FPC Practice questions & Answers
cafeteria plan are authorized by what Internal Revenue Code Section?
A. 125
B. 401k
C. 403b
D. 457b
a. 125
all of the following are tax implications of a cafeteria plan except:
a. no income tax withholding
b. no social security and medicare tax withho...
FPC Practice questions & Answers
cafeteria plan are authorized by what Internal Revenue Code Section?
A. 125
B. 401k
C. 403b
D. 457b - answer a. 125
all of the following are tax implications of a cafeteria plan except:
a. no income tax withholding
b. no social security and medicare tax withholding
c. must withhold income, social security, and medicare taxes
d. no form W2 reporting - answer C. must withhold income, social security, and
medicare taxes
One of the options in an employee's cafeteria benefit plan is a dependent care flexible
spending account. He earmarked $100 per month to the account to pay for child care
but spend only $1000 by the end of the plans grace period. at the end of the grace
period, what happens to the $200 left in the account?
a. the amount is forfeited
b. it will be added to his taxable income
c. he can use it to "buy" ab additional benefit
d. it ill carry over to the next year - answer A. the amount is forfeited
Prior to beginning work for a company, a chemical engineer signed a contract stating
that she agreed to work as an independent contractor. she performs all her duties in the
companys laboratories, works under the companys direction, and maintains regular
office hours. what is her status?
a. independent contractor under common law
b. independent contractor under reasonable basis test
c. employee - answer C. employee
do not assume that the employer has fulfilled its responsibilities and is free from penalty
simply by having a worker sign a contract stating he is a 1099. individuals do not have a
right to waive their ee status in a contract.
A retired safety inspector for the company was rehired as a consultant when the
company expanded its plant operations. the retired employee was a natural choice. the
tasks he undertook as a consultant were the same as the ones he performed before
retirement. paid monthly, he has agreed to work under the direction of his old boss until
the new plant facilitates are fully operational? What is his status?
a. independent contractor under common law
b. independent contractor under reasonable basis test
c. employee - answer C. employee
,consultants are generally treated as independent contractors. however, when an ex ee
is performing the same or similar job as before retirement, it is unlikely that he qualified
as a 1099 after termination
a receptionist has agreed to work afternoons at the company until the company can find
a full time replacement. what is the receptionists status?
a. independent contractor under common law
b. independent contractor under reasonable basis
c. employee - answer C. employee
whether or not an ee is full time or part time or works a few weeks or a lifetime for the
company is not relevant her. she is an employee.
All of the following types of employees are classified as exempt from the FLSAs min
wage and OT requirements except:
a. professional
b. outside salesperson
c. administrative
d. computer repairman - answer D. computer repairman
a computer repairman does not perform the duties required to qualify as an exempt
computer professional
a waitress is paid $2.25 per hour and she receives $225 in tips during the week. She
works 4o hours per week. Which of the following is true?
a. her employer is allowed to reduce her cash wage to no less than $2.13 per hour
b. her base pay must be increase to $4.5 per hour after a 90 day training period.
c. she must be paid $5.12 per hour by her employer
d. her base salary must be raised to $3 per hour to comply with fed min wage
requirements. - answer A. her employer is allowed to reduce her cash wage to no
less than $2.13 per hour
her employer can claim the full federal tip credit because she receives tips and with her
tips, is paid more than the current federal minimum wage purposes, her employer must
pay her at least $2.13 per hour and her hourly rate plus tips must equal at least the
current federal min wage
if a state sets the minimum wage at a rate greater than the federal minimum wage, the
state minimum wage must be paid to workers in that state
- true
-false - answer TRUE
tips can be counted toward the employees minimum wage - answer TRUE
,an employee works 40 hours per week as a fry cook. during the week, she substitutes
for one of the waitresses and reports $5 per week in tips. can her employer pay her
$2.13 per hour?
- yes
- no - answer no
because she isnt making $30 a month. the tip credit can be used to reduce the
minimum wage only if the employee regularly receives tips and documents receiving
more than $30/month
employers who provide paid vacation leave must count the hours of paid time off when
determining if the employee must receive an overtime premium when the total hours
worked in a week exceed 40.
true
false - answer false
only hours worked count toward determining whether overtime premiums must be paid
under the FLSA
the FLSA requires immediate payment of an employees final paycheck upon
termination
true
false - answer FALSE
however, most states impose time limits governing when an employees final paycheck
must be paid to the employee
an employee's parking garage is 2 blocks away from his downtown office. it costs
$275/month to rent a stall there, but the employee doesn't mind because its convenient
and his employer reimburses him 100% of the cost. How much of his monthly parking is
taxable? - answer $15.
remember: employer-provided parking is nontaxable up to $260/month
a retail sales clerk took advantage of the company's employee discount program to
purchase clothes at 10% off the normal retail price. this service represents:
a. taxable compensation
b. a qualified employee discount
c. a working condition fringe
d. a no-additional cost service - answer b. a qualified employee discount
Last month, an employee emailed her mother on the company's email, photocopied
fliers for her church picnic at work and used her work computer to update her resume.
These services represent:
a. taxable compensation
b. de minimis fringes
, c. working condition fringes
d. no-additional cost services - answer b. de minimis fringes
True of false: if an employee dies and a final payment is made, the employer continues
to withhold taxes as if the employee is still alive. - answer FALSE- no federal taxes
are withheld
if the amounts are paid after the year of death, no SS and medicare are withheld and no
reporting is done on the W2. Instead it is reported on _______ misc. - answer 1099-
misc
if the amounts are paid during the same year the employee dies, _______ and ______
must be withheld and reported on the W2. FIT is not reported on W2. - answer Social
security and medicare must be withheld
Percentage method practice: an employee who is married with 4 allowances earns a
biweekly salary of $1500. Calculate his federal income tax using the percentage
method. - answer Find Net/Adjusted Wages (after deduction for withholding
allowances)
§$161.50 x 4 = $646.00
Gross wages - Allowances = Adjusted Wages (Net Wages)
§$1500.00 - $646.00 = $854.00
Apply Percentage Table (Appendix)
§Net Wages over $454.00 but not over $1,200.00
Adjusted Wages - Threshold Amount = Excess Amount
§$854.00 - $454.00 = $400.00
Amount of Tax + (Excess Amount x Percentage) = Total Withholding
§0.00 + ($400.00 x 10%) = $40.00
Calculate the total compensation for an electrician who worked 44 hours last week. In
addition to his regular wage of $10/hour, the electrician was paid $50 for supervising a
trainee. What is the electricians total weekly compensation? - answer Step 1: 44
hours x $10/ hour = $440 + $50= $490 regular pay
Step 2: $490/44 hours = $11.14 regular rate of pay
Step 3: $11.14 x 5 = $5.57 overtime premium rate
Step 4: $5.57 x 4 hours = $22.28 premium pay for overtime
Step 5: $490 + $22.28 = $512.28 total compensation
An employee works 38 hours in a workweek, takes 8 hours sick time, and receives
bonus check for productivity. How many overtime hours should he be paid? - answer
NONE
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