Employee versus
Contractor and other
Tax Information
BETH LOGAN
KOZLOG TAX ADVISERS
TAXES@KOZLOG.COM
Topics
• Why this topic and presentation?
• Enrolled Agent?
• Employee vs Contractor
• Understanding your paystub
• Understanding your W-4
• Understanding your W-2
• Understanding your 1099-INT and 1098-T
• Stipends, Scholarships, and Grants
• Filing your taxes
• 1040-EZ
• 1040A, Forms 8880 and 8885
• Tax Payers Bill of Rights
What is an Enrolled Agent (EA)?
From National Association of Enrolled Agents:
Enrolled agents (EAs) are America's Tax Experts. EAs are the only federally licensed tax practitioners
who specialize in taxation and also have unlimited rights to represent taxpayers before the IRS.
From IRS:
An enrolled agent is a person who has earned the privilege of representing taxpayers before the Internal
Revenue Service by either passing a three-part comprehensive IRS test covering individual and business tax
returns, or through experience as a former IRS employee. Enrolled agent status is the highest credential
the IRS awards. Individuals who obtain this elite status must adhere to ethical standards and complete 72
hours of continuing education courses every three years.
Enrolled agents, like attorneys and certified public accountants (CPAs), have unlimited practice rights. This
means they are unrestricted as to which taxpayers they can represent, what types of tax matters they can
handle, and which IRS offices they can represent clients before.
Paystubs
Paystubs
W-4
Simple W-2: Income Only
W-2 Forms:
Usually include 3-4
versions
•
•
•
•
Federal copy
State copy
Taxpayer copy
Local copy
W-2 with
benefits
Notice the benefits listed:
• Retirement
• 125k
• D – 401K
Note the wage differences
W-2C
Corrected W-2 showing the previous
and corrected information.
Contractor/Consulting
Forms
W-9
1099—MISC
instead of W-2
If you received a 1099-MISC,
you cannot file a 1040-EZ.
Contractor/Consulting
Tax Issues
W-9
Post Doc
Employee
Contractor
 Pay ½ FICA
 Pay all FICA
 Sick time (MA law)
 You miss, you’re out income
maybe
 Vacation?
maybe
 Retirement? Or IRA
 SEP, SIMPLE, IRA
 Limited deductions
 Deduct expenses on Schedule C
Maybe on Schedule A
 No mileage
 Withholdings
 Estimated taxes
Stipends, Scholarships, Fellowships, and Grants
 Money received for work is taxable – most stipends
 US citizen and Resident Aliens – scholarships and grants are tax free
if used for tuition, fees, and required books and equipment of a
degree candidate
 Money for travel, research, room, board, and other incidentals is
taxable
 Non-resident Aliens – taxable unless a “qualified” scholarship
Income Limits FOR 2015
Income limits
◦ plus exemption amount of $4000 per qualifying family member
◦ Except for dependents
Contractors must file taxes if they have income over $400
1098-E
1040A
Use if:
Taxable income below $100,000
Are not claiming any Health Coverage Tax Credit
Do not own a small business
Do not want to itemize
1040A
Not for stock sales
1040A
1040A
1040
1040
1040
1040
1040
1040
1040
Schedule C
Schedule C
Schedule C
Schedule A:
work deductions for some Post Docs
MA State Taxes
Mass DoR
https://wfb.dor.state.ma.us/income/Default.aspx
Create an account (name, address, SS#, and password),
Then just answer the questions using your 1040-A OR 1040 and you are done.
Mass uses Form 1
Mass Form 1
Mass Form 1 - Income
Mass Form 1 - Deductions
Mass Form 1 – The rest
Form 1 is 3 pages long
Other sections:
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◦
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Interest & Dividends
Long-term capital gains
Credits
Voluntary contributions
Healthcare penalties
Tax payments
Refundable credits
Tax due / refund
Healthcare Requirements
Must carry healthcare if you earn enough to file taxes
Gap of less than 3 months = no penalty
IRS – Tax Payers Bill of Rights
The Right to Be Informed
The Right to Finality
The Right to Quality Service
The Right to Privacy
The Right to Pay No More than the Correct Amount of Tax
The Right to Confidentiality
The Right to Challenge the IRS’s Position and Be Heard
The Right to Retain Representation
The Right to Appeal an IRS Decision in an Independent Forum
The Right to a Fair and Just Tax System
Thank you!
BETH LOGAN
KOZLOG TAX ADVISERS
TAXES@KOZLOG.COM