UPDATED [Oct 12, 2025] Pass Fundamental Payroll Certification Exam with Latest Questions
FPC-Remote Exam Practice Questions prepared by APA Professionals
NEW QUESTION # 90
A terminated employee submits a written request on August 1 for the current year Form W-2. By what date MUST the employer furnish the Form W-2?
- A. October 31
- B. September 30
- C. January 31
- D. August 31
Answer: D
Explanation:
* If a terminated employee requests a Form W-2 in writing, the employer must provide it within 30 daysor by January 31, whichever comes first.
* Since the request was made on August 1, the deadline is August 31.
References:
* IRS Form W-2 Guidelines
NEW QUESTION # 91
The best practice is to start the annual reconciliation after the:
- A. First payroll of the current year
- B. End of the calendar year
- C. End of the first quarter
- D. W-2 audit is complete
Answer: D
Explanation:
Comprehensive and Detailed Explanation:
Annual payroll reconciliation ensures that payroll records match tax filings. The best practice is to start reconciliation after completing the W-2 audit, as this verifies:
Employee earnings and tax withholdings
Federal and state tax deposits
Year-end adjustments
Option B is incorrect because quarterly reconciliation is separate from annual reconciliation.
Option C is incorrect because reconciliation should start after verifying W-2s, not just at the year-end.
Option D is incorrect because reconciliation should be based on the prior year, not the first payroll of the new year.
Reference:
IRS - Year-End Payroll Reporting Guide
Payroll.org - Annual Reconciliation Best Practices
NEW QUESTION # 92
Under the CCPA, use the following information to calculate the MAXIMUM deduction for the child support order for an employee who is not supporting another family and not in arrears.
- A. $116.03
- B. $136.23
- C. $113.53
- D. $139.23
Answer: D
Explanation:
Step 1: Calculate disposable earnings
$300.00 - ($45.00 + $18.60 + $4.35) = $232.05
Step 2: Apply CCPA withholding limit
60% of $232.05 = $139.23
Reference:
Consumer Credit Protection Act (CCPA) - Federal Child Support Withholding Limits Payroll Withholding Compliance Guide (Payroll.org)
NEW QUESTION # 93
The best practice is to start the annual reconciliation after the:
- A. First payroll of the current year
- B. End of the calendar year
- C. End of the first quarter
- D. W-2 audit is complete
Answer: D
Explanation:
Comprehensive and Detailed Explanation:Annual payroll reconciliationensures thatpayroll records match tax filings. Thebest practiceis tostart reconciliation after completing the W-2 audit, as this verifies:
* Employee earnings and tax withholdings
* Federal and state tax deposits
* Year-end adjustments
* Option Bis incorrect becausequarterly reconciliationis separate fromannual reconciliation.
* Option Cis incorrect becausereconciliation should start after verifying W-2s, not just at the year-end.
* Option Dis incorrect becausereconciliation should be based on the prior year, not the first payroll of the new year.
Reference:
IRS - Year-End Payroll Reporting Guide
Payroll.org - Annual Reconciliation Best Practices
NEW QUESTION # 94
An example of an interface into a payroll system is a(n):
- A. ACH payment file.
- B. Time and attendance system file.
- C. Transmission of general ledger transactions.
- D. Check print file.
Answer: B
Explanation:
A time and attendance system file is an example of an interface into a payroll system because:
It captures employee work hours and sends data to payroll for accurate calculations.
Payroll interfaces ensure automated and accurate payment processing.
Other options explained:
Check print file (A) is an output, not an interface.
ACH payment file (B) is used to process payments, not interface data.
General ledger transactions (D) are accounting-related, not payroll input.
Reference:
Payroll System Integration Guide (Payroll.org)
NEW QUESTION # 95
The amount of federal income tax that is withheld from an employees regular wages is determined by a formula that uses all of the following items except:
- A. a flat rate
- B. filing status
- C. employees taxable wages
- D. pay period
Answer: A
NEW QUESTION # 96
All of the following regulate payments made by DD EXCEPT:
- A. consumer financial protection bureau
- B. NACHA
- C. local laws
- D. State laws
Answer: C
NEW QUESTION # 97
Which of the following wage attachments has the highest priority for withholding?
