Tuesday, June 12, 2012

Independent Contractors- Is the IRS Looking at YOU?

If you are an Independent Contractor, or you hire independent contractors, you may want to analyze your records and methods of operation because the IRS and Department of Labor have recently teamed up and are now on the lookout for appropriate use of Independent Contractor Status.

According to the IRS website an Independent Contractor is someone who is self- employed and not controlled by an employer (dictating how a job will be done and what will be done). If this description is not cut and dry for you there are several scenarios and categories to look into. Visit the IRS website by clicking here to review ways to determine which category applies to you.

Based on which type of Independent Contractor scenario you fall into you will want to take a look at the employment tax obligations that may help you avoid future issues. These can also be found at the IRS website mentioned above.

Review these common tax issues to help ensure that an auditor isn’t standing in your office.
  1. Proper documentation of time worked. Track overtime and not have back pay due to an employee 
  2. Taxes due for both the company and the employee on income from cash payments.
By taking a look now you can hopefully avoid any issues in the future.

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