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The distinction between independent contractor and employee is an important one in the United States, as the costs for business owners to maintain employees are significantly higher than the costs associated with hiring independent contractors, due to federal and state requirements for employers to pay FICA (Social Security and Medicare taxes) and unemployment taxes on received income for ...
Key Tax Forms for Independent Contractors. Like most employees, the taxes for an independent contractor are typically due on April 15 of each year. The independent contractor files a Form 1040 ...
Employers must report the incomes of employees and independent contractors using the IRS forms W-2 and 1099, respectively. Employers pay various taxes (i.e. Social Security and Medicare taxes, unemployment taxes, etc.) on the wages of a worker that is classified as an employee. These taxes are generally not paid by the employer on the ...
Estimated taxes include both federal income tax — which is organized by tax brackets that run from 10% to 37% — and self-employment tax. There’s also the matter of taxes that fund Social ...
If you're self-employed or a freelancer, you likely get paid as an independent contractor rather than an employee. The IRS defines an independent contractor as someone who performs work for ...
However, such employees are more expensive to hire than independent contractors because Social Security and Medicare taxes must be paid on wages in the form of FICA tax. [2] Statutory employees pay FICA tax through their employer, and so do not pay self-employment tax; despite this, they must report expenses, income and wage. [3] Similar to ...
Misclassification – the practice of treating an employee as an independent contractor – is a major enforcement priority of the US Department of Labor. Household employment is a targeted field. In 2015, Wage and Hour Division investigations into misclassified workers resulted in more than $74 million in back-wage payments for more than ...
Some experts think Trump might favor keeping gig workers classified as independent contractors. Between employee reclassification and independent status, the decisions made could directly affect ...
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