FPC Payroll Fundamentals Exam
Questions and Answers11
Retroactive Pay - ANSWERS -Pay for time worked in a previous workweek; retroactive pay must
be applied to both regular and overtime hours.
Segregation of Duties - ANSWERS -A basic principle of internal control that prevents individuals
from having responsibility for all phases of a job process, thus guarding against misuse or
misappropriation of company assets
Statutory Employees - ANSWERS -Special groups of employees identified by law (e.g., full-time
life insurance salespeople, certain homeworkers) whose wages are not subject to federal
income tax withholding but are subject to social security, Medicare, and FUTA taxes
Supplemental Wages - ANSWERS -Compensation received by employees other than their
regular pay, such as bonuses, commissions, and severance pay. Income tax may be withheld
from such payments at a flat rate under certain circumstances.
Tangible - ANSWERS -Type of asset that includes land and improvements, buildings, computers
and software, furniture, and automobiles
Tip Credit - ANSWERS -A reduction in the minimum wage allowed for tipped employees (e.g.,
$5.12; effective 7/24/09).
Worker that has Fed, OASDI, Medicare, State withheld - ANSWERS -Employee
Worker that requires the employer to pay ER taxes - ANSWERS -Employee
, Worker that receives W2 form - ANSWERS -Employee
Worker that does not have taxes withheld - ANSWERS -Independent Contractor
Worker that has TIN - ANSWERS -Independent Contractor
Worker that receives 1099 Form - ANSWERS -Independent Contractor
Asks how independent is the employee and how much control can be exervised over the
worker. - ANSWERS -Common Law Test
A worker cannot sign a new contract stating that they will be an indepndent contractor. -
ANSWERS -Common Law Test
Employer has treated similar workers as independent contractors for any period and has filed
tax returns - ANSWERS -Reasonable Basis Test
Longstanding industry standard of treating similar workers as independent contractors -
ANSWERS -Reasonable Basis Test
Court decisions for treating workers in similar circumstances as independent contractors -
ANSWERS -Reasonable Basis Test
IRS has ruled in a "published ruling" that the workers are indpendent contractors - ANSWERS -
Reasonable Basis Test
Temporary Service Provider or Leasing Company - ANSWERS -Pays employees and taxes instead
of company the employee is performing services for
Questions and Answers11
Retroactive Pay - ANSWERS -Pay for time worked in a previous workweek; retroactive pay must
be applied to both regular and overtime hours.
Segregation of Duties - ANSWERS -A basic principle of internal control that prevents individuals
from having responsibility for all phases of a job process, thus guarding against misuse or
misappropriation of company assets
Statutory Employees - ANSWERS -Special groups of employees identified by law (e.g., full-time
life insurance salespeople, certain homeworkers) whose wages are not subject to federal
income tax withholding but are subject to social security, Medicare, and FUTA taxes
Supplemental Wages - ANSWERS -Compensation received by employees other than their
regular pay, such as bonuses, commissions, and severance pay. Income tax may be withheld
from such payments at a flat rate under certain circumstances.
Tangible - ANSWERS -Type of asset that includes land and improvements, buildings, computers
and software, furniture, and automobiles
Tip Credit - ANSWERS -A reduction in the minimum wage allowed for tipped employees (e.g.,
$5.12; effective 7/24/09).
Worker that has Fed, OASDI, Medicare, State withheld - ANSWERS -Employee
Worker that requires the employer to pay ER taxes - ANSWERS -Employee
, Worker that receives W2 form - ANSWERS -Employee
Worker that does not have taxes withheld - ANSWERS -Independent Contractor
Worker that has TIN - ANSWERS -Independent Contractor
Worker that receives 1099 Form - ANSWERS -Independent Contractor
Asks how independent is the employee and how much control can be exervised over the
worker. - ANSWERS -Common Law Test
A worker cannot sign a new contract stating that they will be an indepndent contractor. -
ANSWERS -Common Law Test
Employer has treated similar workers as independent contractors for any period and has filed
tax returns - ANSWERS -Reasonable Basis Test
Longstanding industry standard of treating similar workers as independent contractors -
ANSWERS -Reasonable Basis Test
Court decisions for treating workers in similar circumstances as independent contractors -
ANSWERS -Reasonable Basis Test
IRS has ruled in a "published ruling" that the workers are indpendent contractors - ANSWERS -
Reasonable Basis Test
Temporary Service Provider or Leasing Company - ANSWERS -Pays employees and taxes instead
of company the employee is performing services for
