Companies ought to weigh the following aspects when deciding whether a laborer is an independent contractor or employee. Facts that present evidence of the amount of independence and control lie in 3 classes:

  • Behavioral: Does the business have or control the right to decide on what the employee does and in what way the employee does his or her work?
  • Financial: Are the commercial characteristics of the employee’s job organized by the payer? (These comprises of factors such as the procedure of paying workers, who offers supplies or tools, whether expenses are refunded, etc.)
  • Relationship Type: Does there exists drafted contracts or worker type welfares (for example, vacation pay, insurance, pension plan, etc.)? Is there a possibility of the relationship pursuing and is the job done a key feature of the business?

Some aspects may show that the laborer is an employee, while other aspects may point to the fact that the worker is an independent contractor. There exists no standard number of features that “makes” the worker an independent contractor or an employee, and no one issue stands single-handedly in making this conclusion. As well, issues which are pertinent in one situation could be irrelevant in another.

It should be noted that it can take more than six months to acquire a determination, but a company that frequently employs the same types of staff to perform certain services may want to contemplate filing the SS-8 (PDF) Form.

Employment Tax Obligations

After a determination is made (by the IRS or the company itself), the subsequent step is filing the proper forms and compensating the related taxes. If you consider an employee as an independent contractor and you do not have practical basis for doing so, you could be held accountable for service taxes for that employee. This is under Internal Revenue Code section 3509 for more information.

Relief Provisions

If you are not thought to be mistreating your employees as an employer, the responsibility of paying employment taxes may be relieved for that worker. In order for a worker to be offered this relief, they must present all relevant federal information yields in a way that reflects the way you interact with the worker. The employee or their precursor should not have treated any employee in a considerably comparable post as a worker for any periods from after 1977

Workers who consider that they have been inappropriately categorized as independent contractors by an employer can apply Medicare Tax on Wages Uncollected Social Security and Form 8919, to total and put forward the employee’s portion of Medicare taxes and uncollected Social Security outstanding on their reimbursement.

The Voluntary Classification Settlement Program (VCSP) is a new elective program that offers taxpayers with a chance to recognize their workers as employees for forthcoming tax periods for the purpose of employment tax with part reprieve from federal employment taxes for qualified taxpayers that accept to treat their personnel (or a group or class of workers) as employees. To partake in this new optional program, the taxpayer has to meet particular suitability requirements; application is done through filing Form 8952.

In the major motion picture ”pretty woman” Julia Roberts (Vivian Ward) was acting as an independent contractor. This is evidenced by the fact that she was a commercial sex worker, who offered her services to Edward (Richard Gere) the rich prince as he went about his business activities. Edward hired her services for the first week so she could fill the gap that appears to be, as a man with Edward’s social status was not expected to be without a woman on his side, not only a simple woman but a beautiful lady by his side.

It first begins as a normal operation of a rich individual who engages the services of a commercial sex worker who charges before she gets into his car. They then drive up to Edward’s expensive house in Beverly Hills, a high end residential area. However, what was to turn out as a one night stand happens to be a burst of love for Edward. He offers Vivian an enormous amount of money for her to stay for the whole week, specifically $3000.

Vivian is clearly illustrated or depicted as a private business person; she is undoubtedly an independent contractor and not an employee of the rich Mr. Edward. Despite the changes she undergoes that transform her into a lady with etiquette, Vivian had a stroke of luck this time or perhaps a silver spoon in her mouth as she met the man of her dreams in the line of duty (Maslin, 1992).

Question 2

Bankruptcy is governed under the United States constitution under article 1 section 8 clauses 4, where an organization can declare themselves bankrupt. This is the situation where a company or a corporation or an individual or partnership.

According to the Internal Tax code for cases involving bankruptcy filed after October 16, 2005, the Bankruptcy Code offers that if the debtor does not present a tax return that is due after the beginning of the bankruptcy case, or acquire an allowance for filing the return before the date that it’s due, the authority of tax may appeal to the court to either change the case to a case in another Bankruptcy Code chapter or terminate the case. If the debtor fails to present the essential return or get an allowance within 90 days after the appeal is made, the bankruptcy court must convert or dismiss the case.

