New questions and answers will be posted monthly. Keep reading to find out how you can submit your own business questions for an opinion from one of our accounting professionals. For more information on these topics, consult one of of our provided resources. Generally, the determination depends on the extent to which the person receiving the services has the right to direct and control the provider. An employer has the right to control how an employee performs services.
Independent contractors determine for themselves how the work is done.
The Internal Revenue Service has a twenty-factor control test which they use to evaluate situations. As our family income has increased, our deductions have decreased because of the income limitations. For example, paying real estate taxes on your residence and other personally-owned real estate in January, and then in December of the same year, may be done without incurring penalties for late payment. In the subsequent year, you would pay none of the real estate taxes and defer them until the third year, where you would again pay them in both January and December. Similarly, your charitable contributions should be doubled-up in the year that you bunch your property taxes.