FPC FINAL EXAM ACTUAL QUESTIONS AND ANSWERS
GRADED A+
✔✔waiting to be engaged - ✔✔is NOT work time because the employee is freed from all
duties and responsibilities for a definite period of time and has enough time to pursue
personal business before returning to work even if the employee remains on the
employer's premises, the waiting time in not work time.
✔✔Allowances decrease - ✔✔Form W-4 must be completed.
✔✔Mandatory Flat Rate - ✔✔37% when year to date supplemental ages exceed
$1,000,000.
✔✔Who is a tipped employee - ✔✔Reporting more than $30 in tips a month.
✔✔Gross-up - ✔✔Desired net pay divided by 100% minus the total of all tax rates.
EX:
5200/100%-(77$)
✔✔Optional Flat Rate - ✔✔22%
✔✔Constructive Payment - ✔✔When the employee is actually paid. Not when the
payment is available to the employee. When an amount becomes taxable.
✔✔Percentage Method first step - ✔✔subtract pre-tax deduction from gross pay
✔✔Maximum creditor garnishment - ✔✔25% of disposable earnings or disposable
earnings exceeds 30 times the minimum wage.
✔✔Child support rate - ✔✔50% - Supporting another family
55% - Supporting another family and more than 12 weeks in arrears
60% - Not supporting another family
65% - Not supporting another family and more than 12 weeks in arrears.
✔✔Child support begins - ✔✔Begin 14 days following the mailing of the order. States
may have a shorter time period.
✔✔Net Pay - ✔✔Amount of income left after taxes and deductions have been taken out.
✔✔Child support deductions sent - ✔✔Must be remitted within 7 business days after the
deduction is made
✔✔e-IWO - ✔✔Electronic Income Withholding Order.
,Information sharing electronically between state child support enforcement and ER.
✔✔Form 668-D - ✔✔Release of Levy/Release of Property from Levy
Employer will stop making federal tax levy deduction.
✔✔Max student loan garnishment - ✔✔the lesser of 15% of disposable income or 30
times minimum wage.
✔✔Max Federal agency garnishment - ✔✔Lesser of 15% of disposable income or 30
times minimum wage.
✔✔Form 668-W - ✔✔Notice of Levy on Wages, Salary, and Other Income
✔✔Subject to levy - ✔✔Employees take home pay minus the exempt amount from IRS
publication 1494.
✔✔Qualified Employee Discounts - ✔✔-Are nontaxable if:
-Discount is not on realty or investment property
-Item discounted is from same line of business in which employee works
-Discount cannot exceed gross profit on property or 20% of the customer price on
services
-Benefit is offered on nondiscriminatory basis
✔✔Group Term Life (GTL) Exclusion - ✔✔The first $50,000 of GTL coverage is
excluded from income.
✔✔Commuting valuation rate - ✔✔Personal use of company vehicle is $1.50 per trip or
$3.00 per day.
✔✔Taxes withheld from tips - ✔✔FICA has priority then income tax
✔✔Nontaxable GTL amount - ✔✔$50,000
✔✔Taxes withheld from bonuses - ✔✔Income, FICA, FUTA
✔✔Allocated tips - ✔✔When reported tips are not greater than 8% of sales subject to
tips.
ER is required to bring it to 8%.
✔✔Taxable benefits formula - ✔✔TB = FMV - (AEL - amount paid for the benefit)
✔✔Federal business standard mileage rate (Cents per mile valuation - ✔✔$0.545 per
mile
, ✔✔No-additional cost benefit - ✔✔nontaxable benefit provided by an ER.
✔✔Fair Market Value (FMV) - ✔✔The amount that a willing and able buyer would pay
for the principal's assets or the amount that the principal's creditors would accept in
satisfaction of the principal's liabilities in the short term.
✔✔Form 8027 - ✔✔Employer's Annual Information Return of Tip Income and Allocated
Tips
In form w-2 in box 8.
✔✔De minimis fringe benefits - ✔✔Benefit of small value, difficult to track and
occasionally provided.
Excluded from employees income.
✔✔Nontaxable awards - ✔✔Certain conditions, length of service and safety awards are
not taxable.
✔✔working condition benefit - ✔✔Nontaxable benefits which relates to the employees
trade or business.
✔✔For taxes, who is a tipped employee - ✔✔IRS requires employees who receive tips
of $20 or more to report the tips to ER.
✔✔Taxes on commissions - ✔✔Income, FICA, FUTA
✔✔Monthly transportation benefit - ✔✔$260 excluded from income a month for qualified
transportation.
✔✔Taxes withheld from GTL - ✔✔Social security and medicare taxes (FICA)
✔✔401K annual contribution limit - ✔✔$54,000 or 100% EE annual compensation
✔✔Taxes on qualified retirement plans - ✔✔Subject to social security and medicare.
ER contributions are not taxable.
✔✔2 types of retirement plans - ✔✔Qualified or non-qualified plans
✔✔Roth 401K - ✔✔Subject to FIT, FICA.
