PAYROLL COMPLIANCE LEGISLATION FINAL
EXAM 2026 | VERIFIED QUESTIONS &
CORRECT ANSWERS WITH DETAILED
EXPLANATIONS | LATEST UPDATED STUDY
GUIDE
PAYROLL COMPLIANCE LEGISLATION FINAL EXAM 2026
VERIFIED QUESTIONS & CORRECT ANSWER WITH DETAILED EXPLANATIONS
LATEST UPDATED STUDY GUIDE | QUESTIONS
QUESTION 1: What federal law establishes the minimum wage, overtime pay,
recordkeeping, and child labor standards for employees in the private sector and
federal, state, and local governments?
A) The Federal Insurance Contributions Act (FICA)
B) The Employee Retirement Income Security Act (ERISA)
C) The Fair Labor Standards Act (FLSA)
D) The Federal Unemployment Tax Act (FUTA)
E) The Family and Medical Leave Act (FMLA)
CORRECT ANSWER: C) The Fair Labor Standards Act (FLSA)
RATIONALE: The FLSA, enacted in 1938, is the primary federal law governing
minimum wage, overtime, child labor, and recordkeeping requirements for most public
and private sector employees in the United States.
QUESTION 2: As of the most recent federal update, what is the federal minimum
wage per hour?
A) $8.25 per hour
B) $9.00 per hour
C) $10.00 per hour
D) $7.25 per hour
,E) $6.55 per hour
CORRECT ANSWER: D) $7.25 per hour
RATIONALE: The federal minimum wage has been $7.25 per hour since July 24,
2009. States and localities may set higher minimum wages, and employees are entitled
to the higher of the applicable federal or state minimum wage.
QUESTION 3: Under the FLSA, non-exempt employees must receive overtime pay
at what rate for hours worked over 40 in a workweek?
A) 1.25 times the regular rate of pay
B) 2 times the regular rate of pay
C) 1.5 times the regular rate of pay
D) Double time for all hours worked
E) 1.75 times the regular rate of pay
CORRECT ANSWER: C) 1.5 times the regular rate of pay
RATIONALE: The FLSA requires that covered non-exempt employees receive
overtime pay at a rate of not less than one and one-half times their regular rate of pay
for all hours worked over 40 in a workweek.
QUESTION 4: Which IRS form is used by an employer to report wages paid and
taxes withheld for each employee annually?
A) Form 941
B) Form 1099-NEC
C) Form W-4
D) Form W-2
E) Form 940
CORRECT ANSWER: D) Form W-2
RATIONALE: The W-2 (Wage and Tax Statement) is the IRS form employers must
provide to each employee and submit to the SSA annually, reporting wages paid and
taxes withheld including federal, state, and FICA taxes.
,QUESTION 5: What is the Social Security tax rate for employees under FICA?
A) 7.65%
B) 6.20%
C) 1.45%
D) 12.40%
E) 2.90%
CORRECT ANSWER: B) 6.20%
RATIONALE: Under FICA, the Social Security (OASDI) tax rate for employees is
6.20% on wages up to the annual wage base limit. The employer matches this at
6.20%, making the combined rate 12.40%.
QUESTION 6: What is the Medicare tax rate for employees under FICA?
A) 6.20%
B) 2.90%
C) 0.90%
D) 1.45%
E) 3.80%
CORRECT ANSWER: D) 1.45%
RATIONALE: The Medicare (HI) tax rate for employees is 1.45% on all covered
wages with no wage base limit. Employers also pay 1.45%, making the combined
employee/employer Medicare rate 2.90%.
QUESTION 7: The Additional Medicare Tax of 0.9% applies to individuals whose
wages exceed what threshold for single filers?
A) $125,000
B) $400,000
C) $250,000
, D) $200,000
E) $300,000
CORRECT ANSWER: D) $200,000
RATIONALE: Employers must withhold the Additional Medicare Tax of 0.9% on
wages paid to an employee in excess of $200,000 in a calendar year, regardless of the
employee's filing status.
QUESTION 8: Form 941 is filed by employers to report which of the following?
A) Annual federal unemployment tax
B) Annual wages and salaries paid to employees
C) Quarterly federal income tax withheld, Social Security and Medicare taxes
D) Independent contractor payments over $600
E) Employee benefit plan contributions
CORRECT ANSWER: C) Quarterly federal income tax withheld, Social Security
and Medicare taxes
RATIONALE: Form 941 (Employer's Quarterly Federal Tax Return) is used to
report income taxes withheld from employee wages, and both employee and employer
Social Security and Medicare taxes each quarter.
QUESTION 9: What form must employees complete to determine the amount of
federal income tax withheld from their paychecks?