The MF global has experience a massive shortfall in the funds contributed by the customer who entrusted them as a brokerage company. The company used the clients fund improperly to increase their corporate transaction and had created a huge fall of money the clients account. This massive loss was as a  result a bet in the European market on a bet they took  to purchase foreign bond and ended up becoming bankrupt the MF Global broke the law by not putting its money together with their clients money hence when they became bankrupt their clients had to go on a  loss with them. In the year 2008 MF Global ha reported a bad debt of very large amount due to unauthorized transaction by branches of MF Global. This lead to filling of civil law suits against them from companies they engaged  in business  together hence lead them to incurring further loss to their asset and shareholders  had to suffer.

On 31 October the company filed for chapter 11 bankruptcy, this means that the debtors are in control of managing the business and earn what belongs to them and the MF global was subjected to oversight and jurisdiction of the court. This lead to the freezing of their accounts, the MF Global could not pay their customers to what they had lost and the company was under investigations this further made it harder to pay back their clients.

It is not advisable to write of your balance in your account at this moment since the company was under debtors control for filling under chapter 11 and their accounts were frozen and the company was under chaos from law suits cases and it was also under investigation from the courts. 

 As a result for filling bankruptcy under chapter 11 the company was halted from doing business until they proved to handle the market and was responsible as a primary dealer. The company had low risk management since the new CEO, and that’s when the loss was undertaken and they could not deal with government  securities implying that they had no more links, most of the companies were cutting of ties between them hence doing  business was hard, most clients were shying away and claiming for their compensation and it was easier to claim at this point since most clients were doing so and it was easier since the claiming force was much greater than waiting to claim singly.

Chapter 11 majorly constitutes the character and features of the other chapters which the MF Global could have filled under chapter 7 which would have lead them toward liquidation process of the company assets, the court appoints a trustee who will see the process of liquidity of the assets so as to compensate and pay of the debt, the client should take advantage to claim back and write of the balance in his or account  so as to be compensated since the company was undergoing liquidation of its assets in order pay back the clients and most of its creditors, this is also the best time to make your claim since the company would acquire some cash from sell of  its assets and most of the clients would be compensated and the clients would be able to write off their accounts with MF Global.

Under chapter 12 and 13 the  11th title of the united states code the corporation is allowed  to undergo reorganization the company is headed by the debtor and future earnings will used to clear the creditors debt and some of the assets are left for the company, MF Global is undergone this stage through the court order and through (FSCS)  Financial Services Compensation Scheme: it compensates the account holders and they were sending letters informing the account holders to check on their compensation and those who did not receive letter were to apply for their compensation. The MF global was agreeing on the amounts to be compensated and would not compensate unless there was an agreement. She should consider applying at this point since it the most appropriate time and they could agree on the deductions on the tax returns. The Financial Services Compensation Scheme was created as a result of bankruptcy under chapter 12 and 13. This is the best time since the company has underlined strategies to be undertaken for compensation and to stabilize the company, this creates a good environment to discuss and agree on the amounts to receive, and also it is easier to discuss with new management who are trying to correct what was done wrongly (Saphir, 2011).

Question 3

Custody is simply means that has the legal right in making the decision in the life of a child between the parents or a guardian. In most cases both parents share the decision making in a child’s life but at some point when the parents are separating the custody has to be determined on which of the two parents should have the custody. This may come as result of conflict between parents, drug abuse by one of the parents or both, violence and child abuse, mental illness, lack of responsibility or unwillingness to participate in the caring and raising up of a child.

In most cases before the custody of a child is determined the judge has to consider the evidence that shows one of the parents should not be awarded the custody and that the other parent has the qualities that lead to them being given full custody to provide and make sound decision to the child’s life. The evidence found such as the income of the parents, testimonies from people, legal evidence such as breaking the law and capabilities of the parent such as financial capabilities, availability and concern for the child will help in the granting of the custody to them.

The Internal Revenue Code for custody was altered in 2008. The alteration in law is a consequence of comments and court cases from the tax professionals and public respectively. A custodial parent is now prospectively capable of revoking or releasing an exemption from a noncustodial parent for a child. Conferring with the IRS website, if the custodial parent presents notification of revocation to the parent who is noncustodial in 2009, the initial tax year the revocation can be in effect in the tax year starting from 2010.The IRS has also additionally elucidated and altered its characterizations of a noncustodial parent and custodial parent.

A revocation of a release has a high probability of having state and federal tax consequences for both parents. A custodial parent has the power to revoke a prior presentation of an exemption on form 8332 of IRS. Consequently, the noncustodial parent could be barred from demanding, on their Federal return, the child exemption. Furthermore, if the custodial parent rescinds a release, the noncustodial parent could be barred from demanding a child deduction or credit on their State return. Exclusions are there to the new tax guidelines on revocation and release.

