2021 – 02/26 Is your new worker an employee or an independent contractor for federal income and employment tax purposes? Correct classification can be tricky, but the potential penalties for misclassification are high. If a worker is an employee, you must withhold federal income and payroll taxes, pay the employer’s share of FICA taxes on the wages plus FUTA tax. There may also be state tax and other obligations. These requirements don’t apply to a worker who’s an independent contractor. You just send the independent contractor a 1099 form for the year, showing the amount paid to that person (if the sum is $600 or more). Visit or contact us for more information.
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