A 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]