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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16576
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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I have a small business in Illinois. I use students to assemble

Customer Question

I have a small business in Illinois. I use students to assemble trophies on a part time seasonal basis. Can I treat them as 1099 employees and pay them in cash leaving them responsible for all taxes due?
Submitted: 3 years ago.
Category: Tax
Expert:  Megan C replied 3 years ago.

MyVirtualCPA :

Hello! I am a CPA here to assist you with your tax questions. My goal is to provide you with excellent service today.

MyVirtualCPA :

If you control when and where the students work, then they are W-2 employees, not 1099 contractors

MyVirtualCPA :

According to the IRS,

MyVirtualCPA :

Common Law Rules

Facts that provide evidence of the degree of control and independence fall into three categories:

  1. child">
    Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
  2. Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
  3. Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

Businesses must weigh all these factors when determining whether a worker is an employee or independent contractor. Some factors may indicate that the worker is an employee, while other factors indicate that the worker is an independent contractor. There is no “magic” or set number of factors that “makes” the worker an employee or an independent contractor, and no one factor stands alone in making this determination. Also, factors which are relevant in one situation may not be relevant in another.

The keys are to look at the entire relationship, consider the degree or extent of the right to direct and control, and finally, to document each of the factors used in coming up with the determination.

MyVirtualCPA :

More information on this can be found HERE

MyVirtualCPA :

Is there anything else that I can assist you with today?

MyVirtualCPA :

Do you have further questions?

MyVirtualCPA :

If not, please rate my response as "excellent" so that I may receive credit for assisting you today

Expert:  Megan C replied 3 years ago.
Thanks, Jess - for the opportunity to assist. I see you had trouble with live chat. If you would, please review my response. If you have further questions, please reply below. Otherwise, please rate as "excellent" so that I may receive credit for assisting you today.
Expert:  Megan C replied 3 years ago.
Thanks for allowing me the opportunity to help you. Please let me know if I can be of any further assistance to you in this matter. I really enjoyed working with you – please feel free to request me again when you come back to ask another question. Simply enter "MyVirtualCPA" in the subject of your question Thanks again for being a JustAnswer customer