Fundamental Payroll Certification Fundamental Payroll Paycheck Calculation Methods 5

Question 1

A creditor garnishment order requires withholding 25% of an employee's disposable earnings of $700 per week. Federal law limits the garnishment to 25% of disposable earnings OR the amount by which disposable earnings exceed 30× the federal minimum wage ($7.25), whichever is LESS. What is the maximum garnishment?

Accepted Answer

$175.00

Answer

25% of $700 = $175; disposable earnings exceeding 30 × $7.25 ($217.50) = $700 − $217.50 = $482.50; the lesser amount is $175, so the maximum garnishment is $175.

Question 2

A child support withholding order requires 60% of an employee's disposable earnings. The employee supports no other family. Under the CCPA, the maximum percentage allowed for child support withholding is:

Accepted Answer

60%

Answer

For child support and alimony, the CCPA allows up to 60% of disposable earnings if the employee does not support another family, and up to 65% if more than 12 weeks in arrears.

Question 3

An employee has a voluntary Roth 401(k) contribution of $400 per pay period. How does this affect FICA and federal income tax withholding?

Accepted Answer

Does not reduce FICA or FIT taxable wages

Answer

Roth 401(k) contributions are made on an after-tax basis, so they do not reduce federal income taxable wages or FICA wages.

Question 4

After computing gross pay and subtracting all pre-tax deductions, which taxes are deducted in the correct order to arrive at net pay?

Accepted Answer

Employee FICA and FIT simultaneously → State/Local taxes → voluntary deductions → garnishments

Answer

By convention, mandatory taxes (FICA and FIT) are computed on gross taxable wages and withheld together, followed by state/local taxes, then post-tax voluntary deductions, and finally garnishments in priority order.

Question 5

An employee's paycheck shows gross pay of $4,000, pre-tax deductions of $300, employee FICA of $286.65, FIT withholding of $420, and post-tax deductions of $100. What is the net pay?

Accepted Answer

$2,893.35

Answer

$4,000 − $300 (pre-tax) − $286.65 (FICA) − $420 (FIT) − $100 (post-tax) = $2,893.35.

Fundamental Payroll Certification Practice Test

Fundamental Payroll Certification Practice Test

Fundamental Payroll Certification Fundamental Payroll Paycheck Calculation Methods 5