Rehire a retired employee as a contractor
You hear of many employers bringing back retired workers as "contract workers". If the employee is essentially doing the same job, how are companies able to now call them a contract worker and pay them using a 1099 instead of a W-2?
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Hi Brenda!
I see this sort of thing all the time in my market and while it may be common, that doesn't it right. Independent Contractors are heavily governed by the IRS and they've offered some guidance to help employers determine if individuals are employees or independent contractors. Here are some links for your reference:
- https://www.irs.gov/pub/irs-pdf/p1779.pdf
- https://www.irs.gov/taxtopics/tc762.html
- https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee
- https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-defined
- https://www.dol.gov/whd/workers/Misclassification/myths-main.htm.
I caution my clients with engaging in this type of practice. Good luck!