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Hilary Cypher

Tom, what are the tax consequences for a person who WOULD be considered an independant contractor? I know a woman who substitutes once in a while for another provider in my area, and I am considering having her substitute occasionally for me as well. Would it benefit her at all to get a tax id number and work for both of us as an independant contractor?

Tom Copeland

If you truly had an independent contractor and paid them less than $600 in a year, there are no forms to fill out. If you paid $600 or more, you must file a Form 1099 Misc. with the IRS and give a copy to the independent contractor. No other forms or taxes are owed. In both cases you can deduct what you pay the person. It's thus much easier for you if this person is an independent contractor. So, she should get a tax id number. For more, see my article: http://www.tomcopelandblog.com/2011/03/what-is-an-independent-contractor.html


Is there any way that the IRS would know if I was paid by less than $600 as an independent contractor if I didn't claim it?


If you were audited as a provider, the IRS would ask to see attendance records or CACFP records that would indicate how many children were in your care. Then they would see if you got paid for each child. If you are not a provider, you could be found out if the person you worked for got audited and listed you as an expense.

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