FPC-Remote Free Practice Test

- (Topic 2)
Which of the following taxes are NOT withheld from allocated tips?

1. A. Medicare and FIT only
2. B. FIT and Social Security only
3. C. Social Security and Medicare only
4. D. FIT, Social Security, and Medicare only

Correct Answer: D
✑ Allocated tips are NOT subject to withholding unless reported by the employee.
✑ If not reported, FIT, Social Security, and Medicare (D) are not withheld but are still taxable.
References:
✑ IRS Publication 531 (Reporting Tip Income)

- (Topic 1)
Which of the following wage attachments has the highest priority for withholding?

1. A. Bankruptcy
2. B. Child Support
3. C. State Tax Levy
4. D. Wage Assignment

Correct Answer: A
Comprehensive and Detailed Explanation:Thepriority orderfor wage attachments is as follows:
✑ Bankruptcy orders (Option A)– Court-ordered payments under the U.S.Bankruptcy
Codetaketop priorityover all other wage deductions.
✑ Child support (Option B)– Thesecond-highest priorityunderfederal law, governed by theConsumer 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

- (Topic 1)
All of the following criteria are used to determine FMLA eligibility EXCEPT the number of:

1. A. Company Employees
2. B. Dependents in the Household
3. C. Hours Worked in the Previous 12 Months
4. D. Employees within 75 Miles of the Worksite

Correct Answer: B
Comprehensive and Detailed Explanation:To beeligible for leave under the Family and Medical Leave Act (FMLA), an employee must:
✑ Work for a covered employer (50+ employees) (Option A)
✑ Have worked at least 1,250 hours in the past 12 months (Option C)
✑ Work at a location with at least 50 employees within a 75-mile radius (Option D)
✑ Option B (Number of Dependents) is incorrectbecause FMLA eligibility is based onemployment factors, not personal circumstances.
Reference:
U.S. Department of Labor – Family and Medical Leave Act (FMLA) Eligibility Guidelines Payroll.org – FMLA Compliance Requirements

- (Topic 1)
All of the following plans are deferred compensation plans EXCEPT:

1. A. 401(k)
2. B. 403(b)
3. C. 457(b)
4. D. 501(c)

Correct Answer: D
Comprehensive and Detailed Explanation:Deferred compensation plansallow employees to deferincome taxationuntil retirement. These include:
✑ 401(k) (Option A)– A private-sector retirement savings plan.
✑ 403(b) (Option B)– A similar plan fornonprofits and schools.
✑ 457(b) (Option C)– Anonqualified deferred compensation planfor government employees.
✑ Option D (501(c)) is incorrectbecause it refers totax-exempt organizations under the IRS code, not a deferred compensation plan.
Reference:
IRS – Tax Treatment of Deferred Compensation Plans Payroll.org – Retirement Plan Payroll Compliance

- (Topic 2)
An employee has $240,000.00 in YTD taxable wages and receives a taxable fringe benefit of $2,500.00. Calculate the Medicare and FITW using the optional flat rate method for the taxable fringe benefit.

1. A. $586.25
2. B. $606.75
3. C. $661.25
4. D. $683.75

Correct Answer: B
✑ Step 1: Calculate Medicare Tax
✑ Step 2: Calculate FITW using the Optional Flat Rate (22%)
✑ Total tax liability = $550.00 + $58.75 = $606.75 References:
✑ IRS Publication 15-B (Fringe Benefits Taxation)