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

A worker who receives a W-2 form is classified as an employee. The W-2 form is a wage and tax statement provided by employers to report annual wages and the amount of taxes withheld from employee paychecks. This form is typically used for full-time and part-time employees who are on the employer's payroll and have taxes withheld from their earnings.

When an individual is classified as an employee, the employer is responsible for withholding federal, state, and FICA taxes from their paycheck, and the employee is eligible for certain benefits such as unemployment insurance and workers' compensation. This classification gives the employee rights and protections under various labor laws.

In contrast, independent contractors receive a 1099 form, which indicates that they are not employees and do not have taxes withheld from their payments. Therefore, the classification of an employee receiving a W-2 is fundamentally important in understanding payroll processes and tax responsibilities.