Employee Versus Independent Contractor Checklist Math

You should consider all evidence of the degree of control and independence in this relationship.

Employee versus independent contractor checklist math. Employee versus independent contractor checklist. When you hire an employee to work for you you can either pay them as a contractor or as an employee. For federal employment tax purposes the usual common law rules are applicable to determine if a worker is an independent contractor or an employee. There is not a single factor that will indicate whether a worker fits one definition or the other but rather it is a cumulative test.

As always please consult with your legal counsel before making any final decisions. Here is a 10 question test to help determine the classification of a worker as either an employee or independent contractor. There are 20 factors used by the irs to determine whether you have enough control over a worker to be an employer. W2 employees because contractors receive the 1099 tax form at the end of each year while employees receive a w2 form.

Though these rules are intended only as a guide the irs says the importance of each factor depends on the individual. See internal revenue code section 3509 for more information. This guide will help you understand how to determine a workers employment status. By cyndia zwahlen march 26 2017.

Generally the more yes answers you have to the questions below the more likely it is that the individual is an independent contractor. Are you trying to understand the difference between an employee whether full time or part time and an independent contractor. Mistakenly classifying an employee as an independent contractor can result in significant fines and penalties. If you have a reasonable basis for not treating a worker as an employee you may be relieved.

Irs publication 15 a employer s supplemental tax guide. The general rule is that an individual is an independent contractor if the department for whom the services are performed. Employee vs independent contractors checklist this handy little checklist is a guide to help you determine whether an individual is an independent contractor. If there is a high number of yes answers it is likely that the relationship is.

Not the means and methods of accomplishing the result. If you classify an employee as an independent contractor and you have no reasonable basis for doing so you may be held liable for employment taxes for that worker the relief provisions discussed below will not apply. The courts may impose a maximum penalty of 13 320 for individuals and 66 600 for corporations per. A shorthand way to consider this employment relationship is 1099 vs.

Has the right to control or direct only the result of the work. Under the common law you must examine the relationship between the worker and the business. Irs 20 point checklist for independent contractors. Employees and independent contractors can request assistance from the fair work ombudsman if they feel their rights have been contravened.