Do you work with independent contractors? If you do, it’s vitally important to get their tax status right from day one.
Why? Because if you get the contractor’s status wrong, and they are considered by the IRS to be “employees,” you could suffer major penalties. That’s why it’s so important to read my latest article titled Tax Tips: Tax Lawyer Is an Employee, Not an Independent Contractor.
Three ways our fact-filled article can help you:
- We’ll show you how to avoid making a costly error. Robert E. Kovacevich was a tax lawyer who claimed to be an independent contractor. The IRS said he was an employee of the company he worked for. Mr. Kovacevich fought the IRS for a decade and lost his battle. The result? He owed the IRS $94,446.99! Want to avoid Robert Kovacevich’s fate? I urge you to read the full article.
- We’ll share an important planning note with you. If you take W-2 employees and convert them to a 1099, you’ll void Section 530 relief which exposes the taxpayer to the IRS’s 20 questions. In many cases, the switch from W-2 to 1099 is fatal to the 1099 assertion. Want to find out more? Read the full article.
- We’ll explain how to establish independent contractor status. It isn’t hard, but you’ve got to know what you’re doing. The important point? You want to get the independent contractor issue correct from the get-go. The penalties for failure are too high to ignore. Get the whole story when you read the full article.