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FPC Chapter 1 Questions & Answers
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FPC Chapter 1 Questions & Answers An independent contractor invoiced a company $1,401.00 for services performed. The contractor did not provide a TIN before the payment was made. Calculate the federal income tax that must be withheld from the contractor's payment. $392.28 (1401 * 0.28) **A 28%...

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  • October 17, 2024
  • 15
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

Subjects

  • fpc chapter 1 questions answers
  • an independent contractor invoiced a company 140
  • what taxes if any must be withheld from payments

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  • FPC - Fundamental Payroll Certification
  • FPC - Fundamental Payroll Certification

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FPC Chapter 1 Questions & Answers
An independent contractor invoiced a company $1,401.00 for services performed. The
contractor did not provide a TIN before the payment was made. Calculate the federal
income tax that must be withheld from the contractor's payment. - answer $392.28
(1401 * 0.28)

***A 28% backup withholding tax on nonwage payments is withheld if the payee has
failed to provide a Taxpayer Identification Number (TIN) or the IRS has notified the
payer that the TIN is incorrect.***

What taxes, if any, must be withheld from payments to an independent contractor?

A. Federal income tax only
B. Social security and Medicare taxes only
C. Federal income, social security, and Medicare taxes only
D. No federal employment taxes are required to be withheld - answer D. No federal
employment taxes are required to be withheld -

***If the independent contractor has provided a TIN, the company has no responsibility
to withhold taxes from payments to the contractor.***

Which of the following workers would be classified as an independent contractor?

A. A day-care worker receiving a guaranteed minimum salary plus a percentage of the
fees collected from her clients
B. A former employee rehired after retiring to complete a task started before retirement
C. A salaried copywriter required to work on-site and comply with the company's rules
about starting and ending hours
D. A commercial artist furnishing her own tools and equipment and making a profit or
loss - answer D. A commercial artist furnishing her own tools and equipment and
making a profit or loss

***Payment by the job; opportunity for profit and loss***

All of the following actions are requirements of the common law test for determining a
worker's status EXCEPT when the:

A. employer determines when, where and how to work.
B. work is done personally by the worker.
C. employer furnishes tools, equipment, materials and training.
D. employer has treated the worker or similar workers as employees. - answer D.
employer has treated the worker or similar workers as employees.

, ***See Common Law Test for Determining Whether a Worker Is an Employee chart***

Which of the following workers is an independent contractor?

A. An engineer employing assistants to complete a project
B. A clerk working evenings until the company can find a replacement
C. A former employee rehired after retirement to complete a task begun before
retirement
D. A lawyer working as a paralegal - answer A. An engineer employing assistants to
complete a project

Which of the following workers is classified as an employee?

A. A marketing consultant contracted to conduct an employee/customer satisfaction
study
B. A commercial artist furnishing her own tools and equipment
C. A former employee rehired after retirement to complete a task begun before
retirement
D. A lawyer retained on a project-by-project basis - answer C. A former employee
rehired after retirement to complete a task begun before retirement

A company is required to withhold taxes from an independent contractor when:

A. the contractor fails to provide a certificate of compliance.
B. the contractor provides a Form W-4.
C. total payments in a calendar year exceed $600.00.
D. a TIN is not provided. - answer D. a TIN is not provided.

***If the independent contractor has provided a TIN, the company has no responsibility
to withhold taxes from payments to the contractor.***

To satisfy the Reasonable Basis test and treat a worker as an independent contractor, a
company can rely on all of the following methods EXCEPT:

A. a private letter ruling issued to the company indicating the worker is an independent
contractor.
B. information from published IRS rulings.
C. showing at least 25% of its industry treats similarly situated workers as independent
contractors.
D. a private letter ruling issued to another company in the same industry indicating
similarly situated workers are independent contractors. - answer D. a private letter
ruling issued to another company in the same industry indicating similarly situated
workers are independent contractors.

***Reasonable basis may consist of one or more of the following:

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