You know how for years, entrepreneurs have avoided needing to have “Employees” because they’re able to classify the people who do some part time work for them as “Independent Contractors”?

Well, there’s been some abuse of this rule and now the IRS is shaking things up.

(Thanks a lot to all charlatans who blew it for us)

Here’s a couple of serious facts:

1. If the IRS thinks you misclassified people you paid to do ‘side’ or ‘contract’ work, they could reclassify them as ‘employees’ and charge you back payroll taxes and penalties for not paying. (huge $$$$$$ fines)
2. If the people you hire ARE truthfully employees, then man-up and classify them as such and pay the damn taxes, quit ruining the Independent Contractor status for the rest of us.
3. Be mindful that immigrants (both illegal & green-carded) are being advised that if they don’t to pay the taxes on the money they made as an “Independent Contractor” than they can fill out a form and tell the IRS they’re actually employees.

You gotta get your situation straight on this stuff…the IRS means business and you need to get informed.

Here’s the deal…If you pay anyone consistently more than $600 a year, you need to read the new facts on this stuff.

Check out Dr. Sara’s Tax Blog for a recent post on this topic.

Norm