Independent Contractor or Employee?

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Employee or Independent Contractor?

When choosing whether to classify a worker as an independent contractor or an employee the employer has many tax related and non-tax motivations to choose the former. The biggest motivations are the many taxes that the employer will not be responsible for withholding if they choose to classify a worker as an independent contractor. One of the largest responsibilities of an employer is the role it plays as tax collector for the government. If an employer is able to classify its worker as an independent contractor rather than an employee they would not have to worry about withholding federal income tax, FICA taxes, FUTA taxes, and state income taxes. Instead this burden would fall
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The second major category described in IRS Publication 1779 is financial control, which is split apart further into three more sub-categories: significant investment, expenses, and opportunity for profit or loss. With regards to significant investment Kurt is definitely an independent contractor. He is responsible for his own tools and equipment which, considering the job, are most likely very expensive. It states in the fact pattern that Kurt is not reimbursed for gas, chain oil, or mileage to the job site. This is another indicator that Kurt is not considered an employee by XYZ because employees will usually be reimbursed for business expenses. The final category is the opportunity for profit or loss. This once again points towards Kurt being an independent contractor because he could not harvest enough cords of timber to cover the costs for acquiring them. I feel that Kurt falls into all of these categories so it looks more and more like he will be properly classified as an independent contractor. The third and final major category questions the relationship between the worker and the employer. It does this by asking two major questions. Does Kurt receive benefits from the employer and are there any written contracts between Kurt and XYZ? There is nothing in the fact pattern to suggest that Kurt is receiving any kinds of benefits from the country. This fact alone is not conclusive evidence
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