Form SS-8

What is Form SS-8?

Form SS-8, “Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding,” is a form provided by the Internal Revenue Service (IRS). It is used by businesses or workers to request a determination of the status of a worker under the common law rules for purposes of federal taxes.

Purpose of Form SS-8

The main purpose of Form SS-8 is to clarify whether a worker should be classified as an employee or an independent contractor. This classification affects how the worker is treated for employment tax purposes. Correct classification is crucial as it determines who is responsible for withholding and paying Social Security, Medicare, and income taxes.

Who Should File Form SS-8?

Form SS-8 can be filed by either the worker or the firm. Workers who believe they are being misclassified as independent contractors when they function as employees can file this form. Similarly, employers who are uncertain about the correct classification of a worker can seek a definitive determination from the IRS to avoid potential tax liabilities.

Filing Process and What to Expect

When filing Form SS-8, the filer must provide detailed information about the nature of the work, the working relationship, and the terms of employment. This includes descriptions of services provided, degree of control over the work, who provides tools and materials, method of compensation, and whether the firm has the right to discharge the worker.

The IRS reviews the information and decides based on common law rules. This decision considers the degree of control and independence of the worker. The process can take at least six months and often longer, depending on the complexity of the case and the clarity of the information provided.

Implications of the Determination

The determination made by the IRS on Form SS-8 has significant tax implications for both the worker and the firm. If a worker is determined to be an employee, the employer is responsible for withholding and paying employment taxes. If classified as an independent contractor, the worker is responsible for paying their self-employment taxes.Form SS-8 is a critical tool for addressing worker classification issues, helping both employers and workers ensure compliance with tax laws and avoid potential penalties. Both parties should consult with a tax professional before filing this form to understand fully the implications of the IRS’s determination.