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There are two main types of workers when it comes to income taxes — 1099 contractors and W-2 employees. While W-2 employees are considered direct employees of a business, 1099 employees ...
Long-term costs of each employee type. There are very different costs that come with hiring a 1099 contractor as opposed to a full-time employee. Let's say you hire a new employee with a salary of ...
The distinction between independent contractor and employee is an important one in the United States, as the costs for business owners to maintain employees are significantly higher than the costs associated with hiring independent contractors, due to federal and state requirements for employers to pay FICA (Social Security and Medicare taxes) and unemployment taxes on received income for ...
Employers must report the incomes of employees and independent contractors using the IRS forms W-2 and 1099, respectively.Employers pay various taxes (i.e. Social Security and Medicare taxes, unemployment taxes, etc.) on the wages of a worker that is classified as an employee.
For a variety of reasons some Form 1099 reports may include amounts that are not actually taxable to the payee. A typical example is Form 1099-S for reporting proceeds (not gain) from real estate transactions. The Form 1099-S preparer will report the sales proceeds without regard to the amount of the taxpayer's "basis" in the real estate sold.
Business owners (especially new ones) often look toward independent contractors to help complete their work. If you have an outside person who does an occasional project with you, independent ...
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