Ask yourself this question, will someone else - Lynn

You should probably call your accountant ASAP - You may already have IRS Penalties

     I do not want to scare anyone, but I think being forewarned is better than getting a nasty letter from the IRS.  You are probably just fine, but I thought it was worth a “worst case scenario” type answer just in case. 

     If you were an Independent Contractor in the first six months of the year, you probably should have sent in quarterly taxes to the IRS by now.  If you did not do that, you might want to get a hold of a tax accountant, because you could owe penalties already. 

     If you were hired as an Independent Contractor, your check stub will not show any taxes or Social Security being withheld, and you should receive a Form 1099 from the employer. 

     IRS Form 88 (OMB No. 1545-0004) if the official bible of the IRS for determining if the worker is an Employee or an Independent Contractor.  If you do not feel comfortable filling out the form and sending it in to the IRS now, maybe just answering the questions and reading their comments will help. 

           http://www.irs.gov/pub/irs-pdf/fss8.pdf

     Who is Self-Employed?
If you are in business for yourself, or carry on a trade or business as a sole proprietor or an independent contractor, you generally would consider yourself self-employed and you would file Schedule C or Schedule C-EZ with your Form 1040.

     Self-Employment Tax

If you are self-employed you must pay Self-Employment Tax
Self-employment tax (SE tax) is a social security and Medicare tax primarily for individuals who work for themselves.  It is similar to the social security and Medicare taxes withheld from the pay of most wage earners.

If you are self-employed you must pay Estimated Taxes
This applies even if you also have a full-time or part-time job and your employer withholds taxes from your wages.  Estimated tax is the method used to pay tax on income that is not subject to withholding.  If you don’t make quarterly payments you can be penalized for underpayment at the end of the tax year.

      Common Law Rules (Employee versus Indepdenent Contractor)

Facts that provide evidence of the degree of control and independence fall into three categories:

1. Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?


2. Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)


3. Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

     Businesses must weigh all these factors when determining whether a worker is an employee or independent contractor. Some factors may indicate that the worker is an employee, while other factors indicate that the worker is an independent contractor. There is no “magic” or set number of factors that “makes” the worker an employee or an independent contractor, and no one factor stands alone in making this determination. Also, factors which are relevant in one situation may not be relevant in another.

     The keys are to look at the entire relationship, consider the degree or extent of the right to direct and control, and finally, to document each of the factors used in coming up with the determination.

      Form SS-8

If, after reviewing the three categories of evidence, it is still unclear whether a worker is an employee or an independent contractor, Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding (PDF) can be filed with the IRS. The form may be filed by either the business or the worker. The IRS will review the facts and circumstances and officially determine the worker’s status.  Be aware that it can take at least six months to get a determination.

     Hope this information is of some help to you.  Good Luck.