Question

Payments for Statutory EEs are:

a. Subject to FITW and not subject to SS/Medi
b. Not subject to FITW and subject to SS/Medi
c. Subject to FITW and subject to Social Security/Medicare
d. Not subject to either FITW or SS/Medi

Answer 1

Payments for Statutory Employees (EEs) are not generally subject to Federal Income Tax Withholding (FITW) or Social Security/Medicare (SS/Medi) because Statutory EEs are responsible for paying these taxes directly. Unlike traditional employees, they handle their own income tax and self-employment tax.

Step-by-step explanation:

The student's question refers to deductions from wages for Statutory Employees (EEs), focusing on whether these payments are subject to Federal Income Tax Withholding (FITW) or Social Security/Medicare (SS/Medi). Statutory employees are a specific classification of workers who are treated as independent contractors for some purposes but are treated as employees when it comes to the withholding of certain taxes.

Generally, employers do not withhold FITW or SS/Medi taxes from payments made to Statutory EEs, as these workers are responsible for paying their taxes directly to the government, including their income tax and self-employment tax, which covers the social security and medicare contributions. This arrangement is different from conventional employees whose employers typically withhold income tax and social security contributions, as well as contribute to insurance programs and the social security system.