From Convey 1099 News — “The IRS defines worker misclassification as any instance where an employee is classified as an independent contractor on tax documents. When employees are misclassified, employers can avoid paying certain taxes and expenses, such as Social Security, Medicare and workers’ compensation insurance. Additionally, these employees can be denied benefits such as health coverage when misclassified.
Considering the nature of misclassification, the IRS typically regards the practice as a willful act on the part of the employer and has specific guidelines to determine whether a worker is an employee or independent contractor:
- What is the nature of the relationship between the employer and the worker? Is the relationship ongoing, and is the work performed essential for the organization’s operations? Does it involve employee benefits, such as health insurance and vacation pay?
- Does the payer control business aspects of the worker’s job? These can include whether expenses are reimbursed and how the worker is paid.
- How much control does the employer have over how the worker performs his or her job and what the worker does?…”
Read the full story at Avoid worker misclassification this tax season | 1099News. [linked broken]