A) Form W-2
B) Form I-9
C) Form SS-4
D) Form W-4
E) Form 1040
CORRECT ANSWER: D) Form W-4
EXAM 2026 | VERIFIED QUESTIONS &
CORRECT ANSWERS WITH DETAILED
EXPLANATIONS | LATEST UPDATED STUDY
GUIDE
PAYROLL COMPLIANCE LEGISLATION FINAL EXAM 2026
VERIFIED QUESTIONS & CORRECT ANSWER WITH DETAILED EXPLANATIONS
LATEST UPDATED STUDY GUIDE | QUESTIONS
QUESTION 1: What federal law establishes the minimum wage, overtime pay,
recordkeeping, and child labor standards for employees in the private sector and
federal, state, and local governments?
A) The Federal Insurance Contributions Act (FICA)
B) The Employee Retirement Income Security Act (ERISA)
C) The Fair Labor Standards Act (FLSA)
D) The Federal Unemployment Tax Act (FUTA)
E) The Family and Medical Leave Act (FMLA)
CORRECT ANSWER: C) The Fair Labor Standards Act (FLSA)
RATIONALE: The FLSA, enacted in 1938, is the primary federal law governing
minimum wage, overtime, child labor, and recordkeeping requirements for most public
and private sector employees in the United States.
QUESTION 2: As of the most recent federal update, what is the federal minimum
wage per hour?
A) $8.25 per hour
B) $9.00 per hour
C) $10.00 per hour
D) $7.25 per hour
,E) $6.55 per hour
CORRECT ANSWER: D) $7.25 per hour
RATIONALE: The federal minimum wage has been $7.25 per hour since July 24,
2009. States and localities may set higher minimum wages, and employees are entitled
to the higher of the applicable federal or state minimum wage.
QUESTION 3: Under the FLSA, non-exempt employees must receive overtime pay
at what rate for hours worked over 40 in a workweek?
A) 1.25 times the regular rate of pay
B) 2 times the regular rate of pay
C) 1.5 times the regular rate of pay
D) Double time for all hours worked
E) 1.75 times the regular rate of pay
CORRECT ANSWER: C) 1.5 times the regular rate of pay
RATIONALE: The FLSA requires that covered non-exempt employees receive
overtime pay at a rate of not less than one and one-half times their regular rate of pay
for all hours worked over 40 in a workweek.
QUESTION 4: Which IRS form is used by an employer to report wages paid and
taxes withheld for each employee annually?
A) Form 941
B) Form 1099-NEC
C) Form W-4
D) Form W-2
E) Form 940
CORRECT ANSWER: D) Form W-2
RATIONALE: The W-2 (Wage and Tax Statement) is the IRS form employers must
provide to each employee and submit to the SSA annually, reporting wages paid and
taxes withheld including federal, state, and FICA taxes.
,QUESTION 5: What is the Social Security tax rate for employees under FICA?
A) 7.65%
B) 6.20%
C) 1.45%
D) 12.40%
E) 2.90%
CORRECT ANSWER: B) 6.20%
RATIONALE: Under FICA, the Social Security (OASDI) tax rate for employees is
6.20% on wages up to the annual wage base limit. The employer matches this at
6.20%, making the combined rate 12.40%.
QUESTION 6: What is the Medicare tax rate for employees under FICA?
A) 6.20%
B) 2.90%
C) 0.90%
D) 1.45%
E) 3.80%
CORRECT ANSWER: D) 1.45%
RATIONALE: The Medicare (HI) tax rate for employees is 1.45% on all covered
wages with no wage base limit. Employers also pay 1.45%, making the combined
employee/employer Medicare rate 2.90%.
QUESTION 7: The Additional Medicare Tax of 0.9% applies to individuals whose
wages exceed what threshold for single filers?
A) $125,000
B) $400,000
C) $250,000
, D) $200,000
E) $300,000
CORRECT ANSWER: D) $200,000
RATIONALE: Employers must withhold the Additional Medicare Tax of 0.9% on
wages paid to an employee in excess of $200,000 in a calendar year, regardless of the
employee's filing status.
QUESTION 8: Form 941 is filed by employers to report which of the following?
A) Annual federal unemployment tax
B) Annual wages and salaries paid to employees
C) Quarterly federal income tax withheld, Social Security and Medicare taxes
D) Independent contractor payments over $600
E) Employee benefit plan contributions
CORRECT ANSWER: C) Quarterly federal income tax withheld, Social Security
and Medicare taxes
RATIONALE: Form 941 (Employer's Quarterly Federal Tax Return) is used to
report income taxes withheld from employee wages, and both employee and employer
Social Security and Medicare taxes each quarter.
QUESTION 9: What form must employees complete to determine the amount of
federal income tax withheld from their paychecks?
A) Form W-2
B) Form I-9
C) Form SS-4
D) Form W-4
E) Form 1040
CORRECT ANSWER: D) Form W-4
