Jody Stamback is a Senior Stakeholder Liaison with Communications and Liaison. He works with Practitioner and Industry groups in helping to share information to and from the IRS and its external stakeholders. Jody graduated from Weber State University with a BS in Business Management in 1984 and started his IRS career in 1989 with the Ogden Campus. He worked in many different functions until leaving the Campus in 1995 to work as a Tax Auditor in the Salt Lake City District Office.

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Worker Classification:Employee or

Independent Contractor

A Note Before We Begin …

• This presentation is designed to provide information – not a specific determination for any situation.

• Worker classification determinations are made on a case by case basis, depending on specific facts and circumstances.

Worker Classification

• Workers you hire may be:–Independent contractors–Employees

• Determination

Basic Definitions

• Employee – Individual who performs services for you who is subject to your control regarding what will be done AND how it will be done.

• Independent Contractor – Individual who performs services for you – but you control only the work result.

Employee vs.Independent Contractor

Categories of Evidence:1. Behavioral control2. Financial control3. Type of relationship of the parties

Behavioral Control

• Type of instruction given• Degree of instruction• Evaluation systems• Training provided by the business

• Key fact to consider is whether businessretains the RIGHT to control worker regardless of whether the business actually exercises that right

Behavioral Control

Financial Control

• Significant investment• Unreimbursed expenses• Opportunity for profit or loss• Services available to the market• Payment method

Type of Relationship

• Written contract• Employee-type benefits provided• Relationship Permanency• Key business activity provided by services

Determination

• File Form SS-8,Determination ofWorker Status forPurposes of FederalEmployment Taxesand Income TaxWithholding with IRS

• Six-month processingtime

• Misclassified workersreport their share of Social Security andMedicare on Form 8919,Uncollected SocialSecurity and MedicareTax on Wages

• Replaces Form 4137for misclassifiedworkers

Form 8919

Officer Compensation

• Officers are defined as employees for FICA, FUTA and income tax withholding

• Officers are not considered employees ifthey:–Perform no services or only minor services–Are not entitled to remuneration (direct or

indirect)

• Visit IRS.gov, search Keywords–“worker classification”–Handout containing worker classification

URLs–Pub 1779 - Independent Contractor or

Employee–Form SS-8, Determination of Worker Status–Pub 1976, Section 530 Relief Requirements

Resources

New IRS Withholding Calculator

Withholding Estimator

• Makes it easier to pay the correct amount of tax during the year.

• The Estimator replaces the Withholding Calculator on irs.gov• Redesigned Tool• More user friendly• Retirees and Self-employed individuals

• New and Improved Features• Easy to understand language• Ability to skip between screens• Tips and links• A progress tracker• A self-employment tax feature• Automatic calculation of taxable Social

Security benefits

Withholding Estimator

Using the Estimator

• The IRS encourages everyone to use the new Estimator.

• Helps taxpayers target a tax due amount close to zero or a refund amount

Tips for Using the Estimator

• Gather your most recent pay stubs and tax return

• Use the links within the Estimator to check qualification for credits and deductions

• Include other sources of income• Revisit the tool if your circumstances change

Withholding Estimator Results

• Complete a Paycheck Checkup• Review results• Change the amount of tax your employer

withholds if necessary

Avoid Unexpected Results

• Ways to avoid an unexpected result at tax time• Use Form W-4 to change withholding or,• Have an extra flat-dollar amount withheld• Submit form to employer or,• Make estimated payments throughout the year

Withholding Estimator

Draft 2020 W-4

Draft 2020 W-4

Draft 2020 W-4

Draft 2020 W-4

Jody Stamback801-799-6852Jody.K.Stamback@irs.gov

Contact information