CNA as Independent Contractor

chorkle · Oct 23, 2010

New CNA working for a Home Health agency as an independent contractor?? Doesn't seem likely--i.e., not a likely successful situation.

Used to be, years ago, the agency would simply say, "You're responsible for your own taxes," saying no more, and specifically not explaining this meant you had to pay your own Social Security taxes--like 13% or 14%. Almost without exception, this resulted in a huge tax liability around April 15.

But if you're really to be treated as an independent contractor, it is YOU who will decide when to work--hours, days, etc.; YOU who will decide how to do the work needed. All the agency can tell you is, We need this result for this patient. HOW you do the work, When you do the work, Whom you hire to help you--is entirely up to you, and cannot be dictated by the agency.

This just does not seem to be a workable arrangement for an agency using a relatively new CNA graduate.

You know, of course, that an employer (=, you're an employee) withholds 7.65% of gross pay for Social Seurity. (It's slightly more complicated than this, but this is the basic situation.) Unless you have worked in this (tax) field, you may not realize that the employer must pay an employment tax of an additional 7.65% of gross pay. That is, 7.65% gets withheld from your pay, but the employer pays in a total of 15.3%.

If you're an independent contractor, YOU get to pay in the entire 15.3% (with a minor deduction)--and none of this will be withheld anywhere.

BIG sticky situation, potentially.

Go see a tax preparer, for a 15-minute explanation, before proceeding.

Good luck.

caliotter3 · Oct 23, 2010

The IRS has pamphlets on the subject. Basically they warn that in most situations the worker is truly an employee and not an independent contractor. Suggest you obtain this info from them and then get a tax expert to explain anything you don't understand.

AzDeb · Oct 23, 2010

Thