FPC Practice questions and answers
updated 2026
cafeteriaMplanMareMauthorizedMbyMwhatMInternalMRevenueMCodeMSection?
A.M125
B.M401k
C.M403b
D.M457bM-MAnswerMa.M125
allMofMtheMfollowingMareMtaxMimplicationsMofMaMcafeteriaMplanMexcept:
a.MnoMincomeMtaxMwithholding
b.MnoMsocialMsecurityMandMmedicareMtaxMwithholding
c.MmustMwithholdMincome,MsocialMsecurity,MandMmedicareMtaxes
d.MnoMformMW2MreportingM-
MAnswerMC.MmustMwithholdMincome,MsocialMsecurity,MandMmedicareMtaxes
OneMofMtheMoptionsMinManMemployee'sMcafeteriaMbenefitMplanMisMaMdependentMcareM
flexibleMspendingMaccount.MHeMearmarkedM$100MperMmonthMtoMtheMaccountMtoMpayMf
orMchildMcareMbutMspendMonlyM$1000MbyMtheMendMofMtheMplansMgraceMperiod.MatMt
heMendMofMtheMgraceMperiod,MwhatMhappensMtoMtheM$200MleftMinMtheMaccount?
a.MtheMamountMisMforfeited
b.MitMwillMbeMaddedMtoMhisMtaxableMincome
c.MheMcanMuseMitMtoM"buy"MabMadditionalMbenefit
d.MitMillMcarryMoverMtoMtheMnextMyearM-MAnswerMA.MtheMamountMisMforfeited
PriorMtoMbeginningMworkMforMaMcompany,MaMchemicalMengineerMsignedMaMcontractMst
atingMthatMsheMagreedMtoMworkMasManMindependentMcontractor.MsheMperformsMallMhe
rMdutiesMinMtheMcompanysMlaboratories,MworksMunderMtheMcompanysMdirection,MandM
maintainsMregularMofficeMhours.MwhatMisMherMstatus?
a.MindependentMcontractorMunderMcommonMlaw
b.MindependentMcontractorMunderMreasonableMbasisMtest
c.MemployeeM-MAnswerMC.Memployee
,doMnotMassumeMthatMtheMemployerMhasMfulfilledMitsMresponsibilitiesMandMisMfreeMfrom
MpenaltyMsimplyMbyMhavingMaMworkerMsignMaMcontractMstatingMheMisMaM1099.Mindivid
ualsMdoMnotMhaveMaMrightMtoMwaiveMtheirMeeMstatusMinMaMcontract.
AMretiredMsafetyMinspectorMforMtheMcompanyMwasMrehiredMasMaMconsultantMwhenMthe
McompanyMexpandedMitsMplantMoperations.MtheMretiredMemployeeMwasMaMnaturalMchoic
e.MtheMtasksMheMundertookMasMaMconsultantMwereMtheMsameMasMtheMonesMheMperfo
rmedMbeforeMretirement.MpaidMmonthly,MheMhasMagreedMtoMworkMunderMtheMdirection
MofMhisMoldMbossMuntilMtheMnewMplantMfacilitatesMareMfullyMoperational?MWhatMisMhi
sMstatus?
a.MindependentMcontractorMunderMcommonMlaw
b.MindependentMcontractorMunderMreasonableMbasisMtest
c.MemployeeM-MAnswerMC.Memployee
consultantsMareMgenerallyMtreatedMasMindependentMcontractors.Mhowever,MwhenManMex
MeeMisMperformingMtheMsameMorMsimilarMjobMasMbeforeMretirement,MitMisMunlikelyMth
atMheMqualifiedMasMaM1099MafterMtermination
aMreceptionistMhasMagreedMtoMworkMafternoonsMatMtheMcompanyMuntilMtheMcompanyM
canMfindMaMfullMtimeMreplacement.MwhatMisMtheMreceptionistsMstatus?
a.MindependentMcontractorMunderMcommonMlawM
b.MindependentMcontractorMunderMreasonableMbasis
c.MemployeeM-MAnswerMC.Memployee
whetherMorMnotManMeeMisMfullMtimeMorMpartMtimeMorMworksMaMfewMweeksMorMaMli
fetimeMforMtheMcompanyMisMnotMrelevantMher.MsheMisManMemployee.
