Employee vs. Contractor: How to Tell the Difference and Why It’s Important
Jason Dinesen is the President of Dinesen Tax & Accounting, P.C., a public accounting firm in Indianola, Iowa. His practice focuses on tax and accounting services for small businesses and individuals. Dinesen has extensive experience working with a third-party administrator of retirement plans and is a prior presenter of multiple 1099 seminars. Dinesen majored in corporate communications with a minor in management from Simpson College. He started his practice in 2009.
This webinar will cover all aspects of employee vs. contractor, including how to tell the difference, and what to do in an IRS audit. We will discuss the IRS’s 3-factor test for determining if someone is a contractor or an employee, and the older 20-factor “common law” test that IRS auditors can still reference. We will cover the Form SS-8, where a worker can file a Form SS-8 with the IRS to determine if the worker is a contractor or an employee, and what an employer should do if a worker files and SS-8.
Three options are available for businesses caught in a reclassification audit: Section 530 Relief, which provides a safe harbor where the IRS is prohibited from retroactively reclassifying workers; Section 3509 Relief, where the IRS retroactively reclassifies workers but a business can get some relief for back payroll taxes owed; and the Voluntary Classification Settlement Program, where a business voluntarily reclassifies workers before an IRS audit. Each of these options has requirements and cautions, which we will cover.
We will also cover the new Form 1099-NEC, new for 2020, for reporting contract labor payments.
- The three factors the IRS looks at in determining if someone is a contractor or an employee
- The 20-point “common law” test for determining contractor vs. employee
- The reporting implications of employee vs. contractor, such as 1099 vs. W-2, payroll taxes, etc., including a discussion of the new Form 1099-NEC
- Discuss what happens if the IRS re-classifies contractors as employees
- Relief under Section 530 for IRS reclassification
- Relief under Section 3509
- The Voluntary Classification Settlement Program
Course Level - Basic
Who Should Attend
- HR Professionals
- Payroll Professionals
- Office Managers
Why Should You Attend
At the conclusion of the webinar, participants will be able to explain the difference between a contractor and an employee, and why it is important to know the difference. We will cover the 3-factor test the IRS uses for determining if someone is a contractor or an employee, as well as the older 20-factor test. We will discuss what happens if the IRS re-classifies a contractor as an employee, and the possible relief available (called “Section 530” relief). We will also discuss the new Form 1099-NEC for reporting contract-labor pay.
If the IRS reclassifies your contractors as employees, it can be financially devastating for your business. This webinar will demonstrate how to tell the difference between a contractor and an employee, and the types of relief available in a reclassification audit.