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What is the best way to file taxes when you have hired help? 1099 or W-2?
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Samantha Clifford
AgentKate Answered question
If you hire an employee you must file payroll taxes at a minimum every quarter. Depending upon the size of your entity you may need to file more frequently. You don’t pick and choose whether someone is an employee or independent contractor.. If you control the person and tell them everything they must do they will generally be an employee requiring you to file payroll and deliver a W-2 on or before February 1 of each year. If the person controls the means of what to do, decides their own hours etc. they may qualify as an independent contractor.
Independent Contractor v Employee
There are numerous tests for an independent contractor. You may be an independent contractor for tax purposes but an employee for workers compensation. The IRS has numerous tests and without the specific details there is no way to know if the person would qualify as an independent contractor. Just signing an independent contractor agreement which you must do if you want to attempt to make someone an independent contrator is not always sufficient. An independent contractor will receive a 1099. The IRS test is here https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-defined
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