AllMofMtheMfollowingMtypesMofMemployeesMareMclassifiedMasMexemptMfromMtheMFLSAs
MminMwageMandMOTMrequirementsMexcept:
a.Mprofessional
b.MoutsideMsalesperson
c.Madministrative
d.McomputerMrepairmanM-MAnswerMD.McomputerMrepairman
aMcomputerMrepairmanMdoesMnotMperformMtheMdutiesMrequiredMtoMqualifyMasManMexe
mptMcomputerMprofessional
,aMwaitressMisMpaidM$2.25MperMhourMandMsheMreceivesM$225MinMtipsMduringMtheMwee
k.MSheMworksM4oMhoursMperMweek.MWhichMofMtheMfollowingMisMtrue?
a.MherMemployerMisMallowedMtoMreduceMherMcashMwageMtoMnoMlessMthanM$2.13Mper
Mhour
b.MherMbaseMpayMmustMbeMincreaseMtoM$4.5MperMhourMafterMaM90MdayMtrainingMper
iod.
c.MsheMmustMbeMpaidM$5.12MperMhourMbyMherMemployer
d.MherMbaseMsalaryMmustMbeMraisedMtoM$3MperMhourMtoMcomplyMwithMfedMminMwag
eMrequirements.M-
MAnswerMA.MherMemployerMisMallowedMtoMreduceMherMcashMwageMtoMnoMlessMthanM
$2.13MperMhour
herMemployerMcanMclaimMtheMfullMfederalMtipMcreditMbecauseMsheMreceivesMtipsMandM
withMherMtips,MisMpaidMmoreMthanMtheMcurrentMfederalMminimumMwageMpurposes,Mhe
rMemployerMmustMpayMherMatMleastM$2.13MperMhourMandMherMhourlyMrateMplusMtips
MmustMequalMatMleastMtheMcurrentMfederalMminMwage
ifMaMstateMsetsMtheMminimumMwageMatMaMrateMgreaterMthanMtheMfederalMminimumM
wage,MtheMstateMminimumMwageMmustMbeMpaidMtoMworkersMinMthatMstate
-Mtrue
-falseM-MAnswerMTRUE
tipsMcanMbeMcountedMtowardMtheMemployeesMminimumMwageM-MAnswerMTRUE
anMemployeeMworksM40MhoursMperMweekMasMaMfryMcook.MduringMtheMweek,MsheMsu
bstitutesMforMoneMofMtheMwaitressesMandMreportsM$5MperMweekMinMtips.McanMherMe
mployerMpayMherM$2.13MperMhour?
-MyesM
-MnoM-MAnswerMnoM
becauseMsheMisntMmakingM$30MaMmonth.MtheMtipMcreditMcanMbeMusedMtoMreduceMth
eMminimumMwageMonlyMifMtheMemployeeMregularlyMreceivesMtipsMandMdocumentsMrecei
vingMmoreMthanM$30/month
, employersMwhoMprovideMpaidMvacationMleaveMmustMcountMtheMhoursMofMpaidMtimeMof
fMwhenMdeterminingMifMtheMemployeeMmustMreceiveManMovertimeMpremiumMwhenMthe
MtotalMhoursMworkedMinMaMweekMexceedM40.
true
falseM-MAnswerMfalse
onlyMhoursMworkedMcountMtowardMdeterminingMwhetherMovertimeMpremiumsMmustMbe
MpaidMunderMtheMFLSA
theMFLSAMrequiresMimmediateMpaymentMofManMemployeesMfinalMpaycheckMuponMtermin
ation
true
falseM-MAnswerMFALSE
however,MmostMstatesMimposeMtimeMlimitsMgoverningMwhenManMemployeesMfinalMpaych
eckMmustMbeMpaidMtoMtheMemployee
anMemployee'sMparkingMgarageMisM2MblocksMawayMfromMhisMdowntownMoffice.MitMcost
sM$275/monthMtoMrentMaMstallMthere,MbutMtheMemployeeMdoesn'tMmindMbecauseMitsM
convenientMandMhisMemployerMreimbursesMhimM100%MofMtheMcost.MHowMmuchMofMhis
MmonthlyMparkingMisMtaxable?M-MAnswerM$15.
remember:Memployer-providedMparkingMisMnontaxableMupMtoM$260/month
aMretailMsalesMclerkMtookMadvantageMofMtheMcompany'sMemployeeMdiscountMprogramMt
oMpurchaseMclothesMatM10%MoffMtheMnormalMretailMprice.MthisMserviceMrepresents:
a.MtaxableMcompensation
b.MaMqualifiedMemployeeMdiscount
c.MaMworkingMconditionMfringe
d.MaMno-additionalMcostMserviceM-MAnswerMb.MaMqualifiedMemployeeMdiscount
LastMmonth,ManMemployeeMemailedMherMmotherMonMtheMcompany'sMemail,Mphotocopie
dMfliersMforMherMchurchMpicnicMatMworkMandMusedMherMworkMcomputerMtoMupdateM
herMresume.MTheseMservicesMrepresent:
a.MtaxableMcompensation
updated 2026
cafeteriaMplanMareMauthorizedMbyMwhatMInternalMRevenueMCodeMSection?
