Frequently Asked Questions
When Will I Get My Tax Refund?
You can view the status of your tax refund on the IRS’s website. Click here to check on the status of your refund on your tax return or here if you need to check on the status of a refund from an amended tax return. Please feel free to contact us at any time, and we can check on the status of your tax refund on your behalf.
When are My Taxes Due?
Though most people recognize April 15 as tax day, there are several other tax deadlines that taxpayers must keep in mind. The IRS has compiled a handy resource of tax due dates that you should keep note of.
How Long to Keep My Records?
Generally, the IRS recommends keeping three years of financial and income tax data. There are certain things like records of gifts or records of asset purchases that should never be discarded and other items that should be kept for a different number of years. But three years is generally considered fairly safe. We are required to keep a minimum of three years of your data but frequently keep more than that when reasonable and applicable.
Independent Contractor (Self-Employed) or Employee?
It is critical that business owners correctly determine whether the individuals providing services are employees or independent contractors.
Generally, you must withhold and pay income taxes, social security taxes and Medicare taxes as well as pay unemployment tax on wages paid to an employee. You do not generally have to withhold or pay any taxes on payments to independent contractors.
Select the Scenario that Applies to You:
I am an independent contractor or in business for myself
If you are a business owner or contractor who provides services to other businesses, then you are generally considered self-employed. For more information on your tax obligations if you are self-employed (an independent contractor), see our Self-Employed Individuals Tax Center.
I hire or contract with individuals to provide services to my business
If you are a business owner hiring or contracting with other individuals to provide services, then you must determine whether the individuals providing services are employees or independent contractors. Follow the rest of this page to find out more about this topic and what your responsibilities are.
Determining Whether the Individuals Providing Services are Employees or Independent Contractors
Before you can determine how to treat payments you make for services, you must first know the business relationship that exists between you and the person performing the services. The person performing the services may be:
An employee (common-law employee)
In determining whether the person providing service is an employee or an independent contractor, all information that provides evidence of the degree of control and independence must be considered.
Common Law Rules
Facts that provide evidence of the degree of control and independence fall into three categories:
Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
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.)
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 and consider the extent of the right to direct and control the worker. Finally, document each of the factors used in coming up with the determination.
If it is still unclear whether a worker is an employee or an independent contractor after reviewing the three categories of evidence, then 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. A business that continually hires the same types of workers to perform particular services may want to consider filing the Form SS-8 PDF.
Employment Tax Obligations
Once a determination is made (whether by the business or by the IRS), the next step is filing the appropriate forms and paying the associated taxes.
Employment Tax Guidelines
There are specific employment tax guidelines that must be followed for certain industries.
Employment Tax Guidelines: Classifying Certain Van Operators in the Moving Industry PDF
Employment Tax Procedures: Classification of Workers within the Limousine Industry PDF
Misclassification of Employees
Consequences of Treating an Employee as an Independent Contractor
If you classify an employee as an independent contractor and you have no reasonable basis for doing so, then you may be held liable for employment taxes for that worker (the relief provisions, discussed below, will not apply). See Internal Revenue Code section 3509 for more information.
If you have a reasonable basis for not treating a worker as an employee, then you may be relieved from having to pay employment taxes for that worker. To get this relief, you must file all required federal information returns on a basis consistent with your treatment of the worker. You (or your predecessor) must not have treated any worker holding a substantially similar position as an employee for any periods beginning after 1977. See Publication 1976, Section 530 Employment Tax Relief Requirements PDF, for more information.
Misclassified Workers Can File Social Security Tax Form
Workers who believe they have been improperly classified as independent contractors by an employer can use Form 8919, Uncollected Social Security and Medicare Tax on Wages, PDFto figure and report the employee’s share of uncollected Social Security and Medicare taxes due on their compensation.
Voluntary Classification Settlement Program
The Voluntary Classification Settlement Program (VCSP) PDF is an optional program that provides taxpayers with an opportunity to reclassify their workers as employees for future tax periods for employment tax purposes with partial relief from federal employment taxes for eligible taxpayers that agree to prospectively treat their workers (or a class or group of workers) as employees. To participate in this voluntary program, the taxpayer must meet certain eligibility requirements.
