Taxpayer asks:
I do not understand your story about Geithner. If he worked for the IMF for all of those years, why was he not considered an employee?
Taxgirl says:
That’s a great question and I should have elaborated a little more in my post.
To be clear, the number of years that you are paid by a company does not necessarily determine your employee/employer status. You can be an employee for a day – or an independent contractor for 10 years.
But in this case, the length of employment did not have anything to do with Geithner’s withholding issue. It wasn’t his classification so much as his location. The IMF is an international organization. International organizations are not required to withhold FICA (Social Security and Medicare) taxes on wages paid. US taxpayers do, however, have to report what would have been classified as FICA wages on their income tax returns as self-employment wages and pay the resulting tax. It is a confusing issue, though one that, as I pointed out previously, you would think that someone familiar with money (or his financial advisors) would understand.
Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.
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Yes, one can be an independent contractor for ten years like me. However, it gets dicey when one is an independent contractor working for the same company for more than four or five years.
There’s case law where Microsoft (Are we surprised?) was found to have hired consultants as independent contractors for that length of time. The court held they were de facto employees.