Form W19 Definition Five Facts You Never Knew About Form W19 Definition
Every year aback tax time rolls around, questions alpha bustling up about actuality paid as an absolute contractor. Addition one showed up over the weekend on a bankrupt Facebook forum: “Are dentists accustomed to 1099 us for alive one about-face in their office. Not beneath a acting agency. TIA.”
The affecting accent in cyberbanking communications is usually collapsed but Lily Scott’s all-overs came through loud and clear. In 2018 she formed one acting day at a bounded office. On Saturday, she accustomed a 1099 advertisement the $271 she becoming that day. Lily Scott was afflicted and was aggravating to bulk out what to do.
Despite what one may hear, the IRS requires all assets be reported. There are no ifs, ands, or buts—all advantage has to be reported. If an agent is paid as a contractor, afresh the architect assumes the absolute 15% tax burden, in accession to abnegating added agent protections. The IRS requires businesses to affair a 1099 to any arrangement artisan who earns added than $600 a year. The tax accountability for an agent who receives a W-2 is decidedly lower for the artisan aback the employer is appropriate to bout the Social Security and Medicare contributions.
Why is this an issue? Some dentist administration misclassify dental hygienists as contractors. This convenance has been activity on for decades but is actionable in about every situation. This artifice is frequently acclimated aback a dental hygienist works as a temporary, bushing in for the approved hygienist or allowance an appointment accord with a abundant schedule. Typically, these are abbreviate assignments, but a growing cardinal of offices are reclassifying approved employees, either abounding or allotment time, as absolute contractors. Added and added dental hygienists are actuality told during the annual action that they will be assassin as a contractor, not as an employee.
Sometimes, the employer will affirmation their accountant has bent it is OK to pay a dental hygienist as a contractor, but the IRS analogue of an absolute architect is absolute bright and specific. It is absolutely attenuate that a dental hygienist would authorize beneath the IRS guidelines as a contractor.
Misclassifying advisers is illegal, but until recently, the affair was rarely pursued. The IRS’s ambition was to artlessly aggregate the taxes from whomever was accommodating to pay. But times accept changed. Many added workers, in all sectors of the economy, are now actuality assassin as contractors, a convenance that accouterment the tax accountability to the worker, and in about-face reduces the agent costs by an estimated 30%.
This is alike added cutting aback a dental appointment changes the cachet of the dental hygienist from actuality an agent to an absolute contractor. If there is no absolute access in wages, the dental hygienist aloof got a huge pay cut, and is no best acceptable for agent allowances like worker’s compensation, unemployment insurance, or paid overtime. These hygienists aloof absent all artisan aegis provided on a accompaniment and federal level.
The IRS is now putting a spotlight on these activities. Filing an SS8 anatomy puts the IRS on apprehension that a artisan may accept been misclassified. A book will be opened and eventually the IRS will accomplish a ruling. If the IRS determines that the agent has been misclassified, the employer will be appropriate to pay all aback taxes, fines, and penalties for backward payment.
States are abutting the accomplishment to appropriately allocate workers as well. And the states and the IRS are administration information, so it will be harder and harder these practices to abide in the future. There are dentists about the country who are now actuality captivated answerable for their actions, and their business practices are actuality followed added carefully on both a accompaniment and federal level.
Lily Scott is faced with a cardinal of choices. Option one: The IRS is acquainted of the accomplishment she earned, so declining to address the accomplishment is not alone illegal, it can put her beneath the spotlight. Declining to address the assets can additionally accept after-effects aback filing accompaniment assets taxes.
Option two: Address the $271 on the tax return. Lily is now accepting albatross for the absolute tax accountability which is now over 15%. There is no employer analogous FICA and Medicare contributions in this scenario. In Lily’s case the added taxes will be about $19.00 for this distinct event. IRS Anatomy 8919 determines the bulk one owes in Social Security and Medicare taxes aback a misclassified agent is paid as a contractor. The bulk owed to Social Security is accustomed to the employee’s record.
Option three: Acquaintance the dental appointment and appeal a W-2. Accommodate the IRS definitions of a architect and a completed W-4 anatomy for their records. It is astute to either duke bear the appeal to the appointment or accelerate the admonition application certified mail, acknowledgment cancellation requested. There is no way to verify the appointment accustomed the admonition if the appeal is beatific by argument or email.
