FPC ACTUAL 2026 EXAM QUESTIONS AND ANSWERS
GRADED A+
✔✔For child support if the employee does not support a second family the amount
withheld cannot exceed what amount? - ✔✔60% (65% if in arrears)
✔✔Creditor Garnishment - ✔✔Involves a court order to attach the employee's earnings
in order to pay off a debt which the employee incurred.
✔✔The Consumer Credit Protection Act - ✔✔Limits the amount of disposable earnings
that can be garnished by creditors in a week.
✔✔If the employee has disposable pay of more than $290.00 weekly, the maximum
garnishment allowed under federal law is - ✔✔25% of the employee's disposable pay
✔✔Currently three states have provisions for withholding state unemployment tax from
employees in addition to the employer tax - ✔✔Alaska, New Jersey and Pennsylvania
✔✔Explain the purpose of form 843, Claim for refund and request for Abatement -
✔✔Request that a refund or abatement be granted for certain taxes, penalties, interest,
fees and some additions to taxes previously paid.
✔✔Describe the basic components of so-called white-collar exemptions to wage and
overtime laws. - ✔✔White collar exemptions (executive, administrative, and
professional) under FLSA rules follow certain underlying guidelines, including duties and
salary test: 1. salary basis and level test--a minimum salary is $455/week except for
outside sales and certain professions such as doctors and teachers, and certain
computer professionals who are paid $27.63/hour or more in straight-time pay for each
hour worked and subject to a highly compensated employee test. 2. regardless of how
much they are paid, employees who meet the exemption tests for their categories do
not have to be paid overtime pay. 3. a Salary alone does not make an employee
exempt. 4. Generally, exempt employees are the most important, highest-skilled
workers in the company. 5. A title alone does not make an employee exempt.
✔✔Explain the function of NACHA as related to the direct deposit method of payroll
payment. - ✔✔NACHA (formerly an acronym for the National Automated Clearinghouse
Association) is a nonprofit organization that acts as the self-regulatory body for the
automated clearinghouse (ACH) process of electronic payments. In conjunction with its
members, NACHA is responsible for the development, administration and governance
of the ACH network which facilitates electronic payments such as the direct deposit of
payroll earnings.
, ✔✔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: - ✔✔de minimis fringes and are not taxable
✔✔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: - ✔✔This
represents a qualified employee discount. The discount is 10% less than the cost to
customers.
✔✔An employee belongs to a professional organization. When his company pays his
dues, the payment is: - ✔✔A working condition fringe
✔✔An employees parking garage is two blocks away from his downtown office. It costs
$275.00 per month to rent a stall there, but the employee doesn't mind because its
convenient and his employer reimburses him for 100% of the cost. How much of his
monthly parking is taxable? - ✔✔$15.00 Employer- provided parking is nontaxable up to
$260.00
✔✔An employer provides an employee $300.00 a month in bus tokens so she can
commute to work. How much of this expense is nontaxable? - ✔✔$260.00. Employer
provided tokens for public transportation are nontaxable up to $260.00 a month.
✔✔What federal taxes, if any must the salesperson's employer withhold for his personal
use of the company vehicle? - ✔✔Social security tax and Medicare tax only
✔✔For her ten years of service, an employee was given a gold necklace valued at
$100.00. Is this taxable? - ✔✔The gift is tax-free. Most prizes and awards are taxable.
One exception is qualified awards for length of service or safety.
✔✔Under which type of plan are employee contributions subject to Medicare and social
security tax? - ✔✔401(k), 403(b) and 457(b)
✔✔Under which type of plan are employee contributions subject to federal income tax?
- ✔✔Roth 401(k)
✔✔An employer may provide all of the following features in a 401(k) plan except: -
✔✔Higher benefits for highly compensated employees
✔✔Which plan applies to employees of public schools, colleges and universities, and
public charities? - ✔✔Section 403(b) of the internal revenue code creates a tax
sheltered retirement plan for employees of tax exempt non-profit organizations like
schools, colleges, universities, hospitals or charities.
