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Employee Taxes and Withholding
As a business owner with employees, it is important to understand what’s involved, when they are due, how they are paid, and how much should be withheld when it comes to employee taxes.
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IRS Employees vs. Independent Contractors |
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This page contains descriptions and some examples of different applications of IRS regulations. It also has links to other IRS reference materials which assist in the process of making a determination of a worker’s status. |
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Publication 15 -- Circular E |
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The employer’s guide to employee tax withholding provides information and guidance for typical employer/employee relationships and references to other publications. (pdf document) |
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Form SS-8 -- Determination of Worker Status |
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The Form is used to request a determination from the IRS on the nature of an employee-employer relationship. Despite the length of the form, it is probable that examiners will request additional information or clarification. The review process will take several months before a determination letter is issued. The same form can be found in Spanish. (pdf document) |
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Form SS-8 Training Form |
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The training manual for examiners who process the Form SS-8 determination requests is also available. For each point, there are clarifying examples. The manual is quite lengthy, but well designed. Since it was released in 1996, there may be changes in policy or law which affect some sections.
“Is the corporate officer an employee?” is an occasional issue that appears. The short answer is “Yes”. Some circumstances may exist where the officer is not, but please review materials carefully with a professional tax adviser before making a claim to the IRS. References to prior court cases can be found here. (pdf document) |
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Technical Guidelines for Employment Tax Issues |
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Part 4, Section 23, Chapter 5 of the IRS Manual is titled Technical Guidelines for Employment Tax Issues. This guidance document reviews the fine points in analyzing the implications of a large number of employer/employee relationships. This document is quite technical and should be reviewed with professional guidance before establishing any complicated employment relationships. |
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Child Care |
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Link to the IRS' page on child care and related taxes. |
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Withholding Calculator |
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This easy-to-use calculator can help you figure your 2002 Federal income tax withholding so your employer can withhold the correct amount from your pay. This is particularly helpful if you've had too much or too little withheld in the past, your situation has changed, or you are starting a new job. You may use the results of this program to help you complete a new Form W-4, which you will submit to your employer. |
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