Paying Workers - What Can You Write-Off?



Author Login \| Popular Articles \| RSS Feeds \| Sitemap

Home \| Finance \| Taxes Paying Workers - What Can You Write-Off? By: Richard A. Chapo As your business grows, you are going to need help. This help comes in the form of employees and independent contractors. What you can write-off is dependent upon how your helper is classified - as an employee or independent contractor. Independent Contractor Whenever possible, you want to use independent contractors to assist you. Payments to independent contractors are completely deductible. You simply claim the deduction on your return. If you pay them more than $600 during the tax year, you also must issue a 1099-MISC in January of the following year. Importantly, you do not have to pay employment taxes or make withholding on the compensation. Unfortunately, the IRS doesn't allow you to randomly classify a worker as an independent contractor. The key to the determination is whether you "control" the actions of the worker. Generally, you must be able to show the IRS that the worker is an independent contractor because they have the ability to control the details and means by which the work is accomplished. To this end, it is helpful to show the worker sets their own ours, has a work place and risks not getting paid if the work is below standard. Employee If your worker is classified as an employee, the tax burden increases. Under federal law, you are responsible for paying employment taxes related to the worker, even if there is only one. Initially, you must withhold FICA, Social Security and income taxes from employee paychecks. As an employer, you must also contribute FUTA payments on your own, to wit, they are not deducted from the employees pay. FICA stands for the Federal Insurance Contribution Act. This Act created a system to collect and provide benefits for workers who retire, are injured or become disabled. FICA is better known as Medicare. FUTA stands for the Federal Unemployment Tax Act. This Act created a system to provide unemployed workers with temporary benefits until they obtain a new job. The system works in tandem with state unemployment acts. Most consider it a disaster, but you still have to pay. In Closing As you can see, it is cheaper to use independent contractors versus employees. The tax burden is significantly less, but make sure the IRS doesn't reclassify them as employees. Article Source: http://www.articlesnatch.com About the Author: Richard A. Chapo is with BusinessTaxRecovery.com - obtaining tax refund recovery for overpaid small business taxes. Visit BusinessTaxRecovery.com to read more business tax articles or our new tax credits page. Tags: finance, taxes, fica, employee taxes, write-offs, independent contractor, futa, taxes, tax, irsfica, employee taxes, write-offs, independent contractor, futa, taxes, tax, irs \| Print \| Ezine Ready \| \| Recent Taxes Articles Income tax fraud knowledge is must learn nowadays By: Esteri - The entire world agrees that these are days of hard living when people should be cautious with the way each hard- earned dollar is spent. The cost of inflation on fuel and food stuffs has shaken every country especially the third world countries whose economies are still growing and being revived. A Christmas Without Cash By: Corney Vanhelden - Okay, my illustrious readers, I want you to sit down and come with me on a modern day horror story that will leave you quaking in your boots – I promise!! Here we go. One upon a time there was a successful entrepreneur who owned and operated a furniture store. The Ruble is in Trouble! By: Corney Vanhelden - by Corney Vanhelden Russia is now faced with another possible huge devaluation of the ruble. Senior Citizens & Taxes By: Dev Saras - Senior citizens have several tax exemptions, including property tax exemptions and income tax benefits. A great portion of the senior citizen population lives on social security checks. Maybe they also have some dividends coming in from their investments. That's most probably all. The Aftermath of the Presidential Elections By: Corney Vanhelden - All of us are aware that the economy is currently in turmoil – the deficits in budget are on an ever-spiraling growth curve, mortgage payment defaults are continuously on the rise, spending power has drastically decreased! Experts say that all these financial implications and economic issues have contributed towards the precipitation of results in the recent presidential election. Zoning for the Love of Money By: Corney Vanhelden - By Corney Vanhelden What I’m talking about here are currency zones: geographic areas that use a specific currency for most financial transactions. Did you know that in the world today there are four major currency zones? Lower Your Taxes and Help Your Favorite Charity By: Robert D Cavanaugh - Given the fact that most seniors are interested in a secure income, reducing risk and lowering taxes, here is a planning technique to consider if you are trying to increase your income. Maybe you have an investment that is coming up for renewal and you discover the rate is going to be lower. Implications of the New, Heightened Tax Return Preparer Penalties By: Hank Gutman - The Tax Governance Institute (TGI), a forum dedicated to the analysis of corporate issues relating to day-to-day and long-term tax risk management, recently hosted a live video-cast panel discussion to review the implications of the new, heightened tax return preparer penalties. REAPmoreWealth Announces Innovative "Own Nothing, Control Everything" Real Estate Investment Methodology By: Dave Salcido - Nelson Rockefeller once said the secret to success is to “own nothing, but control everything”. Is this success formula applicable to real estate? The rules of Real Estate Investing are changing almost by the second. What you don't know can hurt you. What you DO know canbring you wealth! Many of today’s so-called Gurus are teachingyesterday’s news. How to Hire a Tax Resolution Company You Can Trust By: Michael Rozbruch - Tax-burdened Americans seeking professional help in solving their IRS problems have more options today than ever before. The tax debt relief industry has seen dramatic growth over the past 5 years as many companies have entered the arena to offer help to taxpayers impacted by a sharp increase in IRS tax compliance enforcement. Comments Search Ebay Still can't find what you are looking for? Search for it!	ArticleSnatch Authors: Member Login Sign Up Submit Articles FAQ Submission Guidelines Top Authors For Publishers: Most Popular Articles Ezine Notifications Article RSS Feeds Terms of Service For Everyone: Blog About Us Link to Us Contact Us New Stuff Link Directory Privacy Policy Sitemap Resources Our Sites: Free Magazines Book Your Hotel Stay Free MySpace Tools Massive Video Collection Broadband Speed Test Click here to submit your free, permanent ads to TheFreeAdForum.com!

Submit Your link to the Open Link Directory Project

Copyright 2005-2008 MJE Sales, LLC. All Rights Reserved.
Proud member of the ArticleCkr Search Network Search Network!
ArticleSnatch.com is free for both publishers and authors to use and is supported entirely from advertising revenue.
Use of our service is protected by our Privacy Policy and Terms of Service.

Paying Workers - What Can You Write-Off?

Recent Taxes Articles

Comments

Search Ebay