Payroll tax withholding, FICA, and payroll journal entry concepts tested on the Fundamental Payroll Certification exam.
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- What does FICA stand for?
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Federal Insurance Contributions Act- What is the current Social Security tax rate for employees?
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6.2% of wages- What is the current Medicare tax rate for employees?
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1.45% of wages- What is the Social Security wage base limit for 2025?
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Approximately $168,600- At what income level does the additional Medicare tax apply?
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$200,000 for single filers, $250,000 for married filing jointly- What does FUTA stand for?
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Federal Unemployment Tax Act- What is the federal unemployment tax rate under FUTA?
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6.0% of the first $7,000 of wages per employee per year- What does SUTA stand for?
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State Unemployment Tax Act- Who pays FUTA taxes?
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The employer only- What is the purpose of Form W-4?
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To determine how much federal income tax should be withheld from employee wages- Define a payroll deduction.
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An amount subtracted from gross pay to arrive at net pay- What is the difference between gross pay and net pay?
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Gross pay is total earnings before deductions; net pay is what remains after all deductions- In a payroll journal entry, what accounts are typically debited when recording employee wages?
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Payroll expense accounts (Salaries and Wages Expense or similar)- In a payroll journal entry, what account is credited for employee federal income tax withholding?
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Federal Income Tax Payable- In a payroll journal entry, what account is credited for employee FICA taxes withheld?
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FICA Taxes Payable (or separate accounts for Social Security Payable and Medicare Payable)
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