Can I avoid payroll taxes by hiring independent contractors rather than employees?
The short answer may be yes, but the IRS and other taxing authorities will always look to substance over form in analyzing any tax situation. What this means in the case of payroll taxes is that it doesn’t make any difference if you hire someone and call him or her an independent contractor if you are really treating that person as an employee. There are well-known checklists of factors that a taxing authority will look to in deciding whether a worker is really an employee rather than in independent contractor. The key consideration, though, is the issue of who controls the right to tell the worker what to do. Return to index . . .
Related Questions
- May an employer convert some or all of its employees to independent contractors and thereby avoid paying employment-related taxes and benefits?
- Can I treat employees working for me as contractors and avoid payroll taxes and employee reporting requirements?
- Can I avoid payroll taxes by hiring independent contractors rather than employees?
