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« IRS changes mileage reimbursement to 55.5 cents | Main | You created a budget for 2011- Now what? »
Saturday
Jun182011

1099 Contract Work or Employee?

Did you know that the IRS penalty for failing to withhold income tax is 1.5% and can double to 3% if the employer failed to file the information.  Then there is the 20% penalty for not taking out Social Security and Medicare, which can double in certain circumstances.

In 2010, the IRS increased its enforcement efforts.   They are carefully looking over the 1099's people are submitting for such things as working for only one company, and receiving a 1099 from the same employer year after year.  Many state workforces have signed  up to share information that resulted in their employment tax examinations.

On the flip side of this, I listened to a speaker on Bloomberg who stated there is now evidence that people don't want to be employees anymore- they don't want to have to answer to one employer, and feel they have the upper hand if they stay on contract status. They felt younger employees didn't feel any loyalty to one employer and wanted to move about whenever they choose.

This all equals an area you want to stay out of.  It seems a start of the problem comes when people have been listed as a contract laborer, are let go, then apply for unemployment compensation.  That brings the state in, looking at the situation- with the federal government right behind.

Are you in merky waters? Not sure? Google it- there are plenty of good informationals out there, or here is a link to the government aritcle:

Contractor or Employee?

 

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References (3)

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    QuickBook Training: Virtual Accounting: Wilmington, NC - Accounting: QuickBooks: Bits of Silver Blog - 1099 Contract Work or Employee?
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    Response: tax Return Scam
    QuickBook Training: Virtual Accounting: Wilmington, NC - Accounting: QuickBooks: Bits of Silver Blog - 1099 Contract Work or Employee?
  • Response
    QuickBook Training: Virtual Accounting: Wilmington, NC - Accounting: QuickBooks: Bits of Silver Blog - 1099 Contract Work or Employee?

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July 15, 2011 | Unregistered CommenterPrada leather wallets

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