Watson CPA Group - Knowledgebase

Knowledgebase

Independent Contractors
Employee or Independent Contractor
By Jason Watson (Google+) Business owners and individuals continue to struggle with employee versus independent contractor status. While the distinctions can be subtle the tax consequence can be severe. Businesses that misclassify an employee as an independent contractor can face stiff tax...
21 Nov, 2013 Views: 0 Comments: 0
Statutory Employee and NonEmployees
By Jason Watson (Google+) Statutory Employee There are certain workers who are considered employees by statute, and the discussion is moot. Workers who fall into any of the following four categories are considered employees, and if they meet all three Social Security and Medicare criteria...
21 Nov, 2013 Views: 0 Comments: 0
Employee or Independent Contractor Status
By Jason Watson (Google+) If you don’t fit into the statutory employee or nonemployee, then the relationship must be scrutinized. The crucial test revolves around the degree of control that a business has over an individual. According to the Tax Court and IRS, an employer-employee...
21 Nov, 2013 Views: 0 Comments: 0
Behavioral Control
By Jason Watson (Google+) The behavioral control factors fall into the categories of: Type of Instructions: An employer-employee relationship exists when the business can instruct the worker on: when and where to do the work what tools or equipment to use what workers to hire or...
21 Nov, 2013 Views: 0 Comments: 0
Financial Control
By Jason Watson (Google+) Financial control refers to facts that show whether or not the business has the right to control the economic aspects of the worker’s job. The financial control factors fall into the categories of: Significant Investment: An independent contractor often has a...
21 Nov, 2013 Views: 0 Comments: 0
Type of Relationship
By Jason Watson (Google+) How a business and a worker perceive the relationship can also help define the status as either employee or independent contractor. The factors generally fall into the categories of: Written Contracts: Although a contract may state that the worker is an employee or...
21 Nov, 2013 Views: 0 Comments: 0
Tax Court’s Checklist
By Jason Watson (Google+) The Tax Court uses seven general factors that have been created over time through common law in conjunction with the IRS’s Tax Regulations. Degree of control exercised by the principal over the details of the work Which party invests in the facilities used...
21 Nov, 2013 Views: 0 Comments: 0
IRS Determination, Form SS-8
By Jason Watson (Google+) Form SS-8 can be completed and submitted to the IRS to request a determination on a worker’s status. The form may be filed by either the business or the worker. The IRS will review the facts and circumstances, and officially determine the worker’s status. Be aware...
21 Nov, 2013 Views: 0 Comments: 0
Misclassified Workers Can File Social Security Tax Form
By Jason Watson (Google+) Generally, a worker who receives a Form 1099 for services provided as an independent contractor must report the income on Schedule C and pay self-employment tax on the net profit. However, at times the worker is incorrectly treated as an independent contractor when...
21 Nov, 2013 Views: 0 Comments: 0
Salespeople As Contractors
By Jason Watson (Google+) If a salesperson does not meet the common-law rules of an employee, his or her pay may still be subject to Social Security, Medicare FUTA (Federal Unemployment) taxes. The statutory employee test was mentioned earlier, but the following eight items have been tailored...
21 Nov, 2013 Views: 0 Comments: 0
Colorado's Criteria for Contractor Status
By Jason Watson (Google+) Colorado's Take On Employee Verus Independent Contractor A person hired to perform services for pay is presumed by law to be an employee unless they meet the definition of an independent contractor or qualify under a specific exemption provided by workers’...
21 Nov, 2013 Views: 0 Comments: 0
Sample Response to CO Unemployment Claim
By Jason Watson (Google+) The following is a sample letter I wrote on behalf of a client whose independent contractor attempted to claim unemployment benefits. I am writing on behalf on my client with response to Ms. Davis claim for unemployment. While we respect the unemployment system and...
21 Nov, 2013 Views: 0 Comments: 0