Failure To Withhold Does Not Excuse Failure To Pay
The main disadvantage to the “independent contractor” that is a clear benefit to the “not an employer” concerns FICA/Self-employment tax. An employer has to match FICA, but the self-employed have to pay both the employee and employer share. There is something that disgruntled former “independent contractors” can do about the matter if they are not afraid of burning bridges. They can file Form 8919 to claim the FICA match your “employer” should have paid. I have this sneaking suspicion that the IRS might not actually have the resources to chase most of the former employers, so it might not even turn out to be a bridge burner. Still, it is not something to be done lightly
Social Security Disability Taxation – Curious And Confusing According to Tax Court
The disparate treatment of private and public disability benefits for tax purposes is curious and somewhat confusing. Under these circumstances, petitioners, who do not have tax expertise, sought the advice of two certified public accountants who counseled them that their benefits were not taxable.
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Over and over again courts have said that there is nothing sinister in so arranging one’s affairs as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant.