FPC Payroll Fundamentals UPDATED
Exam Questions and CORRECT Answers
Worker that has Fed, OASDI, Medicare, State withheld - CORRECT ANSWER -
Employee
Worker that requires the employer to pay ER taxes - CORRECT ANSWER - Employee
Worker that receives W2 form - CORRECT ANSWER - Employee
Worker that does not have taxes withheld - CORRECT ANSWER - Independent
Contractor
Worker that has TIN - CORRECT ANSWER - Independent Contractor
Worker that receives 1099 Form - CORRECT ANSWER - Independent Contractor
Asks how independent is the employee and how much control can be exervised over the worker.
- CORRECT ANSWER - Common Law Test
A worker cannot sign a new contract stating that they will be an indepndent contractor. -
CORRECT ANSWER - Common Law Test
Employer has treated similar workers as independent contractors for any period and has filed tax
returns - CORRECT ANSWER - Reasonable Basis Test
Longstanding industry standard of treating similar workers as independent contractors -
CORRECT ANSWER - Reasonable Basis Test
,Court decisions for treating workers in similar circumstances as independent contractors -
CORRECT ANSWER - Reasonable Basis Test
IRS has ruled in a "published ruling" that the workers are indpendent contractors - CORRECT
ANSWER - Reasonable Basis Test
Temporary Service Provider or Leasing Company - CORRECT ANSWER - Pays
employees and taxes instead of company the employee is performing services for
Immigration reform and Control Act of 1986 (IRCA) - CORRECT ANSWER - Requires
employer to verify employees' eligibility for employment in the US.
Penalties for Violating IRCA - CORRECT ANSWER - $375 for the first offence and
$16,000 for the third
Antidiscrimination under IRCA - CORRECT ANSWER - The law prohibits discrimination
in hiring or recruiting workers on the basis of national origin or citizenship
Verification of eligitability - CORRECT ANSWER - The burden of verifying that any
employee is eligible to work in this country falls on the employer. All employees hired after
November 6, 1989 must be verified.
When must Section 1 of Form I-9 be completed? - CORRECT ANSWER - The employee's
date of hire.
When must Section 2 of Form 1-9 be completed? - CORRECT ANSWER - Within three
days of hiring the employee.
Form SS-5 - CORRECT ANSWER - Application for a social security card
Form I-9 - CORRECT ANSWER - Employment Eligitability Verification
, Employee SSN verification is... - CORRECT ANSWER - recommended but not required.
What information must an employer report for new hires? - CORRECT ANSWER - Name,
Date of Hire, Address, SS, Employer's Name, Address, and EIN
Fair Labor Standards Act of 1938 (FLSA) - CORRECT ANSWER - Guarantees employees
a minimum wage, requires employers to pay an overtime premium, limits when minors can
work, and provides equal pay protection.
Who is protected by FLSA? - CORRECT ANSWER - Nonexempt employees
Minimum weekly salary required for exempt employees - CORRECT ANSWER - $455
4 categories of exempt employees - CORRECT ANSWER - Executives, Administrative
Employee, Professional, Outside Sales People
Special FLSA provisions exist for... - CORRECT ANSWER - Various transportation
workers, agricultural workers, hospital employees, and public sector employees.
Automated clearing house (ACH)- - CORRECT ANSWER - An entity which serves as the
central agency for processing and transferring funds from one financial institution to another via
electronic data transmission. ACHs operate under rules and standards established by the National
Automated Clearing House Association (NACHA)
Circular E - CORRECT ANSWER - Employer's Tax Guide (IRS Publication 15). The
basic IRS reference. Provides explanation and illustration of an employer's federal tax
withholding, depositing, and reporting obligations. Circular E provides information relevant to
all employers, while Publication 15-A, Employer's Supplemental Tax Guide , is intended to
provide additional information required by larger employers.
Exam Questions and CORRECT Answers
Worker that has Fed, OASDI, Medicare, State withheld - CORRECT ANSWER -
Employee
Worker that requires the employer to pay ER taxes - CORRECT ANSWER - Employee
Worker that receives W2 form - CORRECT ANSWER - Employee
Worker that does not have taxes withheld - CORRECT ANSWER - Independent
Contractor
Worker that has TIN - CORRECT ANSWER - Independent Contractor
Worker that receives 1099 Form - CORRECT ANSWER - Independent Contractor
Asks how independent is the employee and how much control can be exervised over the worker.
- CORRECT ANSWER - Common Law Test
A worker cannot sign a new contract stating that they will be an indepndent contractor. -
CORRECT ANSWER - Common Law Test
Employer has treated similar workers as independent contractors for any period and has filed tax
returns - CORRECT ANSWER - Reasonable Basis Test
Longstanding industry standard of treating similar workers as independent contractors -
CORRECT ANSWER - Reasonable Basis Test
,Court decisions for treating workers in similar circumstances as independent contractors -
CORRECT ANSWER - Reasonable Basis Test
IRS has ruled in a "published ruling" that the workers are indpendent contractors - CORRECT
ANSWER - Reasonable Basis Test
Temporary Service Provider or Leasing Company - CORRECT ANSWER - Pays
employees and taxes instead of company the employee is performing services for
Immigration reform and Control Act of 1986 (IRCA) - CORRECT ANSWER - Requires
employer to verify employees' eligibility for employment in the US.
Penalties for Violating IRCA - CORRECT ANSWER - $375 for the first offence and
$16,000 for the third
Antidiscrimination under IRCA - CORRECT ANSWER - The law prohibits discrimination
in hiring or recruiting workers on the basis of national origin or citizenship
Verification of eligitability - CORRECT ANSWER - The burden of verifying that any
employee is eligible to work in this country falls on the employer. All employees hired after
November 6, 1989 must be verified.
When must Section 1 of Form I-9 be completed? - CORRECT ANSWER - The employee's
date of hire.
When must Section 2 of Form 1-9 be completed? - CORRECT ANSWER - Within three
days of hiring the employee.
Form SS-5 - CORRECT ANSWER - Application for a social security card
Form I-9 - CORRECT ANSWER - Employment Eligitability Verification
, Employee SSN verification is... - CORRECT ANSWER - recommended but not required.
What information must an employer report for new hires? - CORRECT ANSWER - Name,
Date of Hire, Address, SS, Employer's Name, Address, and EIN
Fair Labor Standards Act of 1938 (FLSA) - CORRECT ANSWER - Guarantees employees
a minimum wage, requires employers to pay an overtime premium, limits when minors can
work, and provides equal pay protection.
Who is protected by FLSA? - CORRECT ANSWER - Nonexempt employees
Minimum weekly salary required for exempt employees - CORRECT ANSWER - $455
4 categories of exempt employees - CORRECT ANSWER - Executives, Administrative
Employee, Professional, Outside Sales People
Special FLSA provisions exist for... - CORRECT ANSWER - Various transportation
workers, agricultural workers, hospital employees, and public sector employees.
Automated clearing house (ACH)- - CORRECT ANSWER - An entity which serves as the
central agency for processing and transferring funds from one financial institution to another via
electronic data transmission. ACHs operate under rules and standards established by the National
Automated Clearing House Association (NACHA)
Circular E - CORRECT ANSWER - Employer's Tax Guide (IRS Publication 15). The
basic IRS reference. Provides explanation and illustration of an employer's federal tax
withholding, depositing, and reporting obligations. Circular E provides information relevant to
all employers, while Publication 15-A, Employer's Supplemental Tax Guide , is intended to
provide additional information required by larger employers.
