The Tax Cuts and Jobs Act has several provisions that impact payroll, employment tax, and employee benefits. In accordance with these changes, the IRS released new withholding tables, as well as a new W-4. Although the IRS is not requiring employers have its entire workforce (hired before March 30, 2018) complete the new W-4, as of February 15, 2018, employers were required to begin withholding from employee wages based on new withholding tables.
At this time, employers should, at a minimum, have all new hires and any employee that has a change in their tax status (e.g., marriage), complete the new 2018 W-4. Further, if employers are not requiring all employees to complete new forms, employers should at least encourage their employees to review their withholdings, as the Act eliminated certain exemptions and allowances. As a result, some employees’ allowances may be overstated, resulting in under-withholding for the year. If employees want to submit a new W-4, they should be allowed.
A person can provide services to a company as an employee or an independent contractor depending upon the nature of the relationship between the service provider and the company. Misclassification of employees as independent contractors remains a primary focus of many government agencies, including the IRS, U.S. Department of Labor, Florida Department of Economic Opportunity Reemployment Assistance Programs, and Florida’s Division of Workers’ Compensation. Investigations by these agencies can be extremely costly, time-consuming, and even lead to personal liability and criminal penalties!
The presentation in the following link explains the detailed federal and Florida tests that are used by these four agencies to properly classify service providers. It also provides practical examples in which the tests can be applied. Additionally, the presentation includes guidance to help mitigate the potential for employer liability regarding other wage and hour complexities and pitfalls.