Can a small business hired people and claim their income as 1099 misc for 3 months before paying taxes?

Question

I just found out my son is working and the employer isn't taking out any taxes from his paycheck. When ask about it the employer said if he works for them for 3 months then they'll start taking taxs, until then he'll get a 1099 misc form at the end of the year. Is this legal? The state is Georgia.

Answer 1

Whether somebody can be called an employee (W-2 and withholdings) or an independent contractor (1099-MISC and no withholdings) depends on the job they do, not how long they have been doing it.  For more info, you may want to read these articles:

http://www.irs.gov/businesses/small/arti...

http://www.irs.gov/businesses/small/arti...

http://taxipay.blogspot.com/2008/03/w2-o...

So you are probably right, most jobs are to be done by employees and not contractors.  So the question then becomes "what are you going to do about it"?  If you make too much of a stink about it, the employer may decide he doesn't need your son.  So is it worth fighting?  Only you and your son can answer that.

Answer 2

No, not legal.  If the person is an employee, they are an employee from day 1.