This is the second blog concerning common paycheck deductions.
Question 2: So What Determines Whether I Get Paid as a Contractor or Employee?
The documents we use to report income tell the IRS whether you are being paid as one or the other. Money paid to independent contractors is reported on a Form 1099. Employee wages are reported on a W-2 Form. When you start a job as an employee you tell your employer how much of your income you want withheld on the W-4 Form.
It’s important to understand that there are strict guidelines governing who qualifies to be paid as an independent contractor (reported on a 1099), and a detailed analysis of the differences is beyond the scope of this article.