Certified Payroll Professional Practice Exam

What distinguishes a Statutory Non-Employee from a Statutory Employee based on the answers provided?

1. Job stability

2. Client affiliations

3. Investment levels

4. Employee benefits

The correct answer is: Investment levels

A Statutory Non-Employee is distinguished from a Statutory Employee based on their investment levels. Statutory Employees are individuals who are treated as employees for employment tax purposes, despite technically being considered independent contractors. These individuals have specific criteria that they must meet, one of which includes not having significant investment in equipment or property used to perform services. In contrast, a Statutory Non-Employee is not subject to payroll tax withholding and is responsible for paying their own self-employment taxes. Therefore, investment levels play a key role in differentiating between the two classifications. Job stability, client affiliations, and employee benefits are important factors in other employment classifications, but they are not the primary distinguishing factor between a Statutory Non-Employee and a Statutory Employee.