Tax Day 2024 and How to Get an Extension from the IRS
Tax Day is on Monday, Apr 15, 2024. Not ready to file? Submit an electronic request to the IRS for an extension ASAP!
Looking to hire a new employee for your small business? Maybe you just joined a new company and are deciphering the complicated language of the IRS withholding forms. Regardless of the scenario, do you know the difference between a 1099-MISC and W-2 Employee?
When it comes to classifying an employee, two forms come to mind: Form 1099-MISC and Form W-2. Each form corresponds to the employee's relationship with the employer. Form W-2 is designed for employees with a fixed work schedule, whereas 1099-MISC is meant for independent contractors. While this may seem straightforward, the practice of determining a W-2 and 1099 employee in a real scenario can be challenging.
A 1099 contractor and W-2 employee are subject to different handling by their employer. Therefore, employers must have it right – are they employing W-2 employees or 1099-MISC contractors? The answer will determine work to be done by both parties.
Employers report employee wages, bonuses, and all remuneration using IRS Form W-2. By doing this, the employer becomes responsible for withholding and social security taxes on behalf of the employee. On the contrary, independent contractors – or workers that use a 1099-MISC – are responsible for recording their compensation to the IRS.
Independent contractors are considered self-employed. Because of this, they do not receive non-payroll benefits such as health, life and disability insurance, an IRA match program or other perks.
There are strict guidelines provided by the IRS for determining an employee from a contractor. Take the time to become familiar with the guidelines and requisites if this topic is relevant. It will save you time and thousands of dollars in the long run. Below are a few scenarios to determine the status of a worker.
When it comes to payroll, knowing if a worker is classified as an independent contractor or an employee is essential. Generally, this comes down to the relationship that the employer has with the worker: Is the job more tasked based with a flexible schedule or performance based and on a fixed schedule?
Tax Day is on Monday, Apr 15, 2024. Not ready to file? Submit an electronic request to the IRS for an extension ASAP!
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