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Permanent rules apply to temporary workers

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in Small Business Tax

Q. We have a big job coming up and plan to hire temps. Are they treated as employees? M.T.K., Brooklyn, N.Y.

A. Probably. The issue of whether certain workers are treated as employees, rather than independent contractors, turns on a number of factors, not whether or not the workers have been hired on a temporary basis. Frequently, the determination boils down to one of control. If your company exerts control over how and when the workers do their jobs, and they are not performing similar services for other employers, it’s likely the IRS will classify them as employees for federal payroll tax purposes even though you only intend to use the workers on a temporary basis.

Tip: If a worker earns more than $600 and is classified as an employee, you must withhold federal payroll taxes on the wages.

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