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!:o

You will have to file taxes for the employee wages and separately for your private business income.

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?

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

Yes, it is done all the time, as long as the 1099 work is not related

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

Can a person work on W2 for one employer and at the same time can he work on 1099 with other employer(s)?

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

If you are paid 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 first at the same place of business are you employee or contract labor thanks chad

Hi Chad,

If the conditions you mentioned above existed you would most likely be considered an employee.

Shirley

So if the insaid employer writes me off as contract labor is this wrong of employer

Yes it could very well be a misclassification. The Department of Labor is currently investigating misclassification of employees.

Contract Labor Vs. Employee | Small Business - Chron.com

Here is a very good article by the small business administration.

If you are misclassified by an employer and the Department of Labor finds out and investigates the employer will be fined and will have to go back and pay all the employment taxes for the entire time you have been employed.


Here is a link to the IRS and what they have to say:


Independent Contractor (Self-Employed) or Employee?



Shirley

OK so if the said employer is contracted to do a order by one company and then contracted for another by different company and has his own shop but using the same people as above employees but pays them as contract labor and the said employees work over time and doesn't get paid time in a half and one of the employees says he is no longer going to work over because the said employer doesn't pay time and a half and then employer wants to fired said employee or calls the person lazy cause said employee is not getting paid time in a half and doesn't want to work over time and has cause grief what can person do and this is in the state of Texas

I say if they are employees they are paid time and a half they are not contract if they are employees. Contract labor is not an employee/employer situation.

The employee should be paid time and 1/2.

Shirley

A semi-related question.

Can I work for the same company as an employee, but in two different capacities, with one being salaried, and the other being hourly?

Example #1: I'm a case manager for the company during the day, receiving a salary. At night, I do on-call work where I get reimbursed hourly if I get called out for work.

Example #2: I'm a part-time hourly employee working for a company providing Service A. I get paid every two weeks for the hours worked. At night, I do a different type of work, and get paid a percentage of the reimbursement the company receives. I get paid when they get paid.

Thank you!

Eric

I think I know the answer to this, but I would value some feedback. Do you think it would be permissible for someone to be paid as a W2 employee for a company (a true employee by all the standards / employed) that is selling a service for the company, however commissions on the employees sales are paid to the employee on a 1099 and weekly salary is paid on a W2?

As I have read this there is one thing that no one has mentioned. As it may be true as an employer that an employee cost extra money because of costs like UC and workers comp ins and 7.65% social security. Does anyone ever consider that if you are an employee you are probably being paid less money per hour as and employee than you would be if you were an independent contractor. If you never have a reason or opportunity to claim UC or work comp then you are in many cases only costing yourself money. Everyboby wants to see the biggest check at the end of the week.

It is not a matter of how you are paid or the benefits you may or may not have.

If you are an independent contractor you still have to pay the social security and taxes on that income from your wages and self employment taxes.

It is a matter of what is legal to do and what is not. If you wish to be audited by the IRS than pay and employee with both a W-2 and a 1099.

Case closed.