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PAYROLL FUNDAMENTALS CERTIFICATION
EXAM 2025 UPDATED ACTUAL EXAM WITH
CORRECT SOLUTIONS.
What's the withholding limit on federal agency garnishments? -
correct answer- The lesser of 15% of disposable earnings OR
the amount by which weekly disposable earnings exceed 30x
federal minimum wage (unless employee consents to a higher
% in writing)
When a bankruptcy is received, what should ER stop
withholding? - correct answer- All garnishments except child
support orders. This is because the trustee will pay out the
debts
What is the withholding limit for creditor garnishment? - correct
answer- The lesser of 25% of disposable earnings OR the
amount by which weekly disposable earnings exceed 30x
federal minimum wage (unless employee consents to a higher
% in writing)
What's the withholding limit for federal student loan
garnishments? - correct answer- The lesser of 15% of
disposable earnings OR the amount by which weekly
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disposable earnings exceed 30x federal minimum wage (unless
employee consents to a higher % in writing)
What is form 4070? - correct answer- Employees report of tips
to employer
How is group term life reported on a W-2 - correct answer-
Included in box 1, 3, 5 wages, and in box 12 code C
How to determine the cost of group term life insurance that is
taxable income? - correct answer- The value of coverage, less
than $50,000 excludable by law, is taxable. Use IRS table by
uniform premiums to determine value. Remember to use their
age as of December 31 of the year to determine age bracket.
Once you find the value from the table and multiply it by the
coverage, remember to deduct any after tax contributions by
the employee
What is the vehicle cents per mile valuation method? - correct
answer- Multiply the IRS mileage rate of $.56 per mile by the
number of personal miles driven. If the employee buys the fuel,
the mileage rate is reduced by .55 cents per mile, so the
effective rate is $.505 per mile
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What is the fair market value limitation on the annual lease
valuation method? - correct answer- Vehicles valued at greater
than $59,999 have an annual lease value of 25% of fair market
value, plus $500
What is the annual lease valuation method? - correct answer-
Personal use is found by multiplying the annual lease value of
the vehicle by the percentage of total personal miles driven.
The fair market value is determined the first day the car is
available to the employee. Then, use the fair market value
using the IRS's ALV table. Then multiply the percent of personal
miles driven by the ALV to find the fair market value of personal
used to be included in income
What is the amount that an employer must include as taxable
income? - correct answer- Fair market value minus (the amount
the employee paid for the benefit after taxes, plus any amount
excludable by law)
When must employees report their tips to the employer by? -
correct answer- The 10th of the next month if they receive at
least $20 in tips
What is FSA experienced gain - correct answer- The amount of
the employer contribution plus any employee salary reduction
PAYROLL FUNDAMENTALS CERTIFICATION
EXAM 2025 UPDATED ACTUAL EXAM WITH
CORRECT SOLUTIONS.
What's the withholding limit on federal agency garnishments? -
correct answer- The lesser of 15% of disposable earnings OR
the amount by which weekly disposable earnings exceed 30x
federal minimum wage (unless employee consents to a higher
% in writing)
When a bankruptcy is received, what should ER stop
withholding? - correct answer- All garnishments except child
support orders. This is because the trustee will pay out the
debts
What is the withholding limit for creditor garnishment? - correct
answer- The lesser of 25% of disposable earnings OR the
amount by which weekly disposable earnings exceed 30x
federal minimum wage (unless employee consents to a higher
% in writing)
What's the withholding limit for federal student loan
garnishments? - correct answer- The lesser of 15% of
disposable earnings OR the amount by which weekly
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disposable earnings exceed 30x federal minimum wage (unless
employee consents to a higher % in writing)
What is form 4070? - correct answer- Employees report of tips
to employer
How is group term life reported on a W-2 - correct answer-
Included in box 1, 3, 5 wages, and in box 12 code C
How to determine the cost of group term life insurance that is
taxable income? - correct answer- The value of coverage, less
than $50,000 excludable by law, is taxable. Use IRS table by
uniform premiums to determine value. Remember to use their
age as of December 31 of the year to determine age bracket.
Once you find the value from the table and multiply it by the
coverage, remember to deduct any after tax contributions by
the employee
What is the vehicle cents per mile valuation method? - correct
answer- Multiply the IRS mileage rate of $.56 per mile by the
number of personal miles driven. If the employee buys the fuel,
the mileage rate is reduced by .55 cents per mile, so the
effective rate is $.505 per mile
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What is the fair market value limitation on the annual lease
valuation method? - correct answer- Vehicles valued at greater
than $59,999 have an annual lease value of 25% of fair market
value, plus $500
What is the annual lease valuation method? - correct answer-
Personal use is found by multiplying the annual lease value of
the vehicle by the percentage of total personal miles driven.
The fair market value is determined the first day the car is
available to the employee. Then, use the fair market value
using the IRS's ALV table. Then multiply the percent of personal
miles driven by the ALV to find the fair market value of personal
used to be included in income
What is the amount that an employer must include as taxable
income? - correct answer- Fair market value minus (the amount
the employee paid for the benefit after taxes, plus any amount
excludable by law)
When must employees report their tips to the employer by? -
correct answer- The 10th of the next month if they receive at
least $20 in tips
What is FSA experienced gain - correct answer- The amount of
the employer contribution plus any employee salary reduction
