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CERTIFIED PAYROLL
PROFESSIONAL TESTS
COMPILATION BUNDLE 2026 FINAL
PAPER PRACTICE QUESTIONS
ANSWERS ACCURATE A+
โ Independent Contractor. Answer: any person who agrees to perform a service for a fee and who is not subject to the control of those for whom the service is performed โ Statutory Employee. Answer: An independent contractor's employee who, because the independent contractor has not maintained worker's compensation insurance, is considered to be an employee of the principal employing the independent contractor. Examples: drivers, life insurance sales agent. โ Statutory Non Employee. Answer: Direct sellers and licenses real estate agents; treated as independent contractors for all tax purposes if certain conditions are met. โ Judicial Precedent Safe Haven. Answer: Taxpayers using previous legal rulings (within reason for employee classification) โ Past audit safe haven.
Answer: Taxpayer relying on an audit by IRS for employment taxes due. (Employee classification) โ Industry practice safe haven. Answer: refers to the taxpayer relying on (within reason) recognized industry practices of a majority of industry in which he or she participates as designating a worker as a contractor. โ Other reasonable bases. Answer: Not meeting other Safe Haven rules, but still having a reasonable basis to consider a worker a contractor. โ Temp agency. Answer: an employment agency that provides part-time and full-time jobs on a temporary basis โ Fair Labor Standards Act. Answer: 1938 act which provided for a minimum wage and restricted shipments of goods produced with child labor โ Shift Differential. Answer: additional money paid to employees for the inconvenience of working less-desirable hours โ compensatory time off.
Answer: 1.45% โ Social security tax rate. Answer: 6.2% โ Backup withholding. Answer: amount of income tax withheld by payers of taxable interest, dividends, and certain other payments made to payees who have failed to furnish the payers with correct identification numbers. โ The FUTA rate for employers is. Answer: 6% of the first $7,000 an employee earns in a year. โ Form SS-4. Answer: The form filled out by an employer to get an EIN. The form is sent to the IRS, which assigns the number to the business. โ Employee Identification Number (EIN). Answer: unique identifier assigned by the federal government and required for tax reporting, banking, etc. โ Form I-9. Answer: employment eligibility verification; documentation must be provided to verify that the person is eligible to work in the United States
โ Form SS-5 is used to:. Answer: obtain a new social security card or have a card reissued. โ FORM SS-8. Answer: Determination of worker status for purpose of federal employment taxes and income tax withholding. Can be filled out by the business or worker. โ FORM W-2. Answer: a form used to report taxable income a worker received during the calendar year โ FORM W-2C. Answer: Correct errors on W-2's. Only update incorrect fields. โ Form W-3, Transmittal of Wage and Tax Statements. Answer: A form completed by the employer to verify the number of W- 2s and amounts withheld as shown on them. This form is sent to the Social Security Administration data processing center along with copies of each employee's W-2 forms. โ Form W-3C Transmittal of Corrected Wage and Tax Statements. Answer: Transmittal of Corrected Wage and Tax Statements
Answer: A. alone when claiming a refund or owing additional taxes. โ Form 943. Answer: Employer's Annual Federal Tax Return for Agricultural Employees โ Form 944. Answer: Employer's Annual Federal Tax Return. The federal return used by filers with LESS THAN $1000 of federal employment tax liability IN THE PREVIOUS YEAR โ Form 945. Answer: Annual return of withheld federal income tax, is for payers to report to the IRS the amount of federal income tax withheld on non payroll payments ex: pensions, military retirement, Indian gaming profits, voluntary withholding, back up withholding โ Form 1042. Answer: The purpose of Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons, is for employers to report to the Internal Revenue Service (IRS) the amount of income tax withheld on certain income paid to nonresident aliens, foreign partnerships, foreign corporations, foreign estates and foreign trusts.
โ Form 1042-S. Answer: (Foreign Person's US Source Income Subject to Withholding) โ Withholding agent. Answer: means any person required to deduct and withhold any tax โ Form 1042-T. Answer: Annual summary and transmittal of forms 1042-S. Summarize the income and taxes withheld amounts from all corresponding forms. โ Form 1096. Answer: Annual Summary and Transmittal of U.S. Information Returns โ Form 1099 - R. Answer: Form filed with the IRS and distributed to plan participants to report distributions from a qualified retirement plan. โ Form 1099-NEC. Answer: the income tax document an Independent Contractor will receive for their non-employee compensation. โ Form 1099-MISC. Answer: Form issued to independent contractors to report various types of incomes.