- A. Child Support
- B. Wage Assignment
- C. Bankruptcy
- D. State Tax Levy
Answer: C
Explanation:
Comprehensive and Detailed Explanation:
The priority order for wage attachments is as follows:
Bankruptcy orders (Option A) - Court-ordered payments under the U.S. Bankruptcy Code take top priority over all other wage deductions.
Child support (Option B) - The second-highest priority under federal law, governed by the Consumer Credit Protection Act (CCPA).
State tax levies (Option C) - Third in priority, varies by state.
Wage assignments (Option D) - Lowest priority, usually voluntary agreements by employees.
Reference:
Consumer Credit Protection Act (CCPA) - Wage Garnishment Priorities
Payroll.org - Wage Garnishment Guidelines
NEW QUESTION # 98
Using the percentage method for automated payroll systems, calculate the federal income tax withholding based on the following information:
- A. $41.69
- B. $18.65
- C. $26.92
- D. $39.04
Answer: D
Explanation:
* Total taxable wages: $384.62 + $76.92 + $38.46 = $500.00
* Using IRS percentage method tables, withholding = $39.04
References:
* IRS Publication 15-T (Tax Withholding Tables)
NEW QUESTION # 99
As of December 31, 2024, what is the MAXIMUM amount, if any, a 49-year-old employee can contribute to a 401(k) plan?
- A. $30,500.00
- B. $23,000.00
- C. $7,500.00
- D. No Limit
Answer: B
Explanation:
Comprehensive and Detailed Explanation:For2024, the401(k) contribution limitis:
* $23,000.00 for employees under 50 years old.
* $30,500.00 for employees 50 and older(includes$7,500 catch-up contribution).
Since the employee is49 years old, theydo not qualify for the catch-up contribution, so the maximum contribution is$23,000.00.
Reference:
IRS - 401(k) Contribution Limits for 2024
Payroll.org - Retirement Plan Payroll Compliance
NEW QUESTION # 100
a retail sales clerk took advantage of the company's employee discount program to purchase clothes at 10% off the normal retail price. this service represents:
- A. taxable compensation
- B. a no-additional cost service
- C. a qualified employee discount
- D. a working condition fringe
Answer: C
NEW QUESTION # 101
Last month, an employee emailed her mother on the company's email, photocopied fliers for her church picnic at work and used her work computer to update her resume. These services represent:
- A. taxable compensation
- B. de minimis fringes
- C. working condition fringes
- D. no-additional cost services
Answer: B
NEW QUESTION # 102
On thurs, an employee receives news of a family emergency that requires him to take a flight home that evening. payday is not until friday at 3pm, but he needs his paycheck to pay for the flight. when he contacts the payroll dept and explains his situation, he is told that a check will be ready for him when he stops by.
Which principle of the customer service has the payroll dept exhibited?
- A. reliability
- B. responsiveness
- C. tangibles
- D. assurance.
- E. empathy
Answer: E
NEW QUESTION # 103
When an employee begins to receive social security benefits, the employer no longer needs to withhold social security and medicare taxes.
- A. TRUE
- B. False
Answer: A
NEW QUESTION # 104
Which of the following awards are included in an employee's taxable income?
- A. A $5.00 restaurant gift card
- B. An engraved clock, valued at $100.00, to celebrate an employee's retirement
- C. A wearable fitness tracker for a safety award
- D. A coupon for a free holiday turkey
Answer: A
Explanation:
Cash equivalents, such as gift cards (A), are always taxable income.
Nominal gifts (B, C, D) are generally tax-exempt under de minimis rules.
Reference:
IRS Publication 15-B (Taxable Fringe Benefits)
NEW QUESTION # 105
What authority controls the frequency with which employees must be paid?
