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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12044
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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When ring a employee how can we paid m on a 1099 form before

Customer Question

when hiring a employee how long can we paid him on a 1099 form before putting him on taxes .. 2 weeks or 3 months
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

Hi,

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I'm not sure I completely understand your question... the difference between 1099 and W-2 isn't really a time issue (although it may be related, if say expectations change after a point in time)

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Whether someone is an employee (w-2) or a contractor (1099-MISC) is based on, more than anything else, control over the individual.

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From IRS: The general rule is that an individual is an independent contractor if you, the person for whom the services are performed, have the right to control or direct only the result of the work and not the means and methods of accomplishing the result. If this is the case, then the individual should be considered an independent contractor.

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Can you give me more details?

Expert:  Lane replied 1 year ago.

Here's how IRS puts it: From https://www.irs.gov/taxtopics/tc762.html

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Topic 762 - Independent Contractor vs. Employee

For federal employment tax purposes, the usual common law rules are applicable to determine if a worker is an independent contractor or an employee. Under the common law, you must examine the relationship between the worker and the business. You should consider all evidence of the degree of control and independence in this relationship. The facts that provide this evidence fall into three categories – Behavioral Control, Financial Control and the Relationship of the Parties.

Behavioral Control covers facts that show if the business has a right to direct and control what work is accomplished and how the work is done, through instructions, training or other means.

Financial Control covers facts that show if the business has a right to direct or control the financial and business aspects of the worker's job. This includes:

  • The extent to which the worker has unreimbursed business expenses
  • The extent of the worker's investment in the facilities or tools used in performing services
  • The extent to which the worker makes his or her services available to the relevant market
  • How the business pays the worker, and
  • The extent to which the worker can realize a profit or incur a loss

Relationship of the Parties covers facts that show the type of relationship the parties had. This includes:

  • Written contracts describing the relationship the parties intended to create
  • Whether the business provides the worker with employee-type benefits, such as insurance, a pension plan, vacation pay, or sick pay
  • The permanency of the relationship, and
  • The extent to which services performed by the worker are a key aspect of the regular business of the company

For more information, refer to Publication 15-A (PDF), Employer's Supplemental Tax Guide, or Publication 1779 (PDF), Independent Contractor or Employee. If you want the IRS to determine if a specific individual is an independent contractor or an employee, file Form SS-8 (PDF), Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding. For information on eligibility for a voluntary program to reclassify your workers as employees with partial relief from federal employment taxes, visit Voluntary Classification Settlement Program (VCSP) on IRS.gov.

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Hope this helps

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Please let me know if yo have ANY questions at all

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Lane

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J.D. a Doctoral degree in the law, MBA in Finance & Tax, CFP and BBA (Mercer School of Business and Economics)

Expert:  Lane replied 1 year ago.

Hi,

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I'm just checking back in to see how things are going.

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Did my answer help?

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Let me know…

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Lane

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