Effective October 1st, All Florida Businesses Must Report New Independent Contractors
Effective October 1st, 2021, all Florida businesses and certain other entities of all sizes must report nearly all new independent contractors expected to earn $600 or more during the calendar year.
Prior to the new law, it was optional for companies with more than 250 employees to report new independent contractors to the Directory of New Hires. The new legislation makes it mandatory, and expands the reporting requirement to companies of all sizes, regardless of the number of employees.
The requirement is the result of Florida Senate Bill 1532 that Governor DeSantis signed into law last June. The law expands the mandatory new hire reporting requirements under Fla. Stat. § 409.2576 to include companies of all sizes, regardless of the number of employees.
The same law also requires all these companies and other contractor service recipients to report independent contractors expected to earn $600 or more during the year to the Directory of New Hires.
The reason for the law is to improve child support collection by eliminating the ‘independent contractor loophole.’ Policymakers were concerned that some workers were evading paying child support by working with smaller employers, or working as independent contractors, thereby circumventing the reporting requirement. They could thus avoid having child support payments docked from their paychecks.
Who Must Report New Independent Contractors to the Florida Department of Revenue?
The reporting requirement isn’t limited to formally licensed or registered businesses. The language in the law is expansive. The mandated reporting requirement also extends to service recipients, defined as “a person engaged in a trade or business who pays an individual for services rendered in the course of such trade or business.”
Thus, the reporting requirement potentially affects not just established employers, but also sole proprietorships, independent landlords, AirBnB and other short-term rental operators, and other small businesses.
What is the Reporting Deadline?
Florida businesses and service recipients expecting to pay independent contractor $600 or more during the calendar year must report the new contractor within 20 days after their first reportable payment to the independent contractor, or the date in which they entered the contract — whichever is earlier.
The term “reportable payment” refers to any payment that requires an information return under IRC 452, Section 6041A(a).
If you make the report electronically, you can make the report via two separate monthly transmissions, if needed. But you cannot make these reports less than 12 days nor more than 16 days apart.
How Do I Report New Contractors to the Directory of New Hires?
The reporting process is mostly the same as it is for statutory employees. You can use this online reporting tool. If you have not yet registered for an account with the Florida Department of Revenue’s Child Support Services for Employers, you can do so here.
Child Support Services for Employers Home (floridarevenue.com)
What Information Must I Report?
Businesses and service recipients must report the following information:
Social Security Number
Date of Birth (if known)
The name, address, and taxpayer ID number of the employer or service recipient
The date the individual first performed services for payment
Are There Any Exceptions?
The reporting mandate does not apply to employees or contractors employed by federal or state agencies that perform intelligence or counterintelligence functions. This is because legislators recognized that reporting these individuals could establish a paper trail that could compromise their identity, their mission, and their safety.
What Should I Do Now?
If you have employees or relationships with independent contractors and you pay any of these contractors more than $600 per year, here’s what you should do:
Look carefully at existing employees and independent contractor relationships to determine if you have exceeded or will exceed the $600 reporting requirement during the calendar year.
Make any necessary changes to your company onboarding policies and manuals to reflect the new requirements.
If you use a payroll service, accounting service, or employee leasing service, verify with your service provider that they are following the new reporting requirement.
Where Can I Register My Business in the State of Florida?
In order to start a business in the State of Florida, you must go to Sunbiz.org and electronically register your business. This site has a ton of resources for new and existing businesses.
Where Can I Apply for a Federal ID Number?
Once you have your business setup in Florida (or your home state), applying for a federal ID number — or EIN — is an easy process that takes less than 10 minutes to complete. The IRS walks you through the process with its Application for an EIN and approves applications instantaneously.
Where Can I Register for Payroll and Sales Taxes in the State of Florida?
The State of Florida has a questionnaire that every business in the Sunshine State should fill out to see if any taxes are due. If you have a new business in Florida, be sure to fill out the state’s Registration Determination to see what taxes you must pay and the schedule with which you must pay them.