- A. state laws
- B. Local laws
- C. FLSA rules
- D. IRS rules
Answer: A
NEW QUESTION # 106
Specifying a defined response time for an employee's payroll-related question is a component of a Payroll Department's:
- A. Service Level Agreement
- B. General Service Contract
- C. Time Management
- D. Standards of Excellence
Answer: A
Explanation:
Comprehensive and Detailed Explanation:
A Service Level Agreement (SLA) (Option B) outlines the expected response times and resolution times for payroll inquiries. This ensures that payroll staff provide timely assistance to employees.
Option A (General Service Contract) applies to external service providers, not internal payroll departments.
Option C (Standards of Excellence) refers to broad performance benchmarks, but it does not include specific response times.
Option D (Time Management) relates to personal efficiency, not defined service expectations.
Reference:
Payroll.org - Payroll Service Level Agreements Best Practices
HR Compliance Guide - Payroll Inquiry Handling
NEW QUESTION # 107
For her 10 years of service, an employee was given a gold necklace valued at $100. Which of the following is true?
- A. only federal income tax should be withheld on the fair market value of the award
- B. the gift must be included in her taxable compensation
- C. the gift is tax free
- D. only social security and medicare tax should be withheld on the fair market value of the award
Answer: C
NEW QUESTION # 108
Which of the following awards are included in an employee's taxable income?
- A. A $5.00 restaurant gift card
- B. An engraved clock, valued at $100.00, to celebrate an employee's retirement
- C. A wearable fitness tracker for a safety award
- D. A coupon for a free holiday turkey
Answer: A
Explanation:
* Cash equivalents, such as gift cards (A), are always taxable income.
* Nominal gifts (B, C, D) are generally tax-exempt under de minimis rules.
References:
* IRS Publication 15-B (Taxable Fringe Benefits)
NEW QUESTION # 109
When using the Optional Flat Rate Method, which of the following items is considered when making the calculation?
- A. filing status
- B. pay frequency
- C. taxable wages
- D. number of dependents
Answer: C
NEW QUESTION # 110
Under what conditions can an employee claim exemption from withholding on form W4?
- A. receiving overtime pay
- B. had no tax liability last year and expects no tax liability this year
- C. an employee takes her first job
- D. anticipates receiving a bonus
Answer: B
NEW QUESTION # 111
To reconcile a general ledger tax liability account balance, verify all of the following items EXCEPT:
- A. Account activity against the quarterly returns
- B. Entries from company accountants
- C. Account entries against the payroll register
- D. Checks issued by accounts payable
Answer: B
Explanation:
Comprehensive and Detailed Explanation:Toproperly reconcile payroll tax liability accounts, the following steps are performed:
* Compare account entries against payroll registers (C)- Ensures wages, deductions, and taxes are posted correctly.
* Verify checks issued by accounts payable (B)- Confirms tax payments were made.
* Match account activity with quarterly tax returns (D)- Ensures payroll taxes were reported correctly on Form 941.
* Option A (Entries from company accountants) is incorrectbecauseaccountants do not create payroll entries; payroll is recordedbased on actual payroll transactions, not estimates or adjustments from accountants.
Reference:
GAAP Accounting Standards - Payroll Tax Liability Reconciliation
Payroll.org - Best Practices for Payroll Tax Account Reconciliation
NEW QUESTION # 112
Which of the following criteria is NOT used to determine if the worker is a nonresident for U.S. income tax purposes?
- A. Impact of tax treaty with another resident country
- B. Lawful permanent resident test
- C. Supplying a W-9 form
- D. Substantial presence test
Answer: C
Explanation:
* Form W-9is used for independent contractors (U.S. residents) butdoes NOT determine residency for tax purposes.
* TheSubstantial Presence Test (B)andGreen Card Test (C)are used to determine tax residency.
* Tax treaties (D) impact tax status for nonresidents.
References:
* IRS Publication 519 (U.S. Tax Guide for Aliens)
NEW QUESTION # 113
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