Idaho uses A 15 Part test, to determine if your workers are classified as an independent contractor or an employee. In today’s economy, more companies are trying to outsource much of their work to lesson higher employee wages, employee taxes and general employee issues. However, if you are treating an independent contractor much like an employee, you could be at risk for fines, back owed wages, overtime and of course those employee taxes. Today we will look at factors of an Idaho Employee versus Independent Contractor.
1. Make sure that you properly classify your workers. Just because a worker agrees to be paid as an independent contractor doesn’t mean it’s the legal way of paying that person. Be very careful of this scam because it will come back to bite you.
Today we will examine rules and regulations regarding Idaho Contractor Taxes.
Who is considered a Contractor
Income tax withholding requirements
Contractors and sales/use tax
Exemptions from sales/use tax
Contractors who are also retailers
Billing examples for contractors
Sales/use tax for contractors in other situations
Contractors working on federal projects
Laws and rules
Whether you have one employee or 50, setting up a payroll system not only gives you the ability to stay on top of your legal and regulatory responsibilities, but it will also prevent you from being fined by costly (IRS) penalties.
Today we will look at Idaho labor law information.
Idaho Labor Law
1. Minimum wage in Idaho
The current Idaho state minimum wage is $7.25 an hour, the same as the federal minimum wage. The minimum wage for a tipped employee is $3.35 per hour. A training minimum wage of $4.25 per hour can be paid to employees under 20 years old for the first 90 calendar days of employment.
Let's look at hiring an employee versus independent contractor including the pros and cons.
If you are wondering if you should hire full time employee or use independent contractor, don’t make the mistake of thinking they are basically the same thing. They aren’t.
Although both are hired to perform tasks for your business, they are not viewed the same by the IRS. And if the IRS suspects that you are not classifying your workers correctly, they might audit you. As you should know by now, auditors are not your friends.
There are important actions that must be taken when closing a business. These filing need to be filed through an annual return for the year you go out of business. If you have employees, you must file the final employment tax returns, in addition to making final federal tax deposits of these taxes. Also attach a statement to your return showing the name of the person keeping the payroll records and the address where those records will be kept. There are other items on the business closing checklist.
Which key 2014 tax deduction and credits will not be available to taxpayers on this year’s tax returns?
2014 Tax Deduction: 6 Key Deductions That We Lost
1. Medical Expense Deduction Thresholds
Under the old rules, those who itemize could deduct medical expenses exceeding 7.5% of their adjusted gross income. Obamacare has now increased this threshold to 10%. For example, an individual with an adjusted gross income of $50,000 can only deduct expenses over $5,000, rather than the $3,750 limit that would have applied under the old rule.