作为一个企业经营者,你可能会雇佣工人冥界p streamline your business processes. When you bring someone on board, one of your responsibilities is to decide whether they are an independent contractor or employee. If you have trouble with this determination, you can file Form SS-8. What is Form SS-8?
What is Form SS-8?
File Form SS-8,Determination of Worker Statusfor Purposes of Federal Employment Taxes and Income Tax Withholding, to determine a worker’s status at your small business.
You can file Form SS-8, or your worker can file the form if they think you have misclassified them. If you file Form SS-8, the IRS will then ask your worker to file the form as well, and vice versa.
When you file this form, provide information about your business and the services your worker offers.
Independent contractor vs. employee
Understanding what determines a worker’s status can be tricky. But, correctly classifying a worker is important. Misclassifying a worker can be detrimental to your business and its finances.
Employee
An employee is included on yourpayroll. You are responsible for withholding payroll and income taxes from employee wages and depositing them with the IRS.
One tax you need to withhold isFICA tax. FICA is made up of Social Security and Medicare taxes. With FICA, you withhold a percentage of your employee’s wages (7.65%), and you pay a matching employer portion (7.65%).
Each year, you report the employee’s wages and tax deductions onForm W-2, and give a copy to the employee, Social Security Administration, and state, city, or local tax departments. Keep a copy for yourpayroll records.
Independent contractor
Independent contractors are not your employees. They are workers you hire to fulfill a certain task. You do not withhold taxes from their wages. Independent contractors are responsible for payingself-employment tax.
Self-employment tax is comprised of Social Security and Medicare taxes, like FICA. Unlike FICA, the independent contractor is responsible for paying the full percentage (15.3%). You are not responsible for paying any part of theirindependent contractor taxes.
Each year, you report an independent contractor’s wages onForm 1099-MISCand give a copy to them, the IRS, and applicable state tax departments. Keep a copy for your records.
How to decide between independent contractors and employees
The Department of Labor recognizes the difficulty of determining a worker’s status, so they releasedsix economic realitiesto help determine a worker’s status.
The problem with misclassification
If you misclassify a worker as an independent contractor when they are an employee, the employee could miss out on minimum wage and overtime pay, protection covered by anti-discrimination and related laws, workers’ compensation, unemployment insurance, and benefits. And, the misclassified employee paid twice the amount for Social Security and Medicare taxes since you did not contribute half.
Since a misclassified employee misses out on so much, the business is responsible for paying unpaid wages and taxes as well as penalties.
Form SS-8 instructions
Form SS-8 is a four-page form, broken down into five parts:
- General Information
- Behavioral Control
- 财务控制
- Relationship of the Worker and Firm
- For Service Providers or Salespersons
On the form, you will provide contact information for your business and the worker in question, and talk about why you are filing the form. You will also describe the worker’s job and their duties, as well as how finances are handled in regard to the worker. The form asks questions about your business’s relationship with the worker and the worker’s relationship with customers.
When you complete the form, you will be prompted to attach supporting documentation, so make sure you always keep accurate records. Examples of supporting documents include Forms W-2 or 1099-MISC, contracts, and invoices.
How to file Form SS-8
You cannot electronically file Form SS-8 or send it via fax. Send Form SS-8 on its own. Though filing is free, you are required to send the completed form to the following address:
Internal Revenue Service
形式SS-8决定
P.O. Box 630
Stop 631
Holtsville, NY 11742-0630
Form SS-8 outcomes
The IRS will send one of three letters on SS-8 determination to your business and the worker:
- Determination letter:This is a binding notice that urges the business to change the worker’s classification.
- Information letter:虽然not binding, this notice could help the worker complete their federal tax obligations.
- Courtesy letter (rare):This is not binding and is used for the worker to complete their federal tax obligations.
Form 8919
If you classified your worker as an independent contractor and the IRS determines they are an employee, you must change their status immediately. And, the employee must fileForm 8919, Uncollected Social Security and Medicare Tax on Wages.
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