8hrs in a day or 80 in 14 days, whichever is more favorable FLSA Components correct answer Sets min wage & overtime rates; requires record keeping by all covered employees; places restrictions on the types of work minors can do & the hours they can work;mandates equal pay for equal work IRCA correct answer Act of 1986; makes it illegal for an employee to hire an unauthorized worker Flat rate method correct answer Wages in excess of $1,000,000; 39.6% Taxable wages correct answer All remuneration for services including non cash benefits. Nontaxable benefits correct answer IRC Section 132; de minimis fringes; working condition fringes; no additional cost services; qualified employees discounts Qualified Plan correct answer Profit sharing plans; defined contribution plans; defined benefit plans; 401k plan; complies with Section 401 of IRC
Stop payment procedures for checks correct answer Wait no more than five business days Review cleared checks Notify the bank to place stop Have employee execute surety bond or affidavit protecting employer Reissue check FMLA correct answer Allows eligible employees to take up to 12 weeks of unpaid job protected leave in a 12 month period for specified family and medical reasons Basic FMLA requirements correct answer An employee must: work for a covered employer, have worked for the employer 12 months, have worked at least 1,250 hours over the 12 months, and work at a location in the US or US possession where at least 50 employees are employed by the employer within 75 miles. Supplemental wages correct answer Reported tips, overtime pay, bonuses, back pay, commissions are examples of Tax deposit methods correct answer Required to use the IRS' Electronic Federal Tax Payment System (EFTPS); the only time an employer can pay taxes with a check is when filing forms, 940, 941, 943, 944, or 945. Child support withholding correct answer 50% of the employees disposable earnings if the employee is supporting another spouse and or children; or 60% if the employee is not supporting another spouse and or children; these amounts increase to 55% and 65% if the employee is at least 12 weeks in arrears 1099 MISC correct answer Required to be filled by any individual or entity that he's at least $ in royalties or at least $600 in aggregate for various items such as rents, services and awards. Copies B and 2 must be sent to the non-employee who received the payments by January 31 of the year after the year during which the payments were made.
Look back period correct answer 12 month period from July 1 of the second previous year through June 30th of the previous year. 668W correct answer Notice of Levy on Wages, Salary, or Other Income; give to employer to begin a federal tax levy garnishment 668D correct answer Release of Levy; contains total amount due, after paid Levy is released New hire reporting correct answer Employees name, address, SSN; Employers name, address, and EIN; First day of work SSNVS correct answer Online social security number verification service Monthly depositor correct answer Look back liability is no greater than $50,000; Required to deposit no later than the 15th day of the following month Semiweekly Depositor correct answer Look back liability greater than $50,000; wages paid on Wednesday, Thursday, and Friday must deposit by the following Wednesday. Wages paid Saturday, Sunday, Monday, and Tuesday must deposit by the following Friday. Wage Assignments correct answer Responsibility of the payroll department of an employer to send a portion of an employees payroll to a third party on the employees behalf. This can be voluntary or involuntary. Consumer Credit Protection Act correct answer Places restrictions on creditor garnishments; lesser of 25% of disposable earnings for THE WEEK or Min wage x 30 (divide by weeks if necessary) -disposable earnings Bankruptcy regulations correct answer Require all prior withholding orders to stop with the exception of child support orders.
Failure to report new hires correct answer States can issue penalties of $25 per new employee not reported or $500 if conspiring not to report an employee Failure to pay minimum wage and overtime correct answer Recovery of back wages and equal damages, and for repeated willful violations the penalty can be up to $1100 per violation Failure to verify documentation correct answer Fines from $110-$ Knowingly hiring unauthorized aliens correct answer Fines from $375-$16,000 depending upon the number of offenses Federal standard mileage rate correct answer For 2016: $.54 per mile for business miles; $. per mile for a medical or moving $300 per month correct answer The value of the excluded benefit in 2023 for transportation in a commuter highway vehicle and employer provided passes, tokens, or fare cards; excluded from income After the year of death correct answer Payment made; not subject to federal income tax withholding, Social Security, Medicare, or FUTA taxes and should be reported only in box 3 of form 1099 MISC in the name of the beneficiary of the payment Same year of death correct answer Payment made; not subject to federal income tax withholdings but is subject to Social Security, Medicare, and FUTA taxes. Wages are reported on a W-2 and also 1099 MISC in the name of the beneficiary State disbursement unit correct answer States are required to establish for the collection and disbursement of child support payments Cafeteria plan correct answer A plan in which all participants are employees who choose from a minimum of two or more benefits that consist of cash and qualified benefits; section 125
Defined contribution plan correct answer Individual accounts for each employee, with a set amount being contributed into the account by the employer Section 132 correct answer Exams certain fringe benefits from inclusion in income, once certain conditions are met. They are not subject to federal income tax withholding or Social Security, Medicare, or FUTA taxes. Deferred compensation plan correct answer Deferrals into this plan are subject to Social Security and Medicare taxes for 401(k) 403B and 457B plans Master file correct answer Required for calculating a paycheck; including such things as employee data, employment data, tax and payroll data, data for both payroll period and calendar year (name, hire date, allowances, total wages) Journal correct answer Accounting document with chronological records of daily transactions of a business Validity edit correct answer Checking input or output against predetermined constraints Batch processing correct answer Method of coding and collecting items to be processed into similar groups System security correct answer Limit system access, secure files, develop audit trails, productive games computer viruses, and secure data Customer service resolution resources correct answer Internal revenue code and regulations, revenue rulings, revenue procedures and publications, internal revenue bulletins, Congressional record, federal register, SSA/IRS reporter 39.6% correct answer Rate for supplemental wage payments if wages exceed 1 million
Box 2 correct answer Federal Income withheld Box 3 correct answer Social security wages Box 4 correct answer Social Security withheld Box 5 correct answer Medicare wages and tips Box 6 correct answer Medicare tax withheld Box 7 correct answer Social security tips Box 8 correct answer Allocated tips Box 10 correct answer Dependent care benefits Box 11 correct answer Non qualified plans Box 12 code c correct answer Box and code for value of group term life insurance Box 12 code D correct answer Box and code for 401k contributions Box 12 Code E correct answer Box and code for 403B contributions Box 12 Code P correct answer Box and code for excludable reimburse moving expenses Box 12 code AA correct answer Box and code for Roth401k contributions
Box 12 Code DD correct answer Box and code for employee paid health coverage Box 13 correct answer Check for sick pay, retirement plan, or third party sick pay
