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Can I hire employees as independent contractors to save money on taxes in West Virginia? What are the requirements?
Based on the information provided in the context documents, it is important to note that hiring employees as independent contractors to save money on taxes is not advisable. In West Virginia, there are specific requirements that must be met in order for a person to be classified as an independent contractor [1.1]. These requirements include signing a written contract with the principal, having control over the manner and means by which the work is accomplished, and being responsible for the majority of supplies and other variable expenses incurred in connection with performing the contracted services, among others.
If a person does not meet these requirements, they may be classified as an employee and the employer may be required to pay certain taxes and provide benefits such as workers’ compensation and unemployment compensation [1.1]. Therefore, it is important to carefully consider the classification of workers and consult with legal and tax professionals to ensure compliance with state and federal laws.
Additionally, every employer maintaining an office or transacting business within West Virginia and making payment of any taxable wage to a resident or nonresident individual is required to deduct and withhold from such wages for each payroll period a tax computed in such manner as to result in withholding from the employee’s wages during each calendar year an amount substantially equivalent to the tax reasonably estimated to be due under this article resulting from the inclusion in the employee’s West Virginia adjusted gross income of wages received during such calendar year [2.1].
In summary, while it may be tempting to hire employees as independent contractors to save money on taxes, it is important to ensure compliance with the specific requirements outlined in West Virginia law. Failure to do so may result in legal and financial consequences for both the employer and the worker.
Source(s):
- [1.1] Classification of independent contractors and employees.
- [2.1] Requirement of withholding tax from wages.
Jurisdiction
West Virginia