(Closed) Bees that do taxes… Difference between Independent Contractor and Employee?!?

posted 7 years ago in Legal
Post # 3
Member
3166 posts
Sugar bee
  • Wedding: October 2011

you probably will get screwed if he signs saying he’s an independent contractor. a friend went through this where his employer didn’t count him as an employee (to forgo the taxes as well) and said friend had to then pay an assload of money since he was considered an independent contractor. it REALLY sucked. it was like a really debilitating amount in his case.

Post # 6
Member
3166 posts
Sugar bee
  • Wedding: October 2011

@misskarianne: yeah, i’m sure i’m incorrect saying you’ll probably get screwed but honestly flags just went up in my head remembering my friend’s ordeal. i don’t remember the details, but maybe it’s something like the taxes that the company would/should be paying get passed on to the so called Independent Contractor? either way i’d be really wary and not sign if at all possible. if they try to coerce him into signing then i’m sure there’d be something illegal going on there!

Post # 7
Member
590 posts
Busy bee
  • Wedding: August 2012

I was in this same situation as a graphic designer… the company i was ’employed’ by didn’t want to pay taxes on me so I was hired as an independent contractor.. but when it came time to pay taxes I was royally screwed. Normally your employer pays 10% of your taxes (I believe) and you pay 15% but as an independent contractor you pay the full 25%. And since I used their computer, office, etc. I had ZERO deductions that you would normally have if you actually were an independent contractor. Does he own the 18-wheeler that he would have deductions?

If he does sign it… make sure to save all receipts for anything he could expense as a business owner. And save 25% of each check for quarterly taxes that he will have to pay in.

Post # 8
Member
5668 posts
Bee Keeper

It depends on the state, I believe, but Fiance has done contracting in the past. You are responsible for withholding your own income tax so if you don’t put it away (in savings or something) throughout the year you’ll be slammed with owing a ton and scrambling to come up with it when tax time comes. You also don’t have the same benefits or protections as a full time employee would. I don’t think I’d do it in your FI’s situation.

Post # 9
Member
951 posts
Busy bee

The independent contractor classification is a VERY hot topic right now with the IRS.  

The general rule is that an individual is an independent contractor if the payer (employer) has the right to control or direct only the result of the work and not what will be done and how it will be done. The earnings of a person who is working as an independent contractor are subject to Self-Employment Tax. If you are an independent contractor, you are self-employed.

You are not an independent contractor if you perform services that can be controlled by an employer (what will be done and how it will be done). This applies even if you are given freedom of action. What matters is that the employer has the legal right to control the details of how the services are performed.

If an employer-employee relationship exists (regardless of what the relationship is called), you are not an independent contractor and your earnings are generally not subject to Medicare and Social Security Taxes for Self-Employed but rather will be subject to taxes as an “employee.”

The IRS website has more information about the tax implications of the classification.

Post # 11
Member
4480 posts
Honey bee
  • Wedding: March 2010 - Calamigos Ranch

You’ll get screwed. Your Fiance will have to pay twice as much in payroll taxes instead of having his employer pay them, and he’ll have less protection if he’s laid off or injured at work. Don’t sign it. If he’s an employee, it’s not legal to classify him as an independent contractor.

Post # 15
Member
4480 posts
Honey bee
  • Wedding: March 2010 - Calamigos Ranch

Workmen’s comp, at least as far as I can tell, only applies to employees. Independent contractors have to go through a different process.

Post # 16
Member
3375 posts
Sugar bee
  • Wedding: October 2011

You don’t have to pay quarterly taxes, I believe you can pay them in one lump sum at the end of the year.

Sheesh I feel like your Fiance is being majorly ripped off. They’re making him sign something illegally and then threatening to fire him if he doesn’t sign. Surely there’s someone he can report this to?

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