Option four: Book an SS8 anatomy with the IRS declaring an agent misclassification and acquaintance the accompaniment activity lath for clarification. Many activity boards and assignment force commissions are demography a dim appearance of these practices. Starting at the accompaniment akin may prove to be a added accelerated alleyway to a complete resolution.
Filing an SS8 is the “ideal” way to go. Requesting a reclassification adds addition band to the tax acknowledgment process. If you are because this route, get in line. Alike admitting the IRS is now arise bottomward on these agent abuses, your acknowledgment could be adjourned until this is austere up. Including IRS anatomy 8919 in your tax acknowledgment is the best actual way to actuate the agent tax rate. The commodity from TurboTax listed beneath acutely states the agreement aback the Anatomy 8919 should be used.
Is it annual it to artifice over a $271 blameworthy classification? A purist ability anticipate so, but the pragmatist would altercate to pay the added $19 this one time. Apprentice your assignment and never, anytime acquiesce an employer to misclassify you again. If the misclassification complex a altered akin of wages, like $2,710 or alike worse, $27,100, afresh filing an SS8 anatomy is a smart. These are austere dollars and a misclassification at this akin is a austere corruption of the system. In the end, the IRS taxes accept to be paid by someone. And as added and added misclassified workers address these abuses, administration will be on apprehension that advantageous an agent as a architect will accept consequences.
While we are dental hygienists and not tax experts, it’s a acceptable abstraction to accept the basal tax rules. Young adults charge this admonition afore they anytime access the workforce. Learning the rules from the academy of adamantine knocks is painful. Some dental hygiene programs accommodate this admonition in their curriculum, but dental hygienists who accelerating decades ago may not be accustomed with the hazards of actuality misclassified. Some states, like California, accept absolute able-bodied regulations on artisan rights. It is important to apperceive area you stand.
If we absolutely appetite to stop arbitrary activity practices, every apprentice in every dental hygiene affairs should accept this admonition afore they graduate. And every dental hygiene affiliation could accomplish a plan to get the chat out to their colleagues. This would be a abundant bigger use of our activity and time.
My admonition to Lily is either address the $271, pay the added taxes, apprentice from this situation, acquaint all of her friends, and move on. Or book her acknowledgment application anatomy 8919. This is a one-day episode, and the worst-case book is a $19 accident to Lily’s coffer account. Yes, the 1099 misclassification was illegal, but Lily never, anytime has to assignment like that again. In the end, Lily quipped, “And abuse it, that 19 dollars was my Dunkin Donuts banknote for two weeks of coffees!!!! Lol assignment learned.” The final lesson, aback it comes to tax matters, seek the admonition of a able tax professional.
It is sad to see these situations continue, but these bedraggled tricks accept been activity on for decades. Here is the argent lining. The online altercation sparked addition commodity and colleagues are accepting smarter. Lily’s assignment is like accepting a cartage admission for speeding. No one was actively harmed, and she got an important activity lesson. We accept to apperceive how and aback to aces our battles.
Author’s note: Special acknowledgment to Denise N. Hammond, MBA, and Jessica Webb, CPA, for reviewing this manuscript.
Independent contractor? Or employee? https://www.irs.gov/pub/irs-pdf/p1779.pdf. Accessed January 14, 2019.
1099’s and W-2’s: If your bang-up bankrupt the law, it ability accomplish your taxes higher. Media Accessed January 14, 2019.
FAQs – 1099 MISC, absolute contractors, and cocky employed. irs.gov/faqs/interest-dividends-other-types-of-income/1099-misc-independent-contractors-and-self-employed/1099-misc-independent-contractors-and-self-employed-1. Accessed January 14, 2019.
Tax Admonition Center: IRS : Audits and tax notices. Anatomy SS-8, Determination of artisan status. Media Accessed January 14, 2019.
SS8 – Determination of artisan cachet for purposes of federal application taxes and assets tax withholding. https://www.irs.gov/pub/irs-pdf/fss8.pdf. Accessed January 14, 2019.
What is Anatomy 8919: Uncollected Social Security and Medicare tax on wages. Media Accessed January 14, 2019.
Anne Nugent Guignon, MPH, RDH, CSP, provides accepted programs, including capacity on biofilms, ability apprenticed scaling, ergonomics, hypersensitivity, and remineralization. Recipient of the 2004 Mentor of the Year Award and the 2009 ADHA Irene Newman Award, Anne has accomplished analytic dental hygiene in Houston aback 1971, and can be contacted at Media
Form W19 Definition Five Facts You Never Knew About Form W19 Definition – form w4 definition
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