IRS Publication 15-A

What Is the IRS Publication 15-A?

IRS Publication 15-A will be a supplement to IRS Publication 15: Employer's Tax Guide. Publication 15-An assists employers with calculating withholding taxes on income, Social Security, and Medicare. It also gives employers updates on new tax legislation and important admonitions regarding recently carried out tax laws.

A portion of the points covered in Publication 15-An incorporate characterizing the differences between employees and independent contractors and explaining withholding rules for employees of exempt organizations. The publication also incorporates several examples intended to assist employers with accurately classifying their workers.

Another related supplementary publication is IRS Publication 15-B, which is the employer's tax guide for handling fringe benefits. IRS Publication 15-T assists employers with calculating the amount of federal income tax to keep from their employees' wages based on various tax withholding methods.

Understanding IRS Publication 15-A

IRS Publication 15-A classifies workers into four types: independent contractor, customary law employee, statutory employee, and statutory nonemployee. Employers face solid penalties for inaccurately classifying employees as independent contractors. Assuming they have no reasonable basis for classifying an employee as an independent contractor, the employer will be liable for employment taxes for that worker. Understanding these classifications is important and increasingly troublesome given the large number of independent contractors presently utilized by businesses.

In deciding if someone performing work is an employee or an independent contractor, a key variable is whether the means and methods of performing the work are controlled by the employer. Put another way, an independent contractor is free to perform the required work utilizing their own methods and apparatuses, as long as the outcome satisfies the employer. This is analogous to independent contractors working on a construction job site, where they own their own instruments and use them to perform work for the builder, but are not actual employees of the contractor.

There are also special rules for Social Security and Medicare taxes available for strict workers, like clergymen. Individuals belonging to strict groups went against to insurance are eligible for special treatment and these rules are detailed in Publication 15-A.

Additional unusual situations covered in IRS Publication 15-An incorporate how to handle temporary work relocation assignments, which is defined as performing work in an alternate location outside a certain nearness from the primary work location and for short of what one year; how to handle scholarship and cooperation payments; and how to treat back pay and golden parachute one-time payouts.

Because new legislation can impact employment tax responsibilities, employers really should keep updated on improvements related to IRS Publication 15-A. You can track down the latest legislation and improvements on the IRS's About Publication 15-A page.

Changes to IRS Publication 15-A

Each year the IRS publishes another Publication 15-A that details new turns of events and regulations employers need to be aware. For example, most IRS publications and forms released by the IRS for 2018 required updates to mirror the Tax Cuts and Jobs Act (TCJA) passed by the United States Congress in December 2017. The IRS released the new Publication 15-An in the first half of 2018. At the beginning of the publication, the IRS summarized a variety of changes, for example, new federal income tax withholding tables, changes to employee moving expense reimbursements, and information about disaster tax relief for casualties of hurricanes and fierce blazes.

In 2020, Publication 15-A furnished employers with information about new Form 1099-NEC: Nonemployee Compensation. Businesses utilize this form to report payments of $600 or more made to nonemployees during the year. Nonemployees incorporate independent contractors, sole owners, freelancers, and self-employed individuals.

Features

• Employers must keep federal income taxes, pay unemployment tax, and keep and pay Medicare and Social Security taxes on wages paid to employees.
• Publication 15-A classifies workers into four categories: independent contractor, precedent-based law employee, statutory employee, and statutory nonemployee.
• Publication 15-An also examines a variety of unusual situations, for example, how to handle temporary work relocation assignments, how to handle scholarship and cooperation payments, and how to treat back pay and golden parachute one-time payouts.
• IRS Publication 15-A: Employer's Supplemental Tax Guide gives employers detailed employment tax information that acts as a supplement to IRS Publication 15: Employer's Tax Guide.
• An employer who misclassifies an employee as an independent contractor may be liable for penalties and employment taxes.