Tax Laws? Where can I find the Guidelines on What Employees get 1099's and how come some employees get W-2's

Question

Does the Owner of a business have the right to determin which employees to withold taxes and use a W-2 form?
Then not withold taxes from a select few employees and use a 1099.?
All employess are treated equally and are all on on the same pay scale and have the same amount of weekly hours and workload

Answer 1

You've asked one of the most subjective questions possible. You're likely to get many different views.

Try looking at Form SS-8 from the IRS.

There is also something called Section 530 Relief here is the link:
http://www.irs.gov/pub/irs-pdf/p1976.pdf

The above is a must read.

Note that if you classify someone as an independent contractor (1099) rather than an employee (W-2); the IRS may agree but the state that you report to may assert employee status. In other words an employee for state purposes (Usually for Unemployment purposes or worker's comp claims) but an IC for Federal purposes.

The conservative answer is generally to treat people as employees.

Good Luck!

Answer 2

No, the owner of the business is not allowed to determine that - there are specific IRS rules for the determination, and that has to do with their duties and responsibilities, and their freedom to do the job when, where, and in the manner they see fit to do it. If you set the hours, place of work, or how they do their job, not just what the end results are, then they are employees and would have taxes withheld and get W-2's. In any case, if they all have the same job, then they're either ALL employees or ALL
independent contractors.

If which they are still seems gray, you can ask the IRS for a determination.

Answer 3

you do not could set up a company. even though in case you do set up a company now, doing so won't influence no rely in case you are able to deduct this, in view which you probably did not have the corporate once you incurred the fee. First, examine make confident that the headhunter is authorized to charge you. In some states, a individual might have a license to charge expenditures to companies yet to not persons. If the headhunter is unlawful by potential of state regulation from charging you a cost, and is meant to be paid purely by potential of the corporate, then do not pay. valid expenditures for finding for a sparkling interest as a W-2 worker interior your latest profession (not attempting to start up a sparkling profession and not finding for a job as an autonomous contractor), alongside with expenditures paid to employment companies, may well be deducted on the "unreimbursed worker fee" line of schedule A, which became line 21 on the 2008 type (the 2009 type isn't yet available), in case you at the instant are not reimbursed. be conscious that the quantity which you surely deduct from taxable earnings is the quantity by potential of which the completed of those expenditures, tax preparation expenditures, and specific different expenditures exceed 2% of your AGI, not the completed quantity of those expenditures.

Answer 4

Code scetion 3401 covers withholding from wages. All payments to a individual are subject to withholding except for those payments for services which are excluded under this code section. Essentially if a person works for an employer, shows up when told, does what they are told to do, does how they are told and use the processes of the employer they would be employees. In most cases employers where employers pay on a 1099 they are trying to avoid their share of payroll taxes, unemployment insurance, worker's compensation insurance premiums and payment of employee benefits.

Answer 5

W-2s are for employees. 1099s are for contract employees. If you get a 1099, you still have to pay taxes.

At the time of hiring, it is the employer's duty to inform the employee that he is a contract employee, usually through a signed agreement. Otherwise, the employee should assume he is a regular employee.

Answer 6

Read publication 15 from the IRS.

Answer 7

You should read this to help determine employees and independent contractors.

http://www.irs.gov/govt/fslg/article/0,,id=110344,00.html