Fundamental Payroll Certification Fundamental Payroll Core Payroll Concepts 5 — Questions and Answers
Question 1: Employers must furnish W-2 forms to employees by what deadline each year?
- January 15
- January 31 (Correct answer)
- February 15
- March 1
Correct answer: January 31
Employers must provide W-2 forms to employees (and file copies with the SSA) by January 31 of the year following the calendar year covered.
Question 2: Which box on Form W-2 reports the total Social Security wages subject to the Social Security tax?
- Box 1
- Box 3 (Correct answer)
- Box 5
- Box 12
Correct answer: Box 3
Box 3 of Form W-2 shows Social Security wages, which may differ from Box 1 (federal wages) because certain pre-tax deductions reduce Box 1 but not Box 3.
Question 3: Form 941 (Employer's Quarterly Federal Tax Return) is generally due:
- On the last day of the quarter
- By the last day of the month following the end of the quarter (Correct answer)
- January 31 for the entire year
- Within 10 days of the quarter end
Correct answer: By the last day of the month following the end of the quarter
Form 941 is due by the last day of the month following the end of each quarter (April 30, July 31, October 31, January 31), with a 10-day extension if deposits are timely.
Question 4: Under IRS rules, how long must employers generally retain payroll records (including W-4 forms and wage records)?
- 1 year
- 2 years
- 3 years (Correct answer)
- 7 years
Correct answer: 3 years
The IRS requires employers to keep employment tax records for at least 4 years after the tax is due or paid (whichever is later), but the FLSA requires wage records for 3 years — commonly employers retain for 4+ years to satisfy all requirements.
Question 5: An employee who is a new hire must have their Form I-9 completed no later than:
- Before their first day of work
- By the end of their first day of work
- Within 3 business days of their first day of work (Correct answer)
- Within 30 days of hire
Correct answer: Within 3 business days of their first day of work
Section 1 of Form I-9 must be completed by the employee no later than the first day of employment, while the employer must complete Section 2 within 3 business days of the employee's first day.
Question 6: The Federal Unemployment Tax Act (FUTA) tax is paid by:
- Both the employer and employee equally
- The employee only through payroll deduction
- The employer only (Correct answer)
- The federal government as a subsidy
Correct answer: The employer only
FUTA tax is solely an employer expense; it is not deducted from employee wages, unlike FICA taxes which are shared.
Question 7: Which of the following best describes 'constructive receipt' in payroll?
- Wages are taxable only when physically deposited in the employee's bank account
- Wages are taxable when made available to the employee without restriction, even if not yet collected (Correct answer)
- Wages become taxable only when the employee cashes the paycheck
- Wages are not taxable until the next calendar year
Correct answer: Wages are taxable when made available to the employee without restriction, even if not yet collected
Under the constructive receipt doctrine, income is taxable in the year it is credited to the employee's account or otherwise made available without substantial limitation, even if not actually received.
Fundamental Payroll Certification Fundamental Payroll Core Payroll Concepts 5
Employers must furnish W-2 forms to employees by what deadline each year?