Employee Vs Independent Contractor


          The IRS wants all businesses and business owners to know the difference between an Employee and an Independent Contractor. One will have income tax, Social Security, and Medicare withheld from their pay, the other will not. This may seem like a small issue, but our next post will discuss why it matters.
          Here are a couple of points to keep in mind to help make the distinction. How the business exerts behavioral control, such as determining what work should be accomplished and directing how it is done, that matters to the IRS. Financial control such as how the worker is paid and the extent they can make their services available to the market are also taken into consideration.
          Apart from the aspect of control, how the relationship is defined plays a key role. This will include written contracts, the provision of a pension, insurance plan vacation or sick days, or the extent the worker has unreimbursed business expenses. These all matter to the IRS and are something they will focus on in the event of, an audit.

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