QuickBooksGal

Do’s and don’ts for paying part-time employees   Source:   The American Institute of Professional Bookkeepers ; Bookkeeping Tips Newsletter   Do withhold FICA on part-timers, including retirees.   Even if someone who works for you part-time also has a full-time job where they have had 100% of their FICA withheld for the year, you must withhold the full amount of FICA from their pay. These individuals can obtain a refund of any overpaid FICA on their 1040. Similarly, if a retiree receiving Social Security benefits works for you, say, one day a week, you must withhold FICA.   Don’t assume former employees who return part-time are Independent Contractors.   If they do the same job they did before they left, especially in the same tax year, they are employees, not independent contractors.   Don't base worker status on length of service.   A worker who fits the definition of “employee” is an employee and all employme...

The IRS and the states know how tempting it is to classify workers as Independent Contractors because of saved employment taxes.  That’s why Delaware and Wisconsin are targeting the construction industry with penalties of $1,000-$5,000 per violation.  Other states such as Indiana and Nevada and Ohio are starting to share information on misclassified workers and similar violations.  Expect your state to be watching you for misclassifying employees as Independent Contractors. Determining a workers’s status depends on the facts that define both the entity and relationship of the entity to the worker at the time that the services are rendered.  Here are the two categories of workers that the IRS and states are focusing on:   Common Law Employee - Works for and performs services under the control of the entity that pays for the services. Independent Contractor - An individual in business for him-/herself whose services are free of control from the entity...

Hi, I'm Jayne Miller, the QuickBooks Gal. Welcome to another in our series of “Quicklets” – informational podcasts about QuickBooks and related bookkeeping topics. You can listen to our archived podcasts at blog.quickbooksgal.com . If you are a Peachtree user, be sure to check out our new PeachPod series at peachpods.custmbiz.com . Last year I published a podcast about W-2's and 1099's that I think is worth repeating. It's getting to be that time of year and we need to be thinking about some of the things we have to do to get ready. As a business owner with employees or subcontractors you will be required to issue W-2's to employees and 1099-Misc to non-incorporated, non-employee service providers. Subcontractors and service providers who are not incorporated must provide a form W-9 to you. You'll use this information to issue a 1099 to them if they were paid $600 or more in the tax year. You can download form W-9 at IRS.GOV . I generally mail this form to all s...