Independent Contractor vs Employee: IRS Does Not Care
The President’s Tax Enforcement Will Raise 700 Billion Now Through The Next Decade!
Whether you’re an independent contractor vs employee, the IRS just announced they are hiring another 87,000 employees.
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That means your chance of audit is going through the roof.
To put it in perspective, the IRS has gone from a budget in 2021 of about $12 billion to a budget in 2022 of over $100 billion.
One of the targets will be the old issue of what qualifies as an independent contract vs an employee.
If you are hiring people as independent contractors, you better make sure you have dotted your “i’s” and crossed your “t’s”.
The penaties for screwing up the distinction between the two are huge!
Watch this important video on the difference between independent contractors and employees:
Employers are hiring people as independent contractors in order to avoid paying the employment taxes and benefits for them, but are they really independent contractors?Lee Phillips
This question affects Real Estate rehabbers and investors.
Are you hiring someone to help with the work or keep maintenance up in the units?
The list goes on.
The distinction between an independent contractor and employee hinges on a number of tests.
Make sure you get it right.
Get It Wrong And You Could Catch An Audit
If you paid someone as an independent contractor with a 1099 status, the IRS will assess 100% of the taxes to the employer, even if the “independent contractor” has paid their taxes.
Plus, you will be hit with penalties and interest.
It can get really ugly.
The IRS isn’t above extortion either.
They will say the person is an employee and it will cost you more to fight the IRS and prove the person is actually an independent contract than it will to pay the IRS bill.
Be careful of this one because the new agents will be trying to squeeze every dime out of you.
The president’s “American Families Plan” will be offset in part by a tax enforcement effort that administration officials believe will raise $700 billion over a decade.
President Biden wants to increase funding for the Internal Revenue Service by $80 billion, an effort his administration says will bring in more tax revenue to help pay for his economic agenda.Erin Scott for The New York Times
Independent Contractor vs Employee Business License Test
The big issue the IRS is watching for these days is a business license Test.
Does your independent contractor have their own business license?
Guest Post By Lee Phillips, United States Supreme Court Counselor, Enhanced By Rural Money