FPC-Remote Free Practice Test

- (Topic 1)
Payroll liability tax accounts should be reconciled at LEAST once a:

1. A. Week
2. B. Month
3. C. Quarter
4. D. Year

Correct Answer: B
Comprehensive and Detailed Explanation:Payroll liabilities (taxes, deductions, and withholdings) must be reconciledregularly to prevent errors and ensure compliance.
✑ Best practice is monthly reconciliation (Option B)to ensure:
✑ Option A (Weekly)is impractical unless payroll runs very frequently.
✑ Option C (Quarterly) and Option D (Yearly) are too infrequentand may result in tax errors or compliance issues.
Reference:
Payroll.org – Payroll Tax Liability Reconciliation Best Practices IRS – Payroll Tax Deposit and Reporting Compliance

- (Topic 2)
Using the table of taxable wages below, calculate the employer'sFICA tax liabilityon the first check of the year:

1. A. $2,387.00
2. B. $2,945.25
3. C. $5,890.50
4. D. $11,415.25

Correct Answer: B
✑ Total Taxable Wages:
✑ Social Security Tax (6.2%)
✑ Medicare Tax (1.45%)
✑ Total FICA Tax (Employer??s share) References:
✑ IRS Publication 15 (Employer??s Tax Guide)

- (Topic 2)
Which of the following criteria is NOT used to determine if the worker is a nonresident for

1. A. U.
2. B. income tax purposes?
3. C. Supplying a W-9 form
4. D. Substantial presence test
5. E. Lawful permanent resident test
6. F. Impact of tax treaty with another resident country

Correct Answer: A
✑ 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)

- (Topic 1)
Report backup withholding to the IRS using:

1. A. Form W-9
2. B. Form W-2
3. C. Form 945
4. D. Form 941

Correct Answer: C
Comprehensive and Detailed Explanation:
Form 945 is used by employers to report federal income tax withheld from non-payroll payments, including backup withholding on:
Payments to independent contractors (when no valid W-9 is provided) Certain gambling winnings
Dividend and interest payments subject to IRS backup withholding rules
Option A (Form W-9) is incorrect because Form W-9 is used by payees to provide taxpayer identification numbers (TINs), not for reporting withholding.
Option B (Form W-2) is incorrect because Form W-2 is used for employee wages and withholding, not backup withholding.
Option D (Form 941) is incorrect because Form 941 reports payroll tax withholdings, not backup withholding.
Reference:
IRS Form 945 Instructions – Annual Return of Withheld Federal Income Tax Payroll.org – Reporting Backup Withholding

- (Topic 2)
TheMAXIMUMamount a52-year-oldemployee can contribute to their401(k) planis:

1. A. $22,500.00
2. B. $23,000.00
3. C. $30,000.00
4. D. $30,500.00

Correct Answer: C
✑ In 2024, the 401(k) contribution limit for employees under 50 is $22,500.
✑ For employees age 50 or older, an additional "catch-up" contribution of $7,500 is allowed.
✑ Total maximum contribution = $22,500 + $7,500 = $30,000. References:
✑ IRS 401(k) Contribution Limits for 2024