Is your New Hire an Employee or Independant Contractor?

The purpose of this article is to discuss and understand the difference between a W-2 employee and a 1099 independent contractor. How do you determine if the individual is an employee?

To answer this question, first let’s look at the Common Law test, then we will review the factors used by the IRS in determining employee status and what to do if you think you have misclassified workers.

Common Law Test

The basis of the common law test is straightforward:  Does the employer have the right to control what work will be done and how that work will be done?  If the answer is yes, then the worker is an employee subject to payroll tax withholding.  If the employer has the right to control the result and not the method in which the result is achieved, then the worker generally qualifies as an independent contractor.

The table below is used for determining whether a [Read More]

January 19th, 2018|Articles|

When Would I Provide a W-2 and 1099 Form to the Same Person?

W2 + 1099 FormA worker’s role determines which information return you would provide. You provide a Form 1099-Misc to independent contractors and Form W-2 to employees. However, there may be instances where a worker may be serving as an independent contractor and an employee for the same entity.

A Federal Tax court case, Ramirez V. Commissioner, stated, “that the fact that a person is an employee in one capacity does not foreclose the possibility that he can be an independent contractor with the same employer in another context”. Employers need to review the details of their payment arrangements with their employees to correctly classify them for W-2 and 1099 tax purposes. Some quick examples of people who correctly should be given both a W-2 and a 1099 in the same year are:

• An employee of a property management company also provides contractor/maintenance [Read More]

August 27th, 2017|Articles|

Amazon FBA and Your Taxes

Amazon Pic

Amazon through their FBA program, makes it easy for online sellers to operate an online store. It has in fact opened up the US consumer market to a lot of non-US individuals who may not be aware that they are creating an obligation to file US tax returns.


What makes FBA different?

Generally speaking Amazon FBA creates an agency relationship between you and Amazon, which makes Amazon your agent in the US. Under most tax laws that means you have a physical presence in the US and in a large number of states in the US because your agent (Amazon) is physically located in the US and in a number of states in the US.

I see this situation treated incorrectly a lot, because people tend to focus on the exclusion that is commonly available under tax treaties and tax statutes to [Read More]

March 18th, 2017|Articles|