Can I do this HELP !!

[MAGCON]

OK I had all contractors for Jan / Feb / March.
Now they will be EMPLOYEES. I know how to figure FICA/MED/FUTA/SUTA
But how do I figure fed tax and illinois tax and how can I take it out of the guys? For the 3 months. It is all set up now for the rest of the year Is there a easy way to do this?
Thanks
Mike:confused:

[Paul Mayer]

You will need to set up new employee records for then in order to print the 1099's and then W2's for each set of records. And do not mark the type N employees as unemployed as you need that flag at the end of year to print the 1099's.

And of course use new and different employee ID's when setting up the new records.

[MAGCON]

Thanks
I was hoping to see if there was a was to take the tax out for those 3 months. Like spreading it out as additional whitholding. I seen the is a box for that but I do not know how to calc. the tax for the feds and state. Is that what that additional whitholding box is for?
Mike

[Paul Mayer]

If you convert the records to be employees, it's not that simple as *YOU* will have the added responsibility to collect from the employees as well as you will have to pay your half of the FICA and Medicare as well. It will turn into a real headache and you should get assistance on how to handle that from your accountant.

[MAGCON]

Ya I know:evil: Was hoping to try to do it myself. was told a 1099 and a w2 from the same employer would put up red flags everywhere with the IRS.
Have you ever heard that Paul? Reason all of this is a audit by IDES. Had iron clad contracts ( I thought) with the guys but that didnt matter :mad:
So to all that read this the goverment is on a mission to do all construction / trucking / all places 1099's are a normal thing audits audits audits that is what he said. Was told they will be going ON SITE to ask people questions of how they get paid who pays them, then they are going after them.
ALL SUMMER AND ALL THIS YEAR. That is what happened to me LOL!!!!!
They said if you pay them they are your employee and yes I am fighting it but it does not look good AT ALL

[Paul Mayer]

I know people have non-employee workers quite frequently and then when the business needs change, the hire them as full time regular employees.

If the people that you paid were under the agreement with you that they were contract workers and they were going to handle their own taxes, then you should not have any problem.

But let me explain what happened to me when I owned a photography studio years ago. We had a retoucher that came in, picked up negatives, went home, did what she does and then returned them to us for a fee. She was a 1099 payee. But we also had a retoucher that we allowed to come into the studio and use our retouching room, our supplies and we paid him as a 1099 payee. We had an audit and had to pay back taxes for the second retoucher as everything was done in our studio and supplies provided by us.

So if you feel your situation falls more in line with the second worker we had, you better redo all of their payrolls as regular employees and pay the appropriate taxes.

[Sarah]

The IRS, State unemployment offices and State Workers Compensation Ins. agencies are increasingly concerned about the use of "independent" contractors. Even going beyond the construction industry. The issue of "control" as illustrated in the second example Paul provided, is just one of several tests applied in determining whether a relationship is employer-employee, or independent contractor. Increasingly the supposition is employer-employee, and you have to go to great lengths to prove it is NOT.

[MAGCON]

Sara and Paul
Yes you do have to go to great lengths and for 10 years I have. BUT even if you meet all there "tests" it is still there call!!! I am fine with the IRS its the Illinois Dept. of Unemployment that THEY say I dont meet THEIR tests. I had a lawyer and won once against the IDES but the IDES just keeps taking you to "court" till they get their end result. BUT before they do that small companies like me cant afford a lawyer for all this and thus give in. By my own lawyers advice ...give up cuz I am going broke this last week was the 3rd time and they finally got the judgement they (IDES) wanted. By the way "court" very informal the "judge" is a IDES higher up!!! Figure that one out. and by mid year in Illinois they are expecting to pass new laws about all this. Basically they are trying to kill all contractors. The Feds are cool with me its dam Illinois if I could move I would in a heart beat out of this state.
Thanks for letting me vent. AND all my guys are very upset about all this and they all file their taxes each and every year.
MIKE

[MAGCON]

Paul when you say redo what exactly do you mean?
Go from their first check and just redo my payroll I pay bi-weekly so that would be 8 pay periods. Would I just reinstall the program and run it ??? then split up the tax thru out the year for them. That would work. Sorry about last post just kinda mad LOL
Could I just delete the transactions? then start fresh? Tweaked the program just the way I like it
Mike

[Paul Mayer]

You will need to work with these employees as they will need to pay you the taxes that you will be deducting for them when all is done.

Make sure you have reports created from all of the pay dates that you paid them as 1099 worker. The in the Tools menu run the End of Year tool. This will delete all transactions.

Then edit the employee records to set them as Salaried or Hourly employees.

The set the date in PayWindow and pay them and print the 80 Column report and the Employer's Totals report.

Change the date and repeat as needed.

Pay the taxes and send in the quarterly reports for the first quarter.