Wallace Corporation Needs an Additional Worker on a Multiyear Project

question 17

Multiple Choice

Wallace Corporation needs an additional worker on a multiyear project.It could hire an employee for a $30,000 annual salary.Alternatively,it could engage an independent contractor for a $35,000 annual fee.Which of the following is true?

• A)Wallace must withhold payroll tax from the salary or the fee.
• B)Wallace must withhold federal and state income tax from the salary or the fee.
• C)Wallace must issue a Form W-2 to the employee or the independent contractor.
• D)None of the above is true.