UCC  Newsletter

If you think you have an independent contractor working for you? Do you pay with a 1099 as opposed to a W2? If so the government might be paying a visit!

For years it has been a constant struggle to determine for whom you should pay taxes and who should pay their own taxes. From an unemployment standpoint the question is: do I include these payments when calculating my SUI tax? Well, the struggle is over, the state has decided that almost everyone is an employee!

It is true that there are specific rules and guidelines to use when determining the difference between and employee and an independent contractor. However, the federal rules differ from the state rules and each state is slightly different from the next. Realistically, it has been more a question of how rigorously the states do their audits than what the rules say.

For social and economic reasons there has been an incredible increase, a “push” in audit activity in this area. Therefore, if you pay people with a 1099 you might want to take certain precautions.

1. Count the number of 1099s you issue and estimate potential liability.
2. Keep advertising literature, business cards and other paperwork from vendors.
3. Speak with us prior to dealing with the government.

Please feel free to discuss this matter with us at any time.