Could you be underpaying in taxes?

During this time of year, it appears that retailers and employees are definitely reaping the benefits of their hard work. Between all the returns and the gift cards that are given as gifts, this week is arguably the most profitable week of the year, even though it is the last week of the year.

Nevertheless, with all the money that temporary workers will earn, Uncle Sam will still want his cut. After all, it is the law. But for many temp workers, there may be questions about how they will be taxed, and how much they may owe when tax time comes around in April. While it may remain to be seen the actual taxes that will be paid, it will largely be determined by an employee’s classification; whether they are seen as employees or contractors.

 How is the difference determined? This post will briefly explain. 

Essentially, there are a number of different factors that are considered, including degree of control the employer exerts over the worker and how the work is done. For instance, if there are set hours for the worker, materials and/or training is provided for the worker, and the employer determines how the work is supposed to be done, chances are that the worker will be classified as an employee.

This means that the employer is responsible for paying half of the Social Security and Medicare taxes (otherwise known as FICA) and withholding the amount the worker is responsible for paying.  So if you have questions about how you are classified, your employer, or an experienced employment law attorney, can advise you. 

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