Is this Legal? He says that there is a gray area..that makes it okay. Is he getting away with anything? He tells me..he only does it because he knows I could use the money. ( I don't think that is his reason) I've never worked at a job like this and don't know how I'm going to pay in at the end of the year. Help!
2006-10-24 08:23:55 · 6 answers · asked by Paige 2 in Business & Finance ➔ Taxes ➔ United States
No, it's not a gray area. It's very clear that if he sets your hours and provides your tasks, you are an employee and he is required to withhold taxes. MAYBE you or he has confused contractor with salary exempt, which is you are paid the same regardless of your hours. But a secretary is not an independent contractor except under extraordinary circumstances.
As far as "using the money" he's putting you in a position to be taxed twice the amount than if he held up his end.
Here is the form the IRS uses to determine your status:
http://www.irs.gov/pub/irs-pdf/fss8.pdf
Read up on the topic here:
http://www.irs.gov/businesses/small/article/0,,id=99921,00.html
2006-10-24 08:30:06 · answer #1 · answered by misslabeled 7 · 4⤊ 1⤋
There are situations where it is legal to pay someone as an independent contractor, but the IRS has strict rules for who can be considered an independent contractor, with such requirements as the ic, not the boss, sets the hours when you do your work and how you do it. If the job is real short term you might also qualify. Most secretarial jobs would be classified as employees, not contractors.
As an independent contractor, you will have to pay both halves of your social security payments. Otherwise he'd have to pay half, and withhold the other half from your wages. Sounds like he's trying to save himself some money, not looking out for you. There might or might not be a few deductions you could take as a contractor, but they aren't likely to add up to what you'd lose on the social security payments.
An independent contractor should make quarterly payments to the IRS.
Read the links below from the IRS website.
2006-10-24 15:33:40 · answer #2 · answered by Judy 7 · 2⤊ 0⤋
I hope this is the only way he is putting the screws to you. As an independant contractor you set your own hours, come and go as you please, and nobody can tell you how to do your job. You are also responsible for the full amount of FICA tax ( 15.3% ). Your boss does not have to pay half the FICA, no unemployment compensation and no workmans compensation insurance. However, if the state investigators start looking into his affairs he can and will have to pay everything clean back to the beginning, plus a big fine, plus interest, and maybe even jail time.
Your circumstances determine your years tax. If you are single and under 65 the standard exemption and dependancy amount for you are $ 8,350.00 for 2006. The first $ 10,000.00 in taxable income above that is taxed at 10% and after that at 15%. So you can make 8,350 and pay no federal income tax. However, FICA applies to everything so if you make 10,000 you will use sch SE for a FICA tax amount owed of $ 1,412.95. As a rule of thumb set aside 15% of your gross amount to pay the FICA bite. If you want to look for another job contact your state wage and hour division and report your "boss" and his activities. If he is doing it to you he is probably doing it to somebody else. If somebody is hurt on the job there is no disability insurance or unemployment or anything. Then a sharp attorney would clean him out of everything he owns. The things in place are there for the protection of everybody concerned and when somebody tries to slip around the edges everybody is hurt.
If you want specific questions answered contact me. 36 years hands on experience here.
2006-10-25 11:09:25 · answer #3 · answered by acmeraven 7 · 0⤊ 0⤋
Been there, done that!
I was hired to work out of my home as an Assistant to a marketing director (for a company based in Okla). I "assumed" I was working directly for the CEO, but come to find out, he had no intention of claiming me as an employee to the IRS. I suspect he claimed me simply as a "business expense".
So I was stuck with the 15% taxes, which he would have had to split. Definitely learned my lesson the hard way.
Did you get hired as an Independent Contractor? Was there an assumption you were working for a company? While he's right that you can work as an independent contractor, as a secretary, he's wrong to screw you out of the taxes.
Leave now, before you're in any deeper. And feel free to report him to the IRS. I didn't in my case, just didn't want the hassle and didn't know the additional expense it might cost me.
You will able to claim all your expenses on your taxes, but it won't help with that 15% tax on your total income. Which if you don't coordinate now with the IRS, you will owe in full in April '07.
www.irs.gov and search for tax info for independent contractor.
2006-10-24 15:33:46 · answer #4 · answered by Anonymous · 1⤊ 0⤋
Actually he is trying to get out of paying the Social Security taxes employers are required to pay. If he classifies you as a contractor he gets out of it. If he cared about you 'having' the $$, he would let you put down more exemptions on the W4 (still risky since many people who do this, don't save the necessary $$ for April 15th). He is also getting out of the disability fees since you will NOT be covered under workers comp.
You need to get a job at a REAL company and report him to the state when you leave.
2006-10-24 15:36:21 · answer #5 · answered by kate 7 · 2⤊ 0⤋
Talk to the state's employment board - now.
Did you sign an independant contractor agreement?
No? you are an employee, he pays taxes on you.
Yes ? you are contractor, you pay taxes.
Get this straight fast or save up some money for the problems coming to you.
2006-10-24 15:30:32 · answer #6 · answered by Anonymous · 1⤊ 1⤋