Fundamental Payroll Certification Fundamental Payroll Certification 4

Question 1

Imputed income from employer-paid group term life insurance is taxable when coverage exceeds:

Accepted Answer

$50,000

Answer

Under IRC Section 79, employer-paid group term life insurance coverage above $50,000 creates imputed income subject to FICA and federal income tax.

Question 2

An employee's pay is levied by the IRS. Compared to a commercial creditor garnishment, the exempt amount for an IRS levy is determined by:

Accepted Answer

Publication 1494 (exempt amount tables based on filing status and dependents)

Answer

IRS levies use Publication 1494 tables to calculate the exempt amount, which depends on the employee's filing status and number of dependents.

Question 3

The Medicare surtax (Additional Medicare Tax) of 0.9% applies to wages exceeding what threshold for a single filer?

Accepted Answer

$200,000

Answer

Employers must withhold the additional 0.9% Medicare tax once an employee's wages exceed $200,000 in a calendar year, regardless of filing status.

Question 4

What is the primary purpose of a Section 125 Cafeteria Plan?

Accepted Answer

To allow employees to choose pre-tax benefits, reducing federal income and FICA taxes

Answer

A Section 125 Cafeteria Plan allows employees to pay for qualified benefits like health insurance and FSAs with pre-tax dollars, lowering taxable wages.

Question 5

Under FLSA, which of the following employees is most likely EXEMPT from overtime pay requirements?

Accepted Answer

A bona fide executive earning a $700 weekly salary who manages 5 employees

Answer

The FLSA white-collar exemption applies to bona fide executives who meet the salary threshold and primarily manage the enterprise or a department.

Fundamental Payroll Certification Practice Test

Fundamental Payroll Certification Practice Test

Fundamental Payroll Certification Fundamental Payroll Certification 4