Fundamental Payroll Certification (FPC) 2025 – 400 Free Practice Questions to Pass the Exam

Question: 1 / 400

Which of the following is an example of an after-tax deduction?

401(k) contributions

Health insurance premiums

Health insurance premiums are considered after-tax deductions because they are taken from an employee's paycheck after federal, state, and local income taxes have already been deducted. This means that the employee has already paid taxes on this portion of their income before the deduction is made. As a result, premiums for health insurance are deducted from the employee's net pay rather than their gross pay.

In contrast, 401(k) contributions are typically pre-tax deductions, significantly lowering the employee's taxable income for the period. Federal income tax withholding directly impacts an employee's tax obligations and is also deducted before reaching the net pay. Lastly, garnishments for child support are court-ordered deductions that may affect net pay, but they are generally based on the employee's income after tax-related deductions have been removed.

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Federal income tax withholding

Garnishments for child support

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