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Cheat sheet

FPC Cheat Sheet

Practice QuestionsStudy Guide

Core Payroll Concepts

29%of exam

Worker ClassificationFLSAEmployment TaxesBenefitsFormsPay Timing

Compliance Research

17%of exam

ResearchRecordkeepingReportingDepositsPenaltiesSource Hierarchy

Paycheck Calculation

24%of exam

Gross-to-NetOvertimeTaxable WagesGarnishmentsPre-tax DeductionsFringe Pay

Process + Systems

7%of exam

Master DataSystem ControlsBCPAccessBatch Totals

Administration Management

7%of exam

PoliciesProceduresServiceAgreementsCommunications

Audits

8%of exam

Internal ControlsAudit PrepReconciliationsExceptionsEvidence

Accounting

8%of exam

Journal EntriesLiabilitiesClearingAccrualsCorrections

Quick Facts

Exam
FPC
Credential
Fundamental Payroll Certification
Owner
PayrollOrg
Questions
150
Time
3 hours
Prereq
No experience required
Result
Pass/fail scaled
Largest area
Core payroll 29%
Law dates
Jan 2025/2026

Worker BFR

BFR: behavioral, financial, relationship.

Behavioral: controlFinancial: economicsRelationship: permanence

Employee vs Contractor

Employee

  • Control how work
  • Payroll taxes
  • Form W-2

Contractor

  • Controls result
  • Business risk
  • Form 1099-NEC

Control drives status

Worker Form Picker

  1. Worker under control→Employee(Payroll taxes)
  2. Business controls result→Contractor(1099 path)
  3. Status unclear→Form SS-8(IRS help)
  4. Employee withholding→Form W-4
  5. Contractor TIN→Form W-9
  6. Nonemployee report→1099-NEC
  7. Employee wages report→Form W-2
  8. Missing TIN→Backup withholding

Worker Classification

Employee
Employer controls work
Contractor
Controls results
Common law
Facts and control
Behavioral
How work done
Financial
Business economics
Relationship
Benefits and continuity
Form SS-8
IRS status request
Form W-9
Contractor TIN
Form W-4
Employee withholding
1099-NEC
Nonemployee pay

W-4 vs W-9

W-4

  • Employee withholding
  • Federal income tax

W-9

  • Contractor TIN
  • 1099 setup

Worker status first

FLSA Pay

Nonexempt
Overtime eligible
Exempt
No overtime rule
Workweek
Fixed 168 hours
Overtime
Over 40 hours
Regular rate
OT base rate
Bonus
May affect OT
Unauthorized OT
Still payable
Comp time
Public sector limit
Salaried nonexempt
Track hours
Rounding
Neutral practice

Exempt vs Nonexempt

Exempt

  • Duties/salary tests
  • No OT required

Nonexempt

  • Track hours
  • Overtime eligible

Title is irrelevant

Employment Taxes

FIT
Employee income withholding
FICA
SS and Medicare
Employer FICA
Matching share
FUTA
Employer unemployment
SUTA
State unemployment
Additional Medicare
Employee-only withholding
Form W-4
Withholding certificate
Lock-in letter
IRS withholding order
Tax deposit
EFTPS remittance
Form 941
Quarter employment return

Forms Calendar

941 quarters, 940 annual, W-2 yearly.

941: quarters940: FUTAW-2: employee1099: contractor

Form 941 vs 940

Form 941

  • Quarterly employment taxes
  • FICA/FIT reporting

Form 940

  • Annual FUTA
  • Employer unemployment

Quarterly vs annual

Compliance Calendar

  1. Quarter employment taxes→Form 941
  2. Annual FUTA taxes→Form 940
  3. Employee wage statement→Form W-2
  4. Correct W-2→Form W-2c
  5. Deposit due→EFTPS
  6. Unclaimed wage→Escheatment
  7. Retention question→Official rule
  8. Penalty notice→Research first

Forms Reporting

Form 941
Quarterly employment taxes
Form 940
Annual FUTA return
Form W-2
Employee wage statement
Form W-3
W-2 transmittal
Form W-2c
Correct W-2
1099-NEC
Nonemployee compensation
Form 945
Nonpayroll withholding
Form 1096
1099 transmittal
New hire
State report
Backup withholding
Missing TIN risk

Deposit vs Report

Deposit

  • Move tax cash
  • EFTPS deadline

Report

  • File return
  • Form deadline

Paying vs filing

Deposits Records

Monthly depositor
Monthly deposit schedule
Semiweekly depositor
Accelerated deposit schedule
Lookback period
Schedule determination window
Next-day rule
Large tax deposit
EFTPS
Federal tax deposits
Record retention
Keep payroll evidence
Escheatment
Unclaimed wages
Penalty notice
Research before response
Due date
Calendar control
Source hierarchy
Use official guidance

Gross-to-Net

Gross, tax, deductions, net.

