AboutJohn Stancil, CPA Expertise I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I teach tax and accounting at a small church-related college. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a part time tax practice for over 30 years. I am a member of the AICPA, National Society of Tax Professionals, and the Institute of Management Accountants.
Experience I hold a doctorate in Accounting, and four professional certifications: CPA, CMA, CFM, and CIA. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I write a monthly tax column for the local newspaper.
Expert: John Stancil, CPA Date: 7/3/2008 Subject: independent contractor
Question QUESTION: hi, i am the owner of a S corp. i was wondering if i hire an independent contractor and pay them lets say $5200 or less for a project, are they subject to federal, ss, medicare and state taxes. i am new at s corp and i would like to know what taxes i need to witheld from that amount. also, do they have to file taxes a the end of the year if that is the only money they earned? thanks
ANSWER: Julia,
Thanks for your question.
If the person is an independent contractor, you do not withhold any taxes from them. Your responsibility is to give them a 1099-Misc at the end of the year.
If they are not independent contractors, you must treat them as employees and withhold taxes and issue a W-2 at year end.
Form SS-8 can help you determine if someone is an employee or and independent contractor.
Hope this helps.
John Stancil, CPA
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QUESTION: ok i see. so if i hire someone from the family which is not currently working and i pay him/her $5000 , i guess that person has to file taxes at the end of the year and report that income. correct? if this is the case, is that person subject to federal, ss, medicare, state taxes or only ss and medicare?
ANSWER: They are subject to all those, but the earning level may be such that they do not pay any state or federal income taxes.
John Stancil, CPA
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QUESTION: what do you mean by earning level? are you saying that at this earning level ($5000) they dont have to pay federal/state taxes taking in consideration this is the only earning for the whole year? if that so, they will pay ss and medicare? can you clarify?
do they have to file tax return at the end of the year?
Answer Earning level is their total income. If their income is $5,000 they will have no federal income tax liability and will not need to file. State laws vary and they may need to file.
Yes they are subject to SS/Medicare for even $1 of earnings.
