Employee Self-Service Tax Withholding Procedures: Fill & Download for Free

To better determine how to properly classify a worker, consider these three categories – Behavioral Control, Financial Control and Relationship of the Parties.Behavioral Control: A worker is an employee when the business has the right to direct and control the work performed by the worker, even if that right is not exercised. Behavioral control categories are:Type of instructions given, such as when and where to work, what tools to use or where to purchase supplies and services. Receiving the types of instructions in these examples may indicate a worker is an employee.Degree of instruction, more detailed instructions may indicate that the worker is an employee. Less detailed instructions reflects less control, indicating that the worker is more likely an independent contractor.Evaluation systems to measure the details of how the work is done points to an employee. Evaluation systems measuring just the end result point to either an independent contractor or an employee.Training a worker on how to do the job -- or periodic or on-going training about procedures and methods -- is strong evidence that the worker is an employee. Independent contractors ordinarily use their own methods.Financial Control: Does the business have a right to direct or control the financial and business aspects of the worker's job? Consider:Significant investment in the equipment the worker uses in working for someone else.Unreimbursed expenses, independent contractors are more likely to incur unreimbursed expenses than employees.Opportunity for profit or loss is often an indicator of an independent contractor.Services available to the market. Independent contractors are generally free to seek out business opportunities.Method of payment. An employee is generally guaranteed a regular wage amount for an hourly, weekly, or other period of time even when supplemented by a commission. However, independent contractors are most often paid for the job by a flat fee.Relationship: The type of relationship depends upon how the worker and business perceive their interaction with one another. This includes:Written contracts which describe the relationship the parties intend to create. Although a contract stating the worker is an employee or an independent contractor is not sufficient to determine the worker’s status.Benefits. Businesses providing employee-type benefits, such as insurance, a pension plan, vacation pay or sick pay have employees. Businesses generally do not grant these benefits to independent contractors.The permanency of the relationship is important. An expectation that the relationship will continue indefinitely, rather than for a specific project or period, is generally seen as evidence that the intent was to create an employer-employee relationship.Services provided which are a key activity of the business. The extent to which services performed by the worker are seen as a key aspect of the regular business of the company.Consequences of Misclassifying an EmployeeClassifying an employee as an independent contractor with no reasonable basis for doing so makes employers liable for employment taxes. Certain employers that can provide a reasonable basis for not treating a worker as an employee may have the opportunity to avoid paying employment taxes. See Publication 1976, Section 530, Employment Tax Relief Requirements for more information.In addition, the Voluntary Classification Settlement Program (VCSP) offers certain eligible businesses the option to reclassify their workers as employees with partial relief from federal employment taxes.The IRS can help employers determine the status of their workers by using Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding. IRS Publication 15-A, Employer's Supplemental Tax Guide, is also an excellent resource.Workers who believe an employer improperly classified them as independent contractors can use Form 8919 to figure and report the employee’s share of uncollected Social Security and Medicare taxes due on their compensation.The IRS Small Business and Self-Employed Tax Center provides a multitude of resources for small businesses as well as self-employed independent contractors.

In the USA, a minister is an individual who is “duly ordained, commissioned, or licensed by a religious body constituting a church or church denomination. They are given the authority to conduct religious worship, perform sacerdotal functions, and administer ordinances and sacraments according to the prescribed tenets and practices of that religious organization.” A minister is the employee of a church if the minister performs services in the exercise of ministry and are subject to the will and control of the church.The minister’s wages from the church are not subject to federal withholding tax, social security tax, or Medicare tax.If the minister is the church’s employee, then the church may optionally and voluntarily agree with the minister to withhold these taxes from the minister’s wages to cover the minister’s liability for self-employment tax and federal income tax.Regardless, the minister’s employment wages must be reported on a Form W-2.Certain ordained ministers, Christian Science practitioners, and certain members of religious orders are conscientiously opposed to public insurance that makes payments in the event of death, disability, old age, or retirement, or that makes payments toward the cost of, or provides services for, medical care, including social security and Medicare benefits. The individual can apply for an exemption from these taxes on the individual’s wages earned from qualified services performed for the religious organization. (See Revenue Procedure 91-20, 1991-1 C.B. 524, and IRS Publication 517 for more information. https://www.irs.gov/pub/irs-tege/rp_1991-20.pdf https://www.irs.gov/pub/irs-pdf/p517.pdf )

