Fundamental Payroll Certification Trivia 5 — Questions and Answers
Question 1: Which IRS notice informs an employer of a specific withholding amount to apply for a particular employee due to a tax debt?
- CP2000
- Lock-in letter (Letter 2800C) (Correct answer)
- Notice 972CG
- Letter 226J
Correct answer: Lock-in letter (Letter 2800C)
IRS Lock-in letters (Letter 2800C) instruct employers to withhold at a specific rate for an employee who has underwithheld taxes, overriding the employee's W-4.
Question 2: What is the maximum percentage of disposable earnings that can be garnished for ordinary debt under the Consumer Credit Protection Act (CCPA)?
- 10%
- 15%
- 25% (Correct answer)
- 50%
Correct answer: 25%
The CCPA limits ordinary debt garnishments to the lesser of 25% of disposable earnings or the amount by which disposable earnings exceed 30 times the federal minimum wage.
Question 3: Which tax applies an additional 0.9% Medicare surtax on high earners?
- Net Investment Income Tax
- Additional Medicare Tax (Correct answer)
- Self-Employment Contributions Act tax
- Alternative Minimum Tax
Correct answer: Additional Medicare Tax
The Additional Medicare Tax of 0.9% applies to wages over $200,000 (single) or $250,000 (married filing jointly) and must be withheld by employers once wages exceed $200,000.
Question 4: Which organization offers the Fundamental Payroll Certification (FPC) designation?
- American Payroll Association (APA) (Correct answer)
- Society for Human Resource Management (SHRM)
- IRS Taxpayer Advocate Service
- National Payroll Reporting Consortium
Correct answer: American Payroll Association (APA)
The American Payroll Association (APA) administers both the FPC and the Certified Payroll Professional (CPP) credentials.
Question 5: Which payroll register column shows the running total of wages paid to an employee since January 1?
- Current period gross
- Net pay column
- Year-to-date (YTD) gross (Correct answer)
- Taxable wages column
Correct answer: Year-to-date (YTD) gross
The year-to-date (YTD) gross column accumulates all gross wages from the beginning of the calendar year, which is essential for tracking wage base limits.
Question 6: When a nonresident alien employee has a valid W-4, which special step must payroll add before using the wage bracket or percentage method tables?
- Subtract one withholding allowance
- Add an extra amount to wages per IRS instructions (Correct answer)
- Divide wages in half
- Apply a flat 30% withholding rate
Correct answer: Add an extra amount to wages per IRS instructions
Per IRS Publication 15 (Circular E), an additional amount is added to the nonresident alien employee's wages before calculating withholding using standard tables.
Question 7: What is the purpose of Form 945 in payroll?
- Reporting quarterly FICA taxes
- Reporting annual withheld federal income tax from non-payroll payments (Correct answer)
- Reconciling W-2s to Form 941
- Filing state unemployment taxes
Correct answer: Reporting annual withheld federal income tax from non-payroll payments
Form 945 is the Annual Return of Withheld Federal Income Tax and is used to report backup withholding and withholding on pension and annuity payments.
Fundamental Payroll Certification Trivia 5
Which IRS notice informs an employer of a specific withholding amount to apply for a particular employee due to a tax debt?