Classification of Workers – Independent Contractors

Whether an individual is classified as an employee or independent contractor can have far-reaching consequences. This decision ultimately determines an organization’s responsibility regarding FICA, income tax withholding and employer’s benefit plans. Mis-classification can lead to significant penalties.

Independent Contractors

Workers are generally considered Contractors if THEY normally set the order and sequence of work, if THEY work for others at the same time, and THEY are paid by the job. The following payments are usually classified as contract labor transactions:

  • Honorariums paid to guest speakers (honorariums seldom, if ever, have income tax withheld)
  • Stipends (periodic payments) made to band members (stipends seldom, if ever, have income tax withheld)

Contract labor payments are made at “gross” amount, with no federal, state or FICA withholding. It is the responsibility of the Contractor to file and pay his/her appropriate taxes.

One Comment

  1. Posted November 22, 2015 at 10:56 am | Permalink

    I have not seen this ride at the Bloomsburg Fair since 1996, first and only time I saw it there!! It was def one of my all time favs well besides speed!!!! PLEASE BRING IT BACK TO BLOOMSBURG!!!!!!!!

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