Caregivers

questions & answers

Question: if I pay for a friend to bring in food and she charges a small fee for preparation -is she considered an employee and do I need to pay taxes?

Answer: This person may be an employee or an independent contractor. More information is required to make this determination.

Arizona law defines an employee as the following:
"A. "Employee" means any individual who performs services for an employing unit and who is subject to the direction, rule or control of the employing unit as to both the method of performing or executing the services and the result to be effected or accomplished. Indications of control by the employing unit include controlling the individual's hours of work, location of work, right to perform services for others, tools, equipment, materials, expenses and use of other workers and other indicia of employment, except employee does not include:
1. An individual who performs services as an independent contractor, business person, agent or consultant, or in a capacity characteristic of an independent profession, trade, skill or occupation.
2. An individual subject to the direction, rule or control or subject to the right of direction, rule or control of an employing unit solely because of a provision of law regulating the organization, trade or business of the employing unit.
3. An individual or class of individuals that the federal government has decided not to and does not treat as an employee or employees for federal unemployment tax purposes.
4. An individual if the employing unit demonstrates the individual performs services in the same manner as a similarly situated class of individuals that the federal government has decided not to and does not treat as an employee or employees for federal unemployment tax purposes.
5. An individual to whom all of the following apply:
(a) Performs officiating services in recreational, interscholastic or intercollegiate sporting events or contests on a contest-by-contest basis.
(b) Has the ability to accept or reject assignments to officiate a sporting event or contest.
(c) Has the right to officiate contests for multiple organizations or entities.
(d) Is not otherwise employed by the sponsoring school, association of schools or the organization, this state, or a political subdivision of this state sponsoring the sporting event or contest.
B. For the purposes of subsection A, paragraph 5 of this section, "officiating services" means overseeing the play of a sporting event or contest, judging whether the rules are being followed and penalizing participants for infringing the rules.
C. Notwithstanding this section, an individual or class of individuals shall not be treated as an employee by the department for purposes of this chapter if, before the department's determination that the individual or class of individuals at issue is an employee:
1. The individual or class of individuals had been performing services for the employing unit.
2. The department had inspected work records of the employing unit for time periods that the individual or class of individuals had been performing these services.
3. The individual or class of individuals at issue was not included on the contribution and wage reports of the employing unit.
4. After its inspection the department concluded in writing provided to the employing unit that either:
(a) No change or changes in the inspected reports were necessary.
(b) The individual or class of individuals in question did not constitute an employee for purposes of this chapter."
(http://www.azleg.gov/ars/23/00613-01.htm)

The following website has information from the IRS on how to distinguish an employee from an independent contractor: https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Independent-Contractor-Self-Employed-or-Employee

If a person is your employee and not an independent contractor, you would need to pay taxes if the employee was paid over a certain amount in one year.

Comments:

QUESTIONS

  • if I pay for a friend to bring in food and she charges a small fee for preparation -is she considered an employee and do I need to pay taxes?

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