IRS Publication 15-A: Employer’s Supplemental Tax Guide

What Is the IRS Publication 15-A?

IRS Publication 15-A is a complement to IRS Publication 15: Employer’s Tax Information. Publication 15-A helps employers calculate withholding taxes on revenue, Social Safety, and Medicare. It additionally offers employers with updates on new tax laws and essential reminders relating to beforehand applied tax legal guidelines.

A few of the subjects lined in Publication 15-A embody defining the variations between workers and unbiased contractors and explaining withholding guidelines for workers of exempt organizations. The publication additionally consists of a number of examples designed to assist employers appropriately classify their staff.

One other associated supplementary publication is IRS Publication 15-B, which is the employer’s tax information for dealing with fringe advantages. IRS Publication 15-T helps employers calculate the quantity of federal revenue tax to withhold from their workers’ wages based mostly on totally different tax withholding strategies.

Understanding IRS Publication 15-A

IRS Publication 15-A classifies staff into 4 varieties: unbiased contractor, common-law worker, statutory worker, and statutory nonemployee. Employers face stiff penalties for incorrectly classifying workers as unbiased contractors. In the event that they haven’t any affordable foundation for classifying an worker as an unbiased contractor, the employer might be chargeable for employment taxes for that employee. Understanding these classifications is essential and more and more tough given the massive variety of unbiased contractors now used by companies.

In figuring out whether or not somebody performing work is an worker or an unbiased contractor, a key variable is whether or not the means and strategies of performing the work are managed by the employer. Put one other method, an unbiased contractor is free to carry out the required work utilizing their very own strategies and instruments, so long as the consequence satisfies the employer. That is analogous to unbiased contractors engaged on a building job website, the place they personal their very own instruments and use them to carry out work for the builder, however should not precise workers of the contractor.

There are additionally particular guidelines for Social Safety and Medicare taxes out there for non secular staff, equivalent to ministers. Folks belonging to spiritual sects against insurance coverage are eligible for particular therapy and these tips are detailed in Publication 15-A.

Further uncommon conditions lined in IRS Publication 15-A embody the best way to deal with short-term work relocation assignments, which is outlined as performing work in a unique location outdoors a sure proximity from the first work location and for lower than one 12 months; the best way to deal with scholarship and fellowship funds; and the best way to deal with again pay and golden parachute one-time payouts.

Modifications to IRS Publication 15-A

Annually the IRS publishes a brand new Publication 15-A that particulars new developments and rules employers must know. For instance, most IRS publications and types launched by the IRS for 2018 required revisions to mirror the Tax Cuts and Jobs Act (TCJA) handed by the US Congress in December 2017. The IRS launched the brand new Publication 15-A within the first half of 2018. Firstly of the publication, the IRS summarized quite a lot of modifications, equivalent to new federal revenue tax withholding tables, modifications to worker transferring expense reimbursements, and details about catastrophe tax aid for victims of hurricanes and wildfires.

In 2020, Publication 15-A offered employers with details about new Kind 1099-NEC: Nonemployee Compensation. Companies use this manner to report funds of $600 or extra made to nonemployees through the 12 months. Nonemployees embody unbiased contractors, sole proprietors, freelancers, and self-employed people.