Temporary Worker Taxation

If you have a big project coming up and you plan to hire temps, be aware that they may be treated as employees rather than independent contractors.  There are a number of factors that come into play, but whether the workers have been hired on a temporary basis does not necessarily determine the final outcome.

Often the determination is decided on control.  If your company exerts control over how and when the workers do their jobs, and they are not performing similar services for other employers, it’s likely the IRS will classify them as employees for federal payroll purposes even though you only intend to use the workers on a temporary basis.  Additionally, if a worker earns more than $600 and is classified as an employee, you must withhold federal payroll taxes on the wages.

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