New Form for Employees Treated as Sub-Contractors

New Form for Employees Treated as Sub-Contractors

If you were an employee but your employer treated you as an independent contractor, use new Form 8919, Uncollected Social Security and Medicare Tax on Wages, to figure and report your share of uncollected social security and Medicare taxes due on your wages. By using Form 8919, your social security and Medicare taxes also will be credited to your social security record.

As a business owner, are your workers independent contractors or employees?  The answer can have a profound impact on how much tax you pay as a small business owner.  Knowing whether your workers are or are not employees will affect the amount of taxes you must withhold from their pay.  It will affect how much additional cost your business must bear, what documents and information they must provide to you, and what tax documents you must give to them. 

Employers who misclassify workers as independent contractors can end up with substantial tax bills as well as penalties for failing to pay employment taxes and failing to file required tax forms.  Workers can avoid higher tax bills and lost benefits if they know their proper status. 

Both employers and workers can ask the IRS to make a determination on whether a specific individual is an independent contractor or an employee by filing a Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding, with the IRS.

If you have a specific question regarding this article, as a public service, and at no cost to you, I invite you to call me with your question. Since I am in the middle of tax season, I will have to limit our conversation. I will be happy to schedule an appointment for you if you would like further consultation regarding this, or any other matter. Thank you for your interest in reading my tax column.

This column is offered as a public service with the understanding that each person's tax situation is different; that you should consult your CPA before taking any action based upon comments made in this article. Call me and I will be happy to explain my “CPA Quality Tax Preparation at H&R Block Rates” and how you can decrease your tax preparation fees, or go to www.danghazel.com for more information. I can be reached at 540-825-2771.