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Can you be both an employee and an independent contractor?
Asked Mar 26, 2009, 01:11 PM
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17 Answers I have been searching on the IRS website and am trying to determine if a person can be both an employee and an independent contractor. For example, a person works for a company during the day, say doing A/P and then at night they clean the office. For the cleaning the office part, they have their own company setup and they are the only employee. Can a company pay them as both an employee and an independent contractor for the cleaning part? Thanks a bunch!  |
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| Emland, thank you for your response. Do you know if a company can legally pay an employee as an employee and then turn around and pay them as an independent contractor. I would think they could and that person would receive a W-2 and a 1099-Misc for non-employee compensation. What do you think? | ||||
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| The company cannot pay an employee for both with a 1099 and a W-2 form. The company would pay th employee with a W-2 for the employee's wages. The company would pay the other company (the cleaning company set up by the employee ) on a 1099. The employee must set up the cleaning company as a sole proprietorship business. It can be Jane's cleaning or whatever. Start a checking account at a bank for Jane's cleaning. Deposit all checks to that account and have the company pay all checks to Jane's cleaning. At the end of the year the company sends a 1099 to Jane's cleaning. This is the way it will work. If the employee gets both a 1099 and a W-2 in the same year it will trigger an audit for both the employee and the company. It is not a good thing to do. Shirley | ||||
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| It may happen, but that does not mean it is legal or right. A worker who received both a W-2 and a 1099 from the same employer as a misclassification of the 1099 payments. It is very difficult to convince an auditor that the 1099 income was not just part of the W-2 wages not properly reported. From the government’s point of view any justification or rationalization is just an excuse to not pay taxes. It really takes a convincing argument to win the point. It is very unusual for an employee to also correctly receive a 1099 from his employer, but it is legally possible. To qualify all of the following must exist: The individual has a legitimate independent business He/she has other clients not connected to the employer The work as an IC is not the identical, or similar, to what he does as an employee. When doing the 1099 work he must meet the common law test as an IC This is why you need a sole proprietorship company for the cleaning business. If this is done it must be to clearly documented and the evidence saved, because when a worker receives both a W-2 and a 1099 from the same business in the same year, it is a red flag to the IRS. The odds are very high the company and the worker will be contacted to explain how this happened. You will need to prove you are right. Shirley | ||||
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| Krismaly, A 1099 is for an independent contractor working as his own business. Yes a person can have a business on the side and work for an employer. He would earn wages from his employer. He could work his business on the side and invoice his clients as a business, they would pay his invoice and at the end of the year he would receive a 1099 from the business's he has invoiced. If the person only works for 1 business and if the business tells him when to work, how to do the job, and gives him the tools to do it he is not a 1099 contractor but he would be an employee. There are specific IRS rules that must be followed in order to qualify for 1099 contractor status: From the IRS http://www.irs.gov/taxtopics/tc762.html http://www.irs.gov/businesses/small/article/0,,id=99921,00.html From the Department of Labor http://www.dol.gov/whd/regs/compliance/whdfs13.pdf http://www.dol.gov/oasam/programs/history/herman/reports/futurework/conference/ staffing/9.1_contractors.htm http://www.dol.gov/whd/workers/misclassification/ From other sources: http://springboard.resourcefulhr.com/independent-contractor-vs-employee-new-irs-flsa-crackdown/ http://labor-employment-law.lawyers.com/wage-and-hour-law/Independent-Contractors-under-the-FLSA.html Shirley | ||||
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| if you are payed as contract labor but told by the employer to show up at a set time and the employers place of business how the employer also provides all supplies to do a set job and then after that jobs is done continuses to have more work after the the first at the same place of business are you employee or contract labor thanks chad | ||||
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