Employees or Independent Contractors 

 

More and more professionals receiving 1099-Miscs these days for their services instead of W-2s may create confusions and potential tax treatment issues. What should taxpayers do as payers or payees? Per IRS Publication 1779, it is critical that business owners (payers) determine whether the individuals (payees) providing services are their employees or independent contractors. Though there is no magic set number of factors that makes the worker an employee or an independent contractor, misclassification of employees as independent contractors is a serious issue, and could cost business owners money and liability.

 

Facts that provide evidence of the degree of control and independence fall into three categories:

 

  1. Behavioral: Does the business control or have the right to control what and how the worker does his or her job, such as who provides tools, supplies?

  2. Financial: Are the financial aspects of the worker’s job controlled by the payer, such as how worker is paid, whether expenses are reimbursed?

  3. Relationship: Are there written contracts or employee type benefits such as pension plan, insurance, vacation pay? 

If business owners misclassify employees as independent contractors and they have no reasonable basis for doing so, they may be held liable for employment taxes for those workers.

Logo 1.png
Contact Us

The CPA Corner, Inc.

Certified Public Accountant 

​​​​4000 Barranca Parkway, Suite 165

Irvine, CA  92604

Phone: (949) 387-4321

Government Links
    Members
AICPA.jpg
  • Facebook App Icon

Our Clients are from Northern California - Southern California - Los Angeles County - Orange County - Riverside County - Irvine - Fountain Valley - Laguna Niguel - Laguna Beach - Laguna Hills - Laguna Woods - Lake Forest - Dana Point - Newport Beach - Mission Viejo - Costa Mesa - Anaheim - Aliso Viejo - Huntington Beach - Fullerton - Garden Grove - Lake Forest - Orange - Seal Beach - Long Beach - Tustin - Westminster - San Clemente - San Juan Capistrano - Rancho Santa Margarita - Yorba Linda - Brea - Buena Park - Cypress - La Palma - Placentia - Anaheim Hills - Rancho Santa Margarita - Stanton - Other States

Copyright © 2019 The CPA Corner, Inc. | 4000 Barranca Parkway, Suite 165, Irvine CA 92604 | Federally Registered With All Rights Reserved.  No part of

this site may be reproduced, stored in a retrieval system or transmitted in any way or by any means without the written permission of The CPA Corner, Inc.