What Is A 1099 Employee And Why Do Coeur d’Alene Business Owners Have Them
One potential Coeur d’Alene business tax reduction strategy is to hire independent contractors instead of employees. Because If a worker’s classification fits within the tax law, it’s a legitimate strategy that can save you thousands of dollars.
Why Coeur d’Alene Business Owners Don’ Classify Their Employees As 1099’s
But sometimes the classification isn’t clear-cut. You may think you have the Coeur d’Alene independent contractor classification correct, but when the IRS does the audit, you could learn the IRS considers those contractors W-2 employees. This can cost you a considerable sum of money in back payroll taxes, fines, fees, and penalties.
The 15.3% In Taxes
You Will Owe the Entire 15.3% The Coeur d’Alene law requires that you withhold taxes on the wages you pay to your employees. if you don’t, you are liable for 100% of the withholding’s of FICA (i.e., Social Security and Medicare) taxes that you neglected to remit to the IRS. Thus, if the IRS reclassifies your independent contractors as W-2 employees, you are on the hook for the taxes you should have taken from the paychecks.
A Way Around This Issue
If you can show the Idaho 1099-worker paid the taxes, then you aren’t liable for them. This rule prevents taxes from being paid twice. For this favorable treatment, which is on a worker-by-worker basis, you need the worker to sign IRS Form 4669, Statement of Payments Received.