Different Types of TaxesPrevalence of various kinds of taxes is found in India. Taxes in India can be either direct or indirect. However, the types of taxes even depend on whether a particular tax is being levied by the central or the state government or any other municipalities. Following are some of the major Indian taxes:Direct TaxesIt is names so because it is directly paid to the Union Government of India. As per a survey, the Republic of India has witnessed a consistent rise in the collection of such taxes over a period of past years. The visible growth in these tax collections as well as the rate of taxes reflects a healthy economical growth of India. Besides that, it evenportrays the compliance of high tax along with better administration of taxation. To name a few of the direct taxes, which are imposed by the Indian Government are:Banking Cash Transaction TaxCorporate TaxCapital Gains TaxDouble Tax Avoidance TreatyFringe Benefit TaxSecurities Transaction TaxPersonal Income TaxTax IncentivesIndirect TaxesAs opposed to the direct taxes, such a tax in the nation is generallylevied on some specified services or some particular goods. An indirecttax is not levied on any particular organisation or an individual.Almost all the activities, which fall within the periphery of theindirect taxation, are included in the range starting from manufacturinggoods and delivery of services to those that are meant for consumption.Apart from these, the varied activities and services, which are relatedto import, trading etc. are even included within this range. This widerange results in the involvement as well as implementation of some orother indirect tax in all lines of business.Usually, the indirect taxation in the Indian Republic is a complexprocedure that involves laws and regulations, which are interconnectedto each other. These taxation regulations even include some laws thatare specific to some of the states of the country. The regime ofindirect taxation encompasses different kinds of taxes. Theorganizations offer services in all or most of the related fields, someof which are as follows:Anti Dumping DutyCustom DutyExcise DutySales TaxService TaxValue Added Tax or V. A. T.Municipal or Local Taxes in IndiaThe most known tax, which is levied by the local municipal jurisdictions on the entry of goods, is known as the Entry Tax or the Octori Tax.Income TaxIncome Tax in India includes all income except the agricultural income that is levied and collected by the central government. This particular income is also shared with the states. The Income Tax was incorporated in India from the year1860.However, after many alterations, finally with the Indian Income Tax Act,1922, there was a revolutionary change brought by the All India Income Tax Committee. This is significant as after this the administration of the Income Tax came under the direct control of the Central Government. This Act got amended again in the year 1961, and the present Income Tax regime in India is still following the provisions of the Act of 1961.As per the Income Tax Act 1961, the assessee whose total income level is more than the maximum exemption limit, are under the domain of chargeable Income Tax. The assessee has to pay the Income Tax at the rates stated in the provisions of the Finance Act. The payment of the Income Tax is to be calculated on the total income of the last year in the relevant financial assessment year. For the determination of the total income of an individual the residential status in India is a necessary parameter. Every Income Tax payer should file Tax Return underthe existing law.Consumption TaxConsumption Tax is applicable on the consumption of any type of good or service. This particular tax is based on consumption and not on income or labor. The Consumption Tax can be regarded as a sales tax, as this tax is also regressive in nature like the other pure sales taxes. However, there are some remedies by which the Consumption Tax can be made progressive in nature. Some of the methods for reducing the regressive trait of this tax include use of exemptions, deductions, graduated rates, or rebates. This will in other terms allow accumulation of savings exempting the tax burdens.Dividend TaxDividend Tax is type of an income tax which is levied on the payments made as the dividend to the shareholders of the company paying the tax. Dividends are the shares of the profit of the company which are the given to the shareholders.The controversy arises here because dividend is nothing but the part of the profit of the company. The profit is the income of the company and atax is paid on that income. Again, when the dividend is paid to the shareholders, a dividend tax is levied on them and so there is double taxation on the same income - once, tax is paid by the company and then the shareholder pays the tax on the same amount as well.The dividend tax has become one of the major issues of debate in the financial market. Many of the countries are taking steps for abolishing the dividend tax as because the double taxation is not considered good for the economy. The dividend tax also poses a problem for the senior citizens and the retired personnel. Many financial experts are of the opinion that dividend tax should be abolished in order to develop the economy and a fair practice of taxation should be followed.Endowment TaxOver the years Indian companies have been asking for a break from endowment taxes so that they can provide the institutions with more funds. Prominent businessmen like Rajan Mittal, the Vice Chairman cum Managing Director of Bharati Enterprises have lent their support towards giving business organizations 100 percent break from endowment taxes.He has reasoned that this benefit is necessary so that companies could contribute towards better research in the higher educational sector. His statements have found support from other well known names in the Indian business fraternity such as Amit Mitra, who works