Reported on form W-2 in box 12 with code AA.
GRADED A+
✔✔waiting to be engaged - ✔✔is NOT work time because the employee is freed from all
duties and responsibilities for a definite period of time and has enough time to pursue
personal business before returning to work even if the employee remains on the
employer's premises, the waiting time in not work time.
✔✔Allowances decrease - ✔✔Form W-4 must be completed.
✔✔Mandatory Flat Rate - ✔✔37% when year to date supplemental ages exceed
$1,000,000.
✔✔Who is a tipped employee - ✔✔Reporting more than $30 in tips a month.
✔✔Gross-up - ✔✔Desired net pay divided by 100% minus the total of all tax rates.
EX:
5200/100%-(77$)
✔✔Optional Flat Rate - ✔✔22%
✔✔Constructive Payment - ✔✔When the employee is actually paid. Not when the
payment is available to the employee. When an amount becomes taxable.
✔✔Percentage Method first step - ✔✔subtract pre-tax deduction from gross pay
✔✔Maximum creditor garnishment - ✔✔25% of disposable earnings or disposable
earnings exceeds 30 times the minimum wage.
✔✔Child support rate - ✔✔50% - Supporting another family
55% - Supporting another family and more than 12 weeks in arrears
60% - Not supporting another family
65% - Not supporting another family and more than 12 weeks in arrears.
✔✔Child support begins - ✔✔Begin 14 days following the mailing of the order. States
may have a shorter time period.
✔✔Net Pay - ✔✔Amount of income left after taxes and deductions have been taken out.
✔✔Child support deductions sent - ✔✔Must be remitted within 7 business days after the
deduction is made
✔✔e-IWO - ✔✔Electronic Income Withholding Order.
,Information sharing electronically between state child support enforcement and ER.
✔✔Form 668-D - ✔✔Release of Levy/Release of Property from Levy
Employer will stop making federal tax levy deduction.
✔✔Max student loan garnishment - ✔✔the lesser of 15% of disposable income or 30
times minimum wage.
✔✔Max Federal agency garnishment - ✔✔Lesser of 15% of disposable income or 30
times minimum wage.
✔✔Form 668-W - ✔✔Notice of Levy on Wages, Salary, and Other Income
✔✔Subject to levy - ✔✔Employees take home pay minus the exempt amount from IRS
publication 1494.
✔✔Qualified Employee Discounts - ✔✔-Are nontaxable if:
-Discount is not on realty or investment property
-Item discounted is from same line of business in which employee works
-Discount cannot exceed gross profit on property or 20% of the customer price on
services
-Benefit is offered on nondiscriminatory basis
✔✔Group Term Life (GTL) Exclusion - ✔✔The first $50,000 of GTL coverage is
excluded from income.
✔✔Commuting valuation rate - ✔✔Personal use of company vehicle is $1.50 per trip or
$3.00 per day.
✔✔Taxes withheld from tips - ✔✔FICA has priority then income tax
✔✔Nontaxable GTL amount - ✔✔$50,000
✔✔Taxes withheld from bonuses - ✔✔Income, FICA, FUTA
✔✔Allocated tips - ✔✔When reported tips are not greater than 8% of sales subject to
tips.
ER is required to bring it to 8%.
✔✔Taxable benefits formula - ✔✔TB = FMV - (AEL - amount paid for the benefit)
✔✔Federal business standard mileage rate (Cents per mile valuation - ✔✔$0.545 per
mile
, ✔✔No-additional cost benefit - ✔✔nontaxable benefit provided by an ER.
✔✔Fair Market Value (FMV) - ✔✔The amount that a willing and able buyer would pay
for the principal's assets or the amount that the principal's creditors would accept in
satisfaction of the principal's liabilities in the short term.
✔✔Form 8027 - ✔✔Employer's Annual Information Return of Tip Income and Allocated
Tips
In form w-2 in box 8.
✔✔De minimis fringe benefits - ✔✔Benefit of small value, difficult to track and
occasionally provided.
Excluded from employees income.
✔✔Nontaxable awards - ✔✔Certain conditions, length of service and safety awards are
not taxable.
✔✔working condition benefit - ✔✔Nontaxable benefits which relates to the employees
trade or business.
✔✔For taxes, who is a tipped employee - ✔✔IRS requires employees who receive tips
of $20 or more to report the tips to ER.
✔✔Taxes on commissions - ✔✔Income, FICA, FUTA
✔✔Monthly transportation benefit - ✔✔$260 excluded from income a month for qualified
transportation.
✔✔Taxes withheld from GTL - ✔✔Social security and medicare taxes (FICA)
✔✔401K annual contribution limit - ✔✔$54,000 or 100% EE annual compensation
✔✔Taxes on qualified retirement plans - ✔✔Subject to social security and medicare.
ER contributions are not taxable.
✔✔2 types of retirement plans - ✔✔Qualified or non-qualified plans
✔✔Roth 401K - ✔✔Subject to FIT, FICA.
Reported on form W-2 in box 12 with code AA.
