W-2 vs. 1099: Worker Classification - Tax Quiz

Question 1 of 25

On which form does an employer report an employee's annual wages and the income and FICA taxes withheld from them?

Form 1099-NEC Form W-2 Form W-9 Form W-4

Question 2 of 25

Which form does a business use to report nonemployee compensation paid to an independent contractor for services?

Form W-2 Form 1099-NEC Form W-4 Form SS-8

Question 3 of 25

Which form does an employee complete and give to an employer so the correct federal income tax is withheld from their pay?

Form W-9 Form W-4 Form 1099-NEC Form SS-8

Question 4 of 25

Which form does an independent contractor give to a business to provide their correct taxpayer identification number?

Form W-4 Form W-2 Form W-9 Form 1099-NEC

Question 5 of 25

The IRS common-law test for worker classification groups the relevant facts into which three categories?

Hours, wages, and location Behavioral control, financial control, and the relationship of the parties Contract length, pay rate, and job title Education, experience, and licensing

Question 6 of 25

Which form is filed to ask the IRS to determine whether a worker is an employee or an independent contractor?

Form W-9 Form 1099-NEC Form SS-8 Form W-4

Question 7 of 25

How much federal income tax does a business generally withhold from payments to a properly classified independent contractor who has furnished a valid TIN?

6.2 percent 15.3 percent None 1.45 percent

Question 8 of 25

What is the combined self-employment tax rate that a self-employed person generally pays on net earnings?

7.65 percent 12.4 percent 15.3 percent 2.9 percent

Question 9 of 25

What portion of the Social Security tax does an employer pay for an employee under FICA?

6.2 percent, matching the 6.2 percent paid by the employee 12.4 percent, with nothing paid by the employee 1.45 percent, matching the employee The employer pays nothing

Question 10 of 25

What is the Medicare tax rate that the employer and the employee each pay on the employee's wages?

6.2 percent each 1.45 percent each 2.9 percent each 15.3 percent each

Question 11 of 25

Why does a self-employed person pay self-employment tax instead of having FICA split with an employer?

Because they have no employer to pay the matching share, so they pay both the employer and employee portions of Social Security and Medicare Because self-employment tax is a separate tax unrelated to Social Security and Medicare Because contractors are exempt from Social Security Because the IRS withholds it automatically from each payment

Question 12 of 25

At what level of net earnings from self-employment must a person generally pay self-employment tax?

$400 or more $600 or more $1,000 or more $2,000 or more

Question 13 of 25

On which schedule do self-employed individuals figure and report their self-employment tax?

Schedule A Schedule SE Schedule B Schedule D

Question 14 of 25

What income tax benefit related to self-employment tax can a self-employed person claim?

They can deduct one-half of their self-employment tax when figuring adjusted gross income They can deduct the entire self-employment tax from their tax owed They can claim a refundable credit for all FICA paid They owe no income tax on self-employment income

Question 15 of 25

On which form does an independent contractor operating as a sole proprietor generally report business income and expenses?

Schedule C (Form 1040) Form W-2 Form 1099-NEC Form W-4

Question 16 of 25

Because no tax is withheld from their pay, how do self-employed individuals generally pay their income and self-employment taxes during the year?

Through quarterly estimated tax payments The payer withholds it from each check They pay only once, on April 15, with no interim payments allowed They are exempt from paying until audited

Question 17 of 25

Within the behavioral control factor, what does it indicate when a business gives a worker detailed instructions on how to do the work?

It points toward the worker being an employee It points toward the worker being an independent contractor It has no bearing on worker status It automatically makes the worker exempt from taxes

Question 18 of 25

Which of the following is an example of a financial control factor in the common-law test?

Whether the worker has a significant investment and can realize a profit or loss Whether the business trains the worker on its procedures Whether the worker receives detailed daily instructions Whether the work is a key aspect of the business

Question 19 of 25

Which factor falls under the type-of-relationship category of the common-law test?

Whether the business provides employee-type benefits such as insurance or a pension plan The dollar amount of the worker's unreimbursed expenses The level of training the business provides Whether the business reimburses travel costs

Question 20 of 25

Under the common-law rules, how does the IRS weigh the factors when determining worker status?

No single factor is decisive; the entire relationship and the degree of the right to control must be considered A single behavioral factor always settles the question Only the written contract between the parties matters Whichever category has the most factors automatically wins

Question 21 of 25

Who is permitted to file Form SS-8 to request a worker-status determination?

Either the business (firm) or the worker Only the worker Only the business Only a tax professional on behalf of the IRS

Question 22 of 25

If a business misclassifies an employee as an independent contractor without a reasonable basis, what is a likely consequence?

The business may be held liable for employment taxes for that worker The worker becomes responsible for the employer's share of all taxes permanently There are no tax consequences, only a warning The IRS refunds the worker's withheld taxes

Question 23 of 25

Which form may a worker who believes they were misclassified as an independent contractor use to report their share of uncollected Social Security and Medicare tax?

Form 8919 Form W-4 Form 1099-NEC Form W-2

Question 24 of 25

For federal employment tax purposes, what controls whether a worker is an employee, regardless of any label in a contract?

The actual working relationship and the right to direct and control the work The job title written in the contract Whether the parties signed a written agreement calling the worker a contractor The worker's personal preference

Question 25 of 25

What is the IRS program that lets eligible businesses voluntarily reclassify workers as employees for future periods with partial employment tax relief?

The Voluntary Classification Settlement Program The Earned Income Tax Credit The Offer in Compromise program The Fresh Start Initiative