as the secretary general of the FICCI.As of now, Indian companies can provide financial aid to educational institutions that are located outside the country as they are operated by trusts. In India, trusts that run educational set-ups can receive thebenefit only if they are acknowledged as a section 25 organization as per the Income Tax Act or under the charities commissioner. Lot of companies provide financial aid to international education institutes and the main reason for this is the attitude of the Income Tax Department, which sees such transactions as tax evasion exercises. These business houses also prefer to be transparent when it comes to detailing the usage of funds spent by them.Estate Tax of Inheritance Tax or Death TaxEstate Tax, also referred as Death tax or Inheritance Tax, is gaining prominence with the boom in the real estate market across the world. The Estate Tax rates vary widely across countries all over the world.It is recorded that Japan stands at the top offering a tax rate of 70%, followed by South Korea (50%), the US (46%), and 40% for France and UK each. Along with India, there are some other countries like China, Australia, Russia, and Malaysia, which do not levy Estate tax. It should be noted that Estate Tax or Estate Duty which was earlier incorporated in India in the year 1953, was taken away under the aegis of the then Finance Minister, V.P. Singh in the year 1985. The economic growth and flourishing capital markets in India have been generating an unprecedented boost for the Indian promoters. Still not like the other advanced market economies of the world, there is no Estate Tax in India.On the other hand, across the globe the Estate Tax, also known as the Death Tax, is very important.In general, the Estate Tax is payable on the economic value of the accumulated savings and assets of a deceased person. This tax on Estate was framed with the objective to prevent the inheritors from a rich family to enjoy too much privilege as compared to the less advantageous in the society. The intention was to strike a balance and maintain inter- generation equity. On the other hand, many tax experts often ridicule this Estate Tax, as this is difficult to assess and collect.Flat Tax, also known as Flat Rate TaxBy Flat Tax or Flat Rate Tax it is indicated that the taxes on household income and corporate profits are fixed at a constant rate. Generally household income below a statutorily fixed level on the basis of the type and size of the household, are exempted from paying Flat Taxes.This type of Flat Taxes is not a proper Flat Tax as there is a discrepancy between the taxable income and the total income. Taxation on consumption can also be labeled as a Flat Tax. In the advanced economies, a tax is payable on the incomes of the households and corporate profits, as a result of which Flat Tax is not very common inthese nations. The United States have initiated a quick move to reform its tax system as under the present condition of competition in the global economy the jobs and capital flow to with the initiation of better tax law. The nine countries of the former Soviet Bloc have taken up versions of the Flat Tax, which has been yielding excellent results for the growth and development of the respective economies.In general, a Flat Tax is simple, fair, and sets a necessary parameter for the growth of a state economy. Flat Tax requires only two forms of postcard size, one for labor income and the other for business and capital income. Flat Tax provides equal treatment to all the taxpayers without any discrimination based on the source, use, and level of income. This is also beneficial, as Flat Tax would reduce marginal taxrates and abolish the tax bias against all forms of saving and investment. However, even this Flat Tax is not free from loopholes as the households on the basis of family sizes get an exemption from paying the stipulated tax.Fuel TaxFuel tax is also called as petrol tax, gas tax, gasoline tax, or fuelduty. The fuel tax is a type of a sales tax which is imposed on the saleof fuel. The fuel tax is one of the important factors pertaining totaxation in many countries.The fuel tax in some countries is mostly hypothecated to roadways andtransportation facilities such as in United States. The fuel tax inseveral other countries is regarded as the source of general type ofrevenue income. The fuel tax is mostly imposed on the fuel which is usedfor the purpose of transportation and not imposed on fuel used for thepurpose of running agricultural vehicles, used as heating oil inhouseholds and other non transportation uses.The demand for petrol is not very elastic in nature, so the fuel taxwill regarded as a revenue generating source in the short run of theeconomy but as time passes, in the long run as per the theory of theexperts, the populace would lower the consumption of fuel by the meansof mass transit systems, fuel economic transport facilities, alternativesource of fuel, etc and the sale of the fuel would fall, bringing downthe tax revenue on the fuel. Some of the environmentalists are thinkingof the idea of introducing fuel tax as a method of checking thepollution due to the burning of fossil fuels.Gift TaxGift tax in India is regulated by the Gift Tax Act which was constitutedon April 1, 1958. It came into effect in all parts of the countryexcept Jammu and Kashmir. As per the Gift Act 1958, all gifts in excessof Rs. 25,000, in the form of cash, draft, check or others, receivedfrom one who doesn't have blood relations with the recipient, weretaxable. More about Gift taxSales TaxSales tax is levied when goods are sold or bought within a country or a state. More about sales taxS. E. T. or Self Employment TaxSelf-employment tax (SET) is a type of a taxation pertaining to thesocial security tax and the medicare tax for the individuals those whoare self employed, i.e., the people engaged in business or commercialactivity of