Tuesday, May 6, 2008

Employee vs. Independent Contractor Podcast

One of the hot issues that the IRS is looking into these days is the "worker classification" issue. That is, the IRS wants to know whether businesses are properly classifying workers as employees or independent contractors.

The consequences of classifying a worker as one or the other relate principally to whether the business has to withhold income tax, social security tax and medicare tax from a worker's wages. A business must do so if the worker is an employee. Further, if a worker is an employee, half of the social security and medicare tax liability falls on the business' pocket book.

If the worker is an independent contractor, all of the responsibility for paying income tax and social security/medicare tax (that is, self employment tax) falls on the worker. Usually this means the independent contractor must save enough money to pay the taxes due and make quarterly estimated tax payments.

I have recorded a podcast that discusses these and other issues that arise in the employee vs. independent contractor setting. I encourage you to listen to it. If you have follow up questions, certainly let me know. (rbt@wbb-law.com)

The Employee vs. Independent Contractor podcast can be found by clicking here.

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