Fundamental Payroll Certification Fundamental Payroll Employment Taxes and Withholding 3 — Questions and Answers
Question 1: Under the lookback period rule, which period do employers examine to determine their deposit schedule for 2026?
- January 1 – December 31, 2025
- July 1, 2024 – June 30, 2025 (Correct answer)
- October 1, 2024 – September 30, 2025
- April 1, 2025 – March 31, 2026
Correct answer: July 1, 2024 – June 30, 2025
For 2026, the lookback period is July 1, 2024 through June 30, 2025; if total tax reported exceeded $50,000, the employer is a semi-weekly depositor.
Question 2: FUTA tax is deposited when the accumulated liability exceeds what threshold?
- $100
- $500 (Correct answer)
- $1,000
- $2,500
Correct answer: $500
FUTA tax must be deposited when the cumulative undeposited FUTA liability exceeds $500 at the end of any calendar quarter.
Question 3: Which of the following correctly describes the 'trust fund' portion of payroll taxes?
- The employer's matching FICA contributions only
- Employee-withheld federal income tax and employee FICA taxes (Correct answer)
- FUTA taxes collected from employees
- State unemployment taxes remitted by the employer
Correct answer: Employee-withheld federal income tax and employee FICA taxes
Trust fund taxes are the amounts withheld from employee paychecks — federal income tax and the employee's share of FICA — which are held in trust for the government.
Question 4: A semi-weekly depositor pays wages on Wednesday. By when must the taxes be deposited?
- The following Monday
- The following Friday (Correct answer)
- The following Wednesday
- The next business day
Correct answer: The following Friday
Under the semi-weekly rule, taxes on wages paid Wednesday through Friday must be deposited by the following Friday.
Question 5: Which employee benefit is excluded from FICA taxation under IRC Section 132?
- Cash bonuses
- Group-term life insurance over $50,000
- Qualified employee discounts (Correct answer)
- Non-accountable plan reimbursements
Correct answer: Qualified employee discounts
Qualified employee discounts provided under IRC Section 132(c) are excluded from FICA wages.
Question 6: The Social Security wage base for 2024 is $168,600. An employee earns $180,000. How much of their wages are subject to Social Security tax?
- $180,000
- $168,600 (Correct answer)
- $11,400
- $0 — wages exceed the limit entirely
Correct answer: $168,600
Only wages up to the annual Social Security wage base ($168,600 for 2024) are subject to the 6.2% Social Security tax.
Question 7: What IRS form must an employer file annually to reconcile wages, tips, and tax withholdings reported on Form 941?
- Form W-3 (Correct answer)
- Form W-2
- Form 945
- Form 940
Correct answer: Form W-3
Form W-3, the Transmittal of Wage and Tax Statements, is filed with the SSA to reconcile the totals from all W-2 forms issued.
Fundamental Payroll Certification Fundamental Payroll Employment Taxes and Withholding 3
Under the lookback period rule, which period do employers examine to determine their deposit schedule for 2026?