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Is it OK w/ the IRS if I transfer payment thru the bank to a contract worker or do I have to write a check?
I have an small online business. My daughter is a professional writer and website designer. She helps me off and on as I need it as an independent contractor. I pay her regular fee. I could simply transfer her payment online through the bank from my business account to her checking account. Would the IRS consider a transfer of funds to be a problem? Do they require that I write a check? I haven't seen this discussed in their tax booklets. Maybe I missed it.
Kathy, that's not what I'm asking. I already understand all that you wrote. I'm asking whether I can do a bank transfer of money to pay an independent contractor or do I have
to write a check based on IRS rules.
2 Answers
- KathyLv 77 years ago
That would make her an independent contractor.
You would not need to withhold FICA taxes (Social Security and Medicare) from her pay as an independent contractor. No unemployment taxes or workers compensation payments are required for independent contractor workers and in most cases, no federal or state income tax is withheld from the pay of an independent contractor. There are exceptions,in the case of a contractor who does not have a taxpayer identification or has provided an incorrect taxpayer ID.
- bdancer222Lv 77 years ago
You don't need to write an actual check. You do need to keep proper business records and so does your daughter. If you pay her more than $600 (I believe that's the number), you need to do a 1099.
Your daughter needs to include your payment as income on her tax return.
