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17 October, 12:32

Beth Caldwell is in the payroll accounting department of Acerill Films. An independent contractor of the company requests that Social Security and Medicare taxes be withheld from future compensation. What advice should Beth offer? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.)

a. The independent contractor should complete Form W-4 to authorize FICA tax withholding.

b. These would not be withheld by the company.

c. As an independent contractor they would be responsible for their own payments.

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  1. 17 October, 15:56
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    C) As an independent contractor they would be responsible for their own payments.

    Explanation:

    The IRS requires independent contractors to file annual returns, pay self employment taxes and income taxes.

    Self employment taxes include Social Security and Medicare which are similar to the taxes paid by employees (same percentages). The income tax brackets are also the same, the difference is that there are no employer taxes.

    Independent contractors are required to file their own Form 1040, if a business files it for them it means that they are not independent contractors anymore, they would be considered employees.
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