some kind which is legally approved by the Governmentalauthorities.The concept of self-employment tax is more or less similar to the socialsecurity tax and the medicare tax which is withhold from the monthlyincome of the professionals engaged in any kind of services under theprivate or the public sector. The employers of most of the workingprofessionals calculate the social security tax and the medicare tax ofthe concerned person.Social Security TaxSocial Security Tax is a popular concept in the United States ofAmerica. The Social Security Tax is a benefit scheme for the employeesafter their retirement from work.The social security tax is contributed in two parts - a part of themonthly income of the employee is deducted at source and another part iscontributed on a monthly basis by the employer under whom the employeeis working. The total sum of money makes up the social security tax. Thesocial security tax benefits are financed with the help of the taxlevied on the employee's income. In case of a self-employed person, thecontribution for the social security tax is made entirely by the personhimself. The social security tax is levied under the norms of the UnitedStates Social Security Act of 1935, which was set up for the purpose ofproviding national social insurance in order to provide economicsecurity to employees in the United States.The social security tax programs are popular in India in the name ofProvident Fund. The concept of the Provident Fund is similar to thesocial security tax programs. Provident Funds are of different typessuch as Public Provident Fund, General Provident Fund, and Employee'sProvident Fund. The General Provident Fund is provided to the employeesof the central government, the Public Provident Fund is provided by theState Bank of India, the largest commercial bank in India for theemployees of the state government, and the Employee's Provident Fund isalso provided by the State Bank of India, for the private sectoremployees.Transfer TaxTransfer Tax in other words implies the tax imposed on the handing overof the title of property ownership by one person to another. Itincorporates a legal transaction fee, which is involved with the titleto property being transferred from one to another.This tax is not very common form of taxation and is imposed where theregistration of the transfer involves a legal requirement. Such aregenerally found to be associated with transfers of real estate, shares,or bond. Although Stamp Duty and the Real Estate Transfer Tax areexamples of the Transfer Tax, it should be noted that the fees paid tothe notaries during any legal jurisdictions are not treated as transfertax.Payroll TaxPayroll tax is one of the important concepts in taxation. Payroll taxcomprises of 2 types of taxes. The Payroll tax may follow a fixed rateformat or the rate may be directly proportional to the income or wage ofthe employee. More about payroll taxPoll TaxIn India, Poll Tax is similar to the road tax on vehicles, but it shouldbe noted that this tax is not very popular here. However, in the year2002, it was decided by the Minister for Transport that the Poll Tax onall-India tourist vehicles entering the state of the Jammu and Kashmirwould be Rs. 2,000 per day per vehicle.Property TaxThe property taxes in India are normally imposed on the yearly value ofthe taxable assets. In case the income is rental, it will be subjectedto the tax rates applicable for income from housing property.If the property is held for professional or business reasons then the profits from the same will be subjected to taxes:Property Tax DeductionsIn India deductions from property taxes are provided in the following cases:If 30% of the yearly value of the house has been used for maintenance and repairsIf the property has been bought, repaired, established, or renewedusing loans. If the house has been remade using borrowed money then theinterest paid on the same will be exempted from property taxes.Concept of Deemed OwnerIn few cases the assessee may not actually own the property but may beregarded as a deemed owner. In such instances, the assessee will beregarded as the property's owner and income generated from that propertywill be subjected to property taxes.The following cases are regarded as being instances of deemed owners:If an individual has handed over any property for a smallcompensation or has gifted it to a minor child or spouse. However,transfers to married daughters will not be considered.Any individual who conforms to the provisions in the Section 53A ofthe Transfer of Property Act will be considered a deemed owner. Thissection focuses on situations whereby a building has been transferredbut there is no proper registered agreement to document the transaction.Owners of impartable estates are regarded as possessors of such property.If an individual has leased a property for a minimum period of 12 years he or she will be regarded as a deemed owner.Members of co-operative societies, companies and other associationswho have been assigned a real estate property as per a house buildingscheme are considered as deemed owners.Self Occupied PropertyA property is regarded as a self owned one under the following circumstances:If the property or a part of the same is owned for residential purposesIf the property or a certain portion of it is being used forbusiness and professional reasons and the owner has to stay at anotherlocationCo-ownersIf a property is co-owned by 2 or more people the following factors come into play while deciding on the tax amount:If the co-owners have definite and clear shares they will not be regarded as an associationThe share of every individual who makes an income from the property will be included in the aggregate income of the co-owners.Wealth TaxWealth tax is normally levied on the basis of the net wealth of theassessee, which could be an individual, a company or a Hindu UndividedFamily.Source : Types of Taxes in India