Ask The Taxgirl: Temps As Employees

Taxpayer asks:

Hi Kelly,

Here is the situation i worked for a doctor’s office for two months and she informed me that I did not need to pay taxes because I was a temp. Ten months after I left the job she started asking me for my information because she said the tax laws have changed and she has to with hold taxes from me. Not knowing what to do I ignored her, and later on that month she sent me a 1040. I took this to the accountant and I paid the taxes that was needed to the IRS and the State of California. My questions is are there going to be any repercussions on my part since I’m technically not a independent contractor? And Is what she did legal?

Thanks,

Taxgirl says:

I’m not exactly sure what happened in your situation – withholding is something that happens for employees, generally, but not independent contractors. And the rules didn’t change with respect to how those are governed – perhaps your employer’s understanding of the rules changed?

The bottom line is that your employer should have treated you as an employee if you were an employee, even if you were only there for a brief period of time. You can be an employee even if you only work one day – generally speaking, whether or not you are an employee or independent contractor is not governed by the amount of time that you work, but by a combination of factors.

Factors to be considered can be found both in common law and in Revenue Ruling 87-41. They include:

1. Are you subject to the employer’s instructions?
2. Does the employer provide training?
3. Do you personally perform the services?
4. Is the employer responsible for hiring, supervising and paying assistants?
5. Is there an ongoing relationship?
6. Does the employer determine when you work?
7. Is full-time work required?
8. Do you work on the employer’s premises?
9. Are oral or written reports required?
10. Does the employer pay the majority of business and/or traveling expenses?
11. Is the employer responsible for the furnishing of tools and materials?
12. Are you free from risk or significant investment with respect to the work being performed?
13. Are you working solely for the employer?
14. Have you stopped offering your services to the general public?
15. Can you be fired for any reason (as opposed to contractually bound to perform services)?

While each of these factors really depends on your personal facts and circumstances, the more times that you can say “yes” to the those questions, the more likely it is that you’re an employee.

Don’t assume that you’re an independent contractor because the employer says so – or because you’re merely part time or temporary. Remember, it’s a set of circumstances, not a magic question. There is no such rule that says that only full time, long term workers can be classified as employees. If you have any questions about your status, ask. And if you don’t agree with the answer, talk to a tax professional.

In your particular case, so long as you’re square now, I wouldn’t waste anymore energy on what happened. It sounds as if your employer was confused and fixed it halfway through the term of your employment. So long as your accountant felt like it was resolved appropriately, I would simply move on and not spend another minute worrying about it.

Before you go: be sure to read my disclaimer. Remember, I’m a lawyer and we love disclaimers.
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Kelly Phillips Erb

Kelly Phillips Erb is a tax attorney, tax writer, and podcaster.

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