A.M125
B.M401k
C.M403b
D.M457bM-MAnswerMa.M125
allMofMtheMfollowingMareMtaxMimplicationsMofMaMcafeteriaMplanMexcept:
a.MnoMincomeMtaxMwithholding
b.MnoMsocialMsecurityMandMmedicareMtaxMwithholding
c.MmustMwithholdMincome,MsocialMsecurity,MandMmedicareMtaxes
d.MnoMformMW2MreportingM-
MAnswerMC.MmustMwithholdMincome,MsocialMsecurity,MandMmedicareMtaxes
OneMofMtheMoptionsMinManMemployee'sMcafeteriaMbenefitMplanMisMaMdependentMcareM
flexibleMspendingMaccount.MHeMearmarkedM$100MperMmonthMtoMtheMaccountMtoMpayMf
orMchildMcareMbutMspendMonlyM$1000MbyMtheMendMofMtheMplansMgraceMperiod.MatMt
heMendMofMtheMgraceMperiod,MwhatMhappensMtoMtheM$200MleftMinMtheMaccount?
a.MtheMamountMisMforfeited
b.MitMwillMbeMaddedMtoMhisMtaxableMincome
c.MheMcanMuseMitMtoM"buy"MabMadditionalMbenefit
d.MitMillMcarryMoverMtoMtheMnextMyearM-MAnswerMA.MtheMamountMisMforfeited
PriorMtoMbeginningMworkMforMaMcompany,MaMchemicalMengineerMsignedMaMcontractMst
atingMthatMsheMagreedMtoMworkMasManMindependentMcontractor.MsheMperformsMallMhe
rMdutiesMinMtheMcompanysMlaboratories,MworksMunderMtheMcompanysMdirection,MandM
maintainsMregularMofficeMhours.MwhatMisMherMstatus?
a.MindependentMcontractorMunderMcommonMlaw
b.MindependentMcontractorMunderMreasonableMbasisMtest
c.MemployeeM-MAnswerMC.Memployee
,doMnotMassumeMthatMtheMemployerMhasMfulfilledMitsMresponsibilitiesMandMisMfreeMfrom
MpenaltyMsimplyMbyMhavingMaMworkerMsignMaMcontractMstatingMheMisMaM1099.Mindivid
ualsMdoMnotMhaveMaMrightMtoMwaiveMtheirMeeMstatusMinMaMcontract.
AMretiredMsafetyMinspectorMforMtheMcompanyMwasMrehiredMasMaMconsultantMwhenMthe
McompanyMexpandedMitsMplantMoperations.MtheMretiredMemployeeMwasMaMnaturalMchoic
e.MtheMtasksMheMundertookMasMaMconsultantMwereMtheMsameMasMtheMonesMheMperfo
rmedMbeforeMretirement.MpaidMmonthly,MheMhasMagreedMtoMworkMunderMtheMdirection
MofMhisMoldMbossMuntilMtheMnewMplantMfacilitatesMareMfullyMoperational?MWhatMisMhi
sMstatus?
a.MindependentMcontractorMunderMcommonMlaw
b.MindependentMcontractorMunderMreasonableMbasisMtest
c.MemployeeM-MAnswerMC.Memployee
consultantsMareMgenerallyMtreatedMasMindependentMcontractors.Mhowever,MwhenManMex
MeeMisMperformingMtheMsameMorMsimilarMjobMasMbeforeMretirement,MitMisMunlikelyMth
atMheMqualifiedMasMaM1099MafterMtermination
aMreceptionistMhasMagreedMtoMworkMafternoonsMatMtheMcompanyMuntilMtheMcompanyM
canMfindMaMfullMtimeMreplacement.MwhatMisMtheMreceptionistsMstatus?
a.MindependentMcontractorMunderMcommonMlawM
b.MindependentMcontractorMunderMreasonableMbasis
c.MemployeeM-MAnswerMC.Memployee
whetherMorMnotManMeeMisMfullMtimeMorMpartMtimeMorMworksMaMfewMweeksMorMaMli
fetimeMforMtheMcompanyMisMnotMrelevantMher.MsheMisManMemployee.