The change calls for that the individual demanding an exemption present their tax return together with particular paperwork. Form 8332, signed by the custodial parent, is ordinarily mandatory. Court cases have passed ruling that some formerly conventional documents are no longer recognized by the IRS in place of a signed form 8332. Noncustodial parents ought to directly consult professional in internal tax code to make sure they fulfill the new requirements, if a signed form 8332 is not available,

In our case the children have been staying with their mother, Helen and the mother to Helen for a longer period that they have stayed with Larry this shows that Helen has assumed the role of custody since they are planning to separate.

The custody of young children is given to the mother in most cases since they need the motherly care unless the mother is not a better condition to take care of the children like not in sound state of mind or happens to be in a state that will endanger the children or expose them to risks that will affect their lives. This makes Helen liable to the custody since the two children are still young with the eldest being three years old and the youngest being one so Helen should take care of the children due to their age.

Larry  earns a Higher income than Helen and is in a better position t o support the children with their basic need on his own like giving them a home and supporting their education, they both  share the expenses equally but Helen depends on the Mother who happens t be providing nearly half of the money to support the children.

Larry seem to be busy since he spent less time with the children that Helen showing that taking care of the children might be harder for him than it is for Helen.

Helens mother is able to  provide for the children since she has been providing half  to the contribution that Helen has been providing and she already  has a house that Helen and  the children are living in but  she is surviving on social security’s which is not a major income to depend on.

This leaves Helen with the responsibilities of taking care of the kids and receiving support from Larry’s income since he is supposed to provide for his family and wife and Helen will receive help from the Mother and the earned income credit which will help her support the children in their social and education needs (Kelly, 2008).

Question 4

Taxation is the major way the government collects it revenue and it maximizes to collection of it to the lowest point possible. In this process the government may end up exploiting those who are unable to earn larger amount sine taxation reduces ones income.

The form w-2 is an employee tax and wage statement given to them by their employer to avail information on taxes withheld in a year. This information is needed by the employee for their personal income tax return information.

Some lectures go out of their way to do research that will eventually help the student and the school that he is teaching since his acquired information will be useful in learning in future and may be incorporate to the system. Most lecturers are usually loyal to their employer why should they be taxed for being loyal and going an extra mile to help the school hence the amount should not be included in the w-2 form.

 Taxation comes in when an employee has worked for his employer for the work agreed upon on the employee agreement and at the end of the month the employee gets his or her pay minus the tax deducted which goes to the government, any other amount like compensation for the amount a lecturer incurred from extra research that would help the school shouldn’t be included in the w-2 form meaning it has been taxed.

The amount should be excluded from the w-2 form since what is the need for taxation and one is being compensated for the money he had been taxed already after receiving it as income from the employee and ended up using it in extra research to benefit the school and students since the school did not provide ready funds to help the lectures acquire what they need in research instead of using their own money to be compensated later and debatable for a second taxing, this will decrease the performance of the lecturer since he will be afraid to go out of his way, because if the money is taxed it will lead to it reducing in amount and hence the lecturer wouldn’t have been compensated fully.

 The lectures should still get the reward of the amount since he is teaching extra courses that were not included in the agreement which means the school could have been obliged to employ another teacher to the worked he has offered to do and this would may be have cost the school more than just giving him or her some amount for the work he has done.

The amount should not be included in the W-2 form since it is his reward and not income. The lecturer should receive some credit and reward for taking his time to do research which he wasn’t obliged to do by his or her contract hence he should be given some amount after being voted the best teacher by a body of students, people don’t earn through being voted for but b working and this earnings are received through voting after their hard work and it shouldn’t be taxed.

In most cases why school might see the need of including the amount in the W-2 form is because some lectures might have malicious intentions of just getting the amount and might not perform their jobs to the full potential and would want to receive pay without shading a drop of sweat. By introducing the W-2 form it will discourage them from false claiming since the amount will be reduced.

The receipts are a source of evidence for auditing process and for taxation since the receipts show the taxation made to the transaction the lecturer made when doing the research and during compensation the amount should not be included in the w-2 form since it had already been taxed and it wouldn’t be fair for the lecturer’s compensation to be taxed a second time.

Though taxation is a process instilled by the government to help it contribute taxes this should not be used to take advantage and tax people on the amount not to be taxed hence the lecturer’s amount should be awarded to them and not included to the w-2 form since it reduces their pay due to taxation and discourages them to continue with the good work they had put and their spirit to volunteer (Graham, 2009).

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