Independent contractor working exclusive?

Question

I am an independent contractor and have an opportunity to work exclusively for 1 company. I would work some hours in their office and some from home. How does that affect me with write-offs? Will I be considered an employee in the eyes of the IRS? I also have another business I do from home but I don't make a lot of income from it.

Answer 1

If the company gets to set your work hours, you are an employee.  If they detail any of the parameters of you job, you are an employee.  They will try to cheat and call you a contractor because it saves them $2,000 in SSI tax.   You will be caught later by the IRS. /

Answer 2

You will owe income tax on the profit you generate (1099 income minus any deductions you can come up with). They usually don't add up to much.

On TOP of the income tax, you will have to pay about 15% self employment tax on the profits.

So, let's say you are married and your spouse has a good job, so you are in the 28% bracket (for Federal Taxes) Let's say your State income tax bracket is 5%. 28% + 5% + 15% = 48%!!!!

You pay almost HALF of your profits to the tax authorities!!!

THAT can be a SAD situation on April 15th if you are not prepared!

Answer 3

Will the company you work for handle your payroll deductions, or are you responsible for this?  Will you receive a W-2 or 1099Misc?

If you are responsible then you will have to pay your portion of the Social Security with-holdings and the amount the employer is required to pay. (This can be quite costly.)  Check the IRS following website:

http://www.irs.gov/faqs/faq-kw90.html

If in fact you recieve a 1099 Misc then you are eligible to take deductions that require you to provide your service.  In all cases, check with the IRS.  I was in this position once, (receiving a 1099) and almost ended up paying to work for my employer.

Good luck!