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Federal taxable wages = Gross – pre-tax deductions.

Gross = $1,000

Pre-tax = $50

Post-tax = no effect

Taxable = $1,000 – $50 = $950.

On APA exams, pre-tax vs. post-tax deduction treatment is a frequently tested area in paycheck calculations.

The Electronic Federal Tax Payment System (EFTPS) is the U.S. Treasury’s free service for depositing federal employment taxes, including withheld income tax, Social Security, Medicare, and FUTA. SSA BSO is used for W-2 filing, E-Verify confirms employment eligibility, and IRS E-FILE is for tax return submissions. On exams, system identification is tested frequently, as payroll professionals must know which platform to use for compliance functions.

IRS regulations require employers to keep payroll tax records for at least four years after the tax is due or paid, whichever is later. These include tax returns, W-2 copies, and deposit records. FLSA requires three years for payroll records, FUTA governs unemployment taxes, and ERISA applies to benefit plans. On APA exams, candidates must know the differences in retention rules between IRS and DOL requirements.

Accruing payroll means recognizing wages as an expense and recording a liability until employees are paid. Cash is credited only upon payment. On APA exams, payroll accounting entries are tested frequently to ensure candidates understand accrual principles.

When wages are paid, the Cash account is credited to reflect outflow, and Wages Payable (liability) is debited. Wages Expense was already recognized at accrual. On APA exams, payroll accounting questions test knowledge of how expenses/liabilities flow through payroll transactions.