The IRS has several checklists and test to determine whether an individual is an employee or an independent contractor.
In general, employers are responsible for the Federal Withholding and payment of Social Security and Medicare taxes and unemployment taxes on wages or compensation paid to employees. The business, regardless of type of entity, issues a Form W-2 to each employee showing the amount of wages earned and type and amount of taxes withheld. When a company has employees they are offered different benefits and protections, whether they are state or federal. The benefits and protections include family and medical leave, civil rights laws, group health insurance, unemployment insurance, workers’ compensation, FLSA and OSHA protection. These are benefits and protections that the independent contractor will not have. This video reviews employee classification, and the benefits and drawback of independent contractors.
IRS CIRCULAR 230
Any tax advice included in this written or electronic communication was not intended or written to be used, and it cannot be used by the taxpayer, for the purpose of avoiding any penalties that may be imposed on the taxpayer by any governmental taxing authority or agency.
Marcia L. Miller, M.B.A., E.A.
Financial Horizons, Inc.
- President and owner of Financial Horizons, Inc., a full service accounting and tax firm
- Enrolled agent entitled to practice before the Internal Revenue Service
- 40 years of accounting, tax and management consulting in South Florida for a practice with an emphasis on representing small business owners in all aspects of taxes, employment and labor issues, pensions, estate planning as well as federal, state (nationwide) and foreign mandatory reporting
- Federal appointment successfully completed for a three year term to the Internal Revenue Service's Information Reporting Program Advisory Committee (IRPAC)
- Author, speaker and teleconference expert, for various national companies and accounting organizations at their annual conferences, lecturing on a multitude of tax, technical and non-technical topics focusing on the areas of tax planning, management and health care reform
- Managing director, Transition Advisors, LLC, leading CPAs through transition with succession and M & A strategies
- Live presenter at the 2016 CCH Annual User's Conference and FICPA Chapter meetings regarding Succession Planning for CPAs
- Previous nationwide presenter of tax legislative seminars for Thomson Reuters' Bell Learning Series on current business taxation and accounting issues
- Former adjunct professor at Nova Southeastern University's H. Wayne Huizenga School of Business and Entrepreneurship
- M.B.A. and B.B.A. degrees, University of Miami School of Business
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