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Contractor or employee: What's the difference?
Source:
cbsnews.com
- Sep 23, 2016
Here’s a warning to small-business owners who routinely use contractors.
The owner of a home care services agency contracted with 35 workers to provide services to her customers. An IRS audit determined that the workers she paid were actually her employees, not independent contractors. The tax agency then demanded that she pay federal employment taxes, including the employer portion of Social Security taxes and federal unemployment tax.
If the IRS’s position holds, she would also be responsible for pay additional state unemployment taxes and workers’ compensation/disability premiums.
So, if you run a small business and hire workers, you’ll definitely want to be clear as to whether these workers are independent contractors or employees. For federal tax purposes, this really matters. It affects how and what taxes you pay and how you file your tax returns.
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Category: General Business
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