Accounting, Payroll & Pension Issues/general payroll and withholding


Last year I worked for an employer periodically. I worked five days over the course of the year. I was not considered an independent contractor. I earned approximately $300 per day. I completed a W4, and at the end of 2012 I received my W2. There were no state, city or federal taxes, DUI or any other deductions. I presently own a c-corporation. What are the earning guidelines one needs to follow in order to hire on this basis? When
is an employer not required to calculate or deduct any amounts from employees' pay for Social Security, Medicare,state, city, DUI/SUI etc. ?

   Thank you, sir.  

First, your last qyestion. To the best of my knowledge, *all* employees are subject to all federal and state payroll taxes. Income tax withholding is, of course, based on income so if the wages paid are liw enough, there eould be no taxes withheld.

As to your second question, I presune you are asking about when to hire an independent contractor as opposed to an employee. As payroll and income taxes do not need to be withheld or paid for independent contractors, employers often prefer this arrangement. In general the more independence, the more likely the person doing the work will be an independent contractor.

Please review the following from the IRS' web site:

Please remember to include all income on your annual individual tax return regardless of whether you received a form 1099, W-2, or no form; the income is all to be reported on you tax return.

Accounting, Payroll & Pension Issues

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Arthur Naman


General accounting and bookkeeping questions. Specific questions pertaining to: monthly bookkeeping, preparing financial reports; reconciling accounts.

I cannot answer questions pertaining to pension or retirement planning.

This is not a forum to have homework answered. Please do your own homework.


30 years' experience doing tax and accounting work

MPA from Univ. of Texas at Austin, MBA Golden Gate Univ, San Francisco CA

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