As most employers know, the classification of a worker as an independent contractor or employee is a major consideration when it comes to taxes. It doesn’t necessarily matter how you label an employee; rather, the role the employee has and the nature of their job duties will play a huge part in determining their status.
Re-classifying a worker can result in penalties, self-employment tax, and/or withholdings that an employer will suddenly be required to pay. If reclassification cases are not handled correctly, serious consequences can result, such as an employer or responsible party owing trust fund recovery penalties. These consequences have huge implications for the business’ cash flow, tax liabilities, and more.
Remember, there is no hard and fast rule determining how to properly classify a worker. This means that sometimes an employer can be seemingly forced into a situation that they would have been otherwise able to avoid with professional guidance. A qualified tax professional or tax attorney can help you sort through the details of your unique employee circumstances to help you make a classification decision that is in your best interest.
Whether you are looking for expert tax planning to help you classify a worker properly and avoid any bumps, or you need fast damage control to help fix an existing classification situation, the experienced tax attorneys at Abajian Law are available for a no-obligation consultation today.
Professional Tax Representative
October 4, 2022