Fundamental Payroll Certification (FPC) 2025 – 400 Free Practice Questions to Pass the Exam

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What type of employees typically do not have taxes withheld from their paychecks?

Statutory employees

Independent contractors

Independent contractors typically do not have taxes withheld from their paychecks because they are considered self-employed. As independent contractors, they receive payment for services rendered without an employer-employee relationship. This means that they are responsible for reporting their income and paying their own taxes, including self-employment tax, directly to the IRS.

In contrast, statutory employees are a specific category of workers for whom certain tax withholdings may apply, despite their contracted status, as they are treated similarly to employees in some respects for tax purposes. Full-time salaried employees and part-time hourly employees generally have various taxes withheld from their paychecks, including federal income tax, Social Security, and Medicare taxes. These workers receive a paycheck where tax withholding is standard practice to ensure compliance with tax laws.

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Full-time salaried employees

Part-time hourly employees

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