Gross: earningsTax: mandatoryDeduct: elections/ordersNet: paid

Pretax vs Post-tax

Pretax

  • Before selected taxes
  • Plan rules govern

Post-tax

  • After tax withholding
  • Net pay impact

Tax base changes

Paycheck Picker

  1. Need gross pay→Rate x hours
  2. Over 40 hours→FLSA overtime
  3. Bonus is nondiscretionary→Regular rate
  4. Pre-tax elected→Reduce eligible wages
  5. Order received→Garnishment sequence
  6. Noncash benefit→Imputed income
  7. Net target→Gross-up
  8. Prior underpay→Retro pay

Gross-to-Net

Gross pay
Before deductions
Taxable wages
Tax calculation base
Pre-tax deduction
Reduces some taxes
Post-tax deduction
After taxes
Disposable earnings
Garnishment base
Net pay
Employee take-home
Regular pay
Straight-time wages
Overtime premium
Extra half-time
Retro pay
Prior-period adjustment
Imputed income
Taxable noncash value

Gross vs Taxable Wages

Gross

  • All earnings
  • Before exclusions

Taxable

  • Tax base
  • After allowed exclusions

Not always equal

Garnishments

Garnishment order
Court/agency directive
Child support
Priority withholding
Creditor garnishment
CCPA limits apply
Tax levy
Government collection
Bankruptcy order
Court priority
Disposable pay
After mandatory deductions
Voluntary deduction
Employee-authorized amount
Protected worker
No discharge
Remit date
Order controls timing

Benefits Fringe

Fringe benefit
Compensation in kind
De minimis
Small occasional benefit
GTL
Imputed over limit
Company vehicle
Personal use taxable
Section 125
Pre-tax benefits
401(k) deferral
FIT reduction only
Reimbursement plan
Accountable plan rules
Moving expense
Usually taxable
Award
Taxability depends facts

Systems Controls

Master file
Employee data source
Access roles
Least privilege
Segregation
Separate duties
Batch totals
Input completeness
Exception report
Find outliers
Audit trail
Change evidence
BCP
Continuity plan
Encryption
Protect payroll data
Direct deposit
Banking controls
Time system
Hours source

Admin Policies

Payroll calendar
Processing roadmap
Procedure manual
Repeatable steps
SLA
Service expectation
Approval matrix
Authority map
Communication
Explain pay issues
Intradepartment agreement
Shared responsibility
Training
Consistent execution
Escalation
Issue routing

Control ACE

ACE: access, controls, evidence.

Access: leastControls: testedEvidence: retained

Audit vs Reconcile

Audit

  • Control testing
  • Evidence review

Reconcile

  • Match balances
  • Find differences

Test vs match

Control Picker

  1. New hire setup→Master file review
  2. Payroll input→Batch totals
  3. Sensitive access→Least privilege
  4. Unusual pay→Exception report
  5. Payroll complete→Reconciliation
  6. System outage→BCP
  7. Audit request→Source evidence
  8. Error recurring→Root cause

Audit Reconciliation

Pre-audit
Before payroll review
Post-audit
After payroll review
Variance
Unexpected difference
Reconciliation
Match reports
Source document
Evidence record
Control failure
Process breakdown
Remediation
Correct root cause
Sampling
Test selected records
Signoff
Approval evidence
Exception log
Tracked anomalies

Payroll Accounting

Payroll liability
Amounts owed
Wage expense
Labor cost
Tax expense
Employer taxes
Employee deduction
Liability until paid
Clearing account
Temporary holding
Accrual
Earned not paid
Reversal
Undo accrual
Journal entry
Debit/credit record
Bank recon
Cash match
Off-cycle
Separate payroll run

Common Traps

Contract label trap

Label is not status ≠ Control facts decide

Salary trap

Salary can be nonexempt ≠ Track actual hours

Bonus trap

Nondiscretionary affects OT ≠ Discretionary may not

Taxable fringe trap

Cash not required ≠ Value can tax

Deposit trap

Deposit differs filing ≠ Calendar both deadlines

Garnishment trap

Disposable not net ≠ Order priority matters

940/941 trap

941 is quarterly ≠ 940 is FUTA annual

Control trap

Access is risk ≠ Evidence proves control

Last Minute

  1. 1.Know seven FPC weights
  2. 2.Classify before forms
  3. 3.Control beats contract label
  4. 4.Track nonexempt hours
  5. 5.Include nondiscretionary bonuses
  6. 6.Separate pre-tax rules
  7. 7.Prioritize garnishment orders
  8. 8.Calendar deposits and filings
  9. 9.Reconcile W-2 to 941
  10. 10.Document control evidence
  11. 11.Research official guidance first

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