FPC ( FUNDAMENTAL PAYROLL
CERTIFICATION) EXAM 2026-2027 QUESTIONS
AND CORRECT ANSWERS GRADED A+
The federal minimum wage is established by the ______.
FLSA
What is the overtime rate formula?
Regular rate multiplied by 1.5 for hours over 40 in a workweek.
What is compensable time?
Time during which an employee is required to be on duty or permitted to work.
Name the two components of FICA taxes.
Social Security and Medicare.
FUTA stands for Federal ______ Tax Act.
Unemployment
,Who is responsible for withholding federal income tax?
The employer.
What form reports quarterly federal payroll taxes?
Form 941.
An employee earns wages exceeding the Social Security wage base. What
happens?
Social Security tax stops for the remainder of the year.
Define taxable wages.
Compensation subject to federal income tax and employment taxes.
True or False: Employers match Medicare tax withheld from employees.
True.
What form is used to determine federal income tax withholding?
Form W-4.
,Additional Medicare tax applies to wages above a certain ______.
threshold
What is the purpose of FUTA tax?
To fund unemployment compensation programs.
What is a pre-tax deduction?
An amount deducted before taxes are calculated, reducing taxable wages.
Contributions to a traditional 401(k) plan are generally ______ tax for federal
income tax.
pre-
An employee contributes to health insurance premiums before taxes. What effect
does this have?
It reduces taxable wages.
What is a cafeteria plan under Section 125?
A benefit plan allowing employees to choose between taxable and nontaxable
benefits.
, True or False: All fringe benefits are taxable.
False.
A graphic designer sets her own schedule and uses her own equipment. What is her
likely worker status?
Independent contractor, because she controls how and when the work is performed.
True or False: Misclassification of employees can result in penalties and back
taxes.
True.
What form is generally used to report payments to independent contractors?
Form 1099-NEC.
The IRS uses ______, financial, and relationship factors to determine worker
classification.
behavioral
Employees typically receive Form ______ for wage reporting.
W-2
CERTIFICATION) EXAM 2026-2027 QUESTIONS
AND CORRECT ANSWERS GRADED A+
The federal minimum wage is established by the ______.
FLSA
What is the overtime rate formula?
Regular rate multiplied by 1.5 for hours over 40 in a workweek.
What is compensable time?
Time during which an employee is required to be on duty or permitted to work.
Name the two components of FICA taxes.
Social Security and Medicare.
FUTA stands for Federal ______ Tax Act.
Unemployment
,Who is responsible for withholding federal income tax?
The employer.
What form reports quarterly federal payroll taxes?
Form 941.
An employee earns wages exceeding the Social Security wage base. What
happens?
Social Security tax stops for the remainder of the year.
Define taxable wages.
Compensation subject to federal income tax and employment taxes.
True or False: Employers match Medicare tax withheld from employees.
True.
What form is used to determine federal income tax withholding?
Form W-4.
,Additional Medicare tax applies to wages above a certain ______.
threshold
What is the purpose of FUTA tax?
To fund unemployment compensation programs.
What is a pre-tax deduction?
An amount deducted before taxes are calculated, reducing taxable wages.
Contributions to a traditional 401(k) plan are generally ______ tax for federal
income tax.
pre-
An employee contributes to health insurance premiums before taxes. What effect
does this have?
It reduces taxable wages.
What is a cafeteria plan under Section 125?
A benefit plan allowing employees to choose between taxable and nontaxable
benefits.
, True or False: All fringe benefits are taxable.
False.
A graphic designer sets her own schedule and uses her own equipment. What is her
likely worker status?
Independent contractor, because she controls how and when the work is performed.
True or False: Misclassification of employees can result in penalties and back
taxes.
True.
What form is generally used to report payments to independent contractors?
Form 1099-NEC.
The IRS uses ______, financial, and relationship factors to determine worker
classification.
behavioral
Employees typically receive Form ______ for wage reporting.
W-2