GRADED A+
✔✔For child support if the employee does not support a second family the amount
withheld cannot exceed what amount? - ✔✔60% (65% if in arrears)
✔✔Creditor Garnishment - ✔✔Involves a court order to attach the employee's earnings
in order to pay off a debt which the employee incurred.
✔✔The Consumer Credit Protection Act - ✔✔Limits the amount of disposable earnings
that can be garnished by creditors in a week.
✔✔If the employee has disposable pay of more than $290.00 weekly, the maximum
garnishment allowed under federal law is - ✔✔25% of the employee's disposable pay
✔✔Currently three states have provisions for withholding state unemployment tax from
employees in addition to the employer tax - ✔✔Alaska, New Jersey and Pennsylvania
✔✔Explain the purpose of form 843, Claim for refund and request for Abatement -
✔✔Request that a refund or abatement be granted for certain taxes, penalties, interest,
fees and some additions to taxes previously paid.
✔✔Describe the basic components of so-called white-collar exemptions to wage and
overtime laws. - ✔✔White collar exemptions (executive, administrative, and
professional) under FLSA rules follow certain underlying guidelines, including duties and
salary test: 1. salary basis and level test--a minimum salary is $455/week except for
outside sales and certain professions such as doctors and teachers, and certain
computer professionals who are paid $27.63/hour or more in straight-time pay for each
hour worked and subject to a highly compensated employee test. 2. regardless of how
much they are paid, employees who meet the exemption tests for their categories do
not have to be paid overtime pay. 3. a Salary alone does not make an employee
exempt. 4. Generally, exempt employees are the most important, highest-skilled
workers in the company. 5. A title alone does not make an employee exempt.
✔✔Explain the function of NACHA as related to the direct deposit method of payroll
payment. - ✔✔NACHA (formerly an acronym for the National Automated Clearinghouse
Association) is a nonprofit organization that acts as the self-regulatory body for the
automated clearinghouse (ACH) process of electronic payments. In conjunction with its
members, NACHA is responsible for the development, administration and governance
of the ACH network which facilitates electronic payments such as the direct deposit of
payroll earnings.
, ✔✔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: - ✔✔de minimis fringes and are not taxable
✔✔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: - ✔✔This
represents a qualified employee discount. The discount is 10% less than the cost to
customers.
✔✔An employee belongs to a professional organization. When his company pays his
dues, the payment is: - ✔✔A working condition fringe
✔✔An employees parking garage is two blocks away from his downtown office. It costs
$275.00 per month to rent a stall there, but the employee doesn't mind because its
convenient and his employer reimburses him for 100% of the cost. How much of his
monthly parking is taxable? - ✔✔$15.00 Employer- provided parking is nontaxable up to
$260.00
✔✔An employer provides an employee $300.00 a month in bus tokens so she can
commute to work. How much of this expense is nontaxable? - ✔✔$260.00. Employer
provided tokens for public transportation are nontaxable up to $260.00 a month.
✔✔What federal taxes, if any must the salesperson's employer withhold for his personal
use of the company vehicle? - ✔✔Social security tax and Medicare tax only
✔✔For her ten years of service, an employee was given a gold necklace valued at
$100.00. Is this taxable? - ✔✔The gift is tax-free. Most prizes and awards are taxable.
One exception is qualified awards for length of service or safety.
✔✔Under which type of plan are employee contributions subject to Medicare and social
security tax? - ✔✔401(k), 403(b) and 457(b)
✔✔Under which type of plan are employee contributions subject to federal income tax?
- ✔✔Roth 401(k)
✔✔An employer may provide all of the following features in a 401(k) plan except: -
✔✔Higher benefits for highly compensated employees
✔✔Which plan applies to employees of public schools, colleges and universities, and
public charities? - ✔✔Section 403(b) of the internal revenue code creates a tax
sheltered retirement plan for employees of tax exempt non-profit organizations like
schools, colleges, universities, hospitals or charities.
