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emk
10-25-2012, 04:35 PM
My new employer said he won't deduct tax or EI from my earning since I only get paid $10/hr and work 15 hrs week.

He asked me to print and fill out a document for hours worked for the month etc. for my administrative services.

I googled to find a template for this, could not find anything.

My employer has owned/operated this small family business for about a year.

Freelancier
10-25-2012, 05:23 PM
Where are you located? Your "employer" could indeed be running afoul of the law with his plan to call you a contractor when you might actually be an employee.

MyITGuy
10-25-2012, 06:31 PM
I'm with Freelancier on this one...the "document for hours worked for administrative services" sounds like he wants an invoice, so he can pay you as a contractor to avoid having to manage the payroll deductions, along with paying his portion of the taxes, unemployment taxes and/or workmans compensation insurance.

nealrm
10-25-2012, 07:04 PM
By law he is required to withhold taxes, pay social security and unemployment insurance. The pay amount and number of hours worked have nothing to do with needing to withhold the taxes. Both SS and medicare are taxed on the first dollar. Federal and state income tax have a base amount you need to hit before paying, so its possible there maybe no withholding on that part.

By treating you as an independent contractor he is forcing you to pay his 7.5% of SS, 1.45% for medicare and not pay unemployment insurance. That means if the job ends, you will not get unemployment benefits.

There is really no real reason for him to do this. At your pay level, his payout is minimal. (about $15 per week). And Quickbooks will handle the paying of the withholding with a click of mouse.

It's possible the guy thinks it will be more of a hassle than it truly is. Sit down and talk it over with him. If he refuses to budge, then start looking for a new job. Once you find it, give your 2 weeks notice and turn him in to the feds. He will be forced to pay the back taxes.

jamesray50
10-26-2012, 10:37 AM
Here is an article from the IRS explaining the difference between an Independent Contractor and Employee: Independent Contractor (Self-Employed) or Employee? (http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Independent-Contractor-%28Self-Employed%29-or-Employee%3F)

If you are indeed an employee, your employer is responsible for withholding taxes. Show him this article, new employers may not know all the rules (not an excuse) or he just may be wanting to cut corners (likely). You won't have to pay self-employment taxes on your earnings if you are just an employee (I'm sure someone will correct me if I'm wrong on this), but when you fill out your income tax you may find you owe federal tax because it was not withheld. Your employer can be held responsible for underwithholding. The social security and medicare that is not being withheld is your future retirement money. He needs to comply with the law. Good luck.

emk
10-29-2012, 04:51 PM
Thank you for everyone's input.

I've officially resigned from the job.

I agree it seems he wanted to pay me as an independent contractor, and even if my employer wasn't aware of the rules or regulations or ''thought it was a hassle'' I have worked there for 1 month and have not been doing the administrative tasks that were put in the job description. As I am a business student I wanted to gain some experience which is why I took this position in the first place.

Again thanks for everyone's replies.

cheaper accountant
11-05-2012, 12:09 PM
Thank you for everyone's input.

I've officially resigned from the job.

I agree it seems he wanted to pay me as an independent contractor, and even if my employer wasn't aware of the rules or regulations or ''thought it was a hassle'' I have worked there for 1 month and have not been doing the administrative tasks that were put in the job description. As I am a business student I wanted to gain some experience which is why I took this position in the first place.

Again thanks for everyone's replies.

I think you've made the right move here and you're brave for doing so. Good luck with the next job.

Evan
11-16-2012, 11:37 AM
This is also good news. This news story may also be of interest too:

New Crackdown On Using Independent Contractors - Forbes (http://www.forbes.com/sites/robertwood/2012/11/15/new-crackdown-on-using-independent-contractors/)