AllMofMtheMfollowingMtypesMofMemployeesMareMclassifiedMasMexemptMfromMtheMFLSAs
MminMwageMandMOTMrequirementsMexcept:
a.Mprofessional
b.MoutsideMsalesperson
c.Madministrative
d.McomputerMrepairmanM-MAnswerMD.McomputerMrepairman
aMcomputerMrepairmanMdoesMnotMperformMtheMdutiesMrequiredMtoMqualifyMasManMexe
mptMcomputerMprofessional
,aMwaitressMisMpaidM$2.25MperMhourMandMsheMreceivesM$225MinMtipsMduringMtheMwee
k.MSheMworksM4oMhoursMperMweek.MWhichMofMtheMfollowingMisMtrue?
a.MherMemployerMisMallowedMtoMreduceMherMcashMwageMtoMnoMlessMthanM$2.13Mper
Mhour
b.MherMbaseMpayMmustMbeMincreaseMtoM$4.5MperMhourMafterMaM90MdayMtrainingMper
iod.
c.MsheMmustMbeMpaidM$5.12MperMhourMbyMherMemployer
d.MherMbaseMsalaryMmustMbeMraisedMtoM$3MperMhourMtoMcomplyMwithMfedMminMwag
eMrequirements.M-
MAnswerMA.MherMemployerMisMallowedMtoMreduceMherMcashMwageMtoMnoMlessMthanM
$2.13MperMhour
herMemployerMcanMclaimMtheMfullMfederalMtipMcreditMbecauseMsheMreceivesMtipsMandM
withMherMtips,MisMpaidMmoreMthanMtheMcurrentMfederalMminimumMwageMpurposes,Mhe
rMemployerMmustMpayMherMatMleastM$2.13MperMhourMandMherMhourlyMrateMplusMtips
MmustMequalMatMleastMtheMcurrentMfederalMminMwage
ifMaMstateMsetsMtheMminimumMwageMatMaMrateMgreaterMthanMtheMfederalMminimumM
wage,MtheMstateMminimumMwageMmustMbeMpaidMtoMworkersMinMthatMstate
-Mtrue
-falseM-MAnswerMTRUE
tipsMcanMbeMcountedMtowardMtheMemployeesMminimumMwageM-MAnswerMTRUE
anMemployeeMworksM40MhoursMperMweekMasMaMfryMcook.MduringMtheMweek,MsheMsu
bstitutesMforMoneMofMtheMwaitressesMandMreportsM$5MperMweekMinMtips.McanMherMe
mployerMpayMherM$2.13MperMhour?
-MyesM
-MnoM-MAnswerMnoM
becauseMsheMisntMmakingM$30MaMmonth.MtheMtipMcreditMcanMbeMusedMtoMreduceMth
eMminimumMwageMonlyMifMtheMemployeeMregularlyMreceivesMtipsMandMdocumentsMrecei
vingMmoreMthanM$30/month
, employersMwhoMprovideMpaidMvacationMleaveMmustMcountMtheMhoursMofMpaidMtimeMof
fMwhenMdeterminingMifMtheMemployeeMmustMreceiveManMovertimeMpremiumMwhenMthe
MtotalMhoursMworkedMinMaMweekMexceedM40.
true
falseM-MAnswerMfalse
onlyMhoursMworkedMcountMtowardMdeterminingMwhetherMovertimeMpremiumsMmustMbe
MpaidMunderMtheMFLSA
theMFLSAMrequiresMimmediateMpaymentMofManMemployeesMfinalMpaycheckMuponMtermin
ation
true
falseM-MAnswerMFALSE
however,MmostMstatesMimposeMtimeMlimitsMgoverningMwhenManMemployeesMfinalMpaych
eckMmustMbeMpaidMtoMtheMemployee
anMemployee'sMparkingMgarageMisM2MblocksMawayMfromMhisMdowntownMoffice.MitMcost
sM$275/monthMtoMrentMaMstallMthere,MbutMtheMemployeeMdoesn'tMmindMbecauseMitsM
convenientMandMhisMemployerMreimbursesMhimM100%MofMtheMcost.MHowMmuchMofMhis
MmonthlyMparkingMisMtaxable?M-MAnswerM$15.
remember:Memployer-providedMparkingMisMnontaxableMupMtoM$260/month
aMretailMsalesMclerkMtookMadvantageMofMtheMcompany'sMemployeeMdiscountMprogramMt
oMpurchaseMclothesMatM10%MoffMtheMnormalMretailMprice.MthisMserviceMrepresents:
a.MtaxableMcompensation
b.MaMqualifiedMemployeeMdiscount
c.MaMworkingMconditionMfringe
d.MaMno-additionalMcostMserviceM-MAnswerMb.MaMqualifiedMemployeeMdiscount
LastMmonth,ManMemployeeMemailedMherMmotherMonMtheMcompany'sMemail,Mphotocopie
dMfliersMforMherMchurchMpicnicMatMworkMandMusedMherMworkMcomputerMtoMupdateM
herMresume.MTheseMservicesMrepresent:
a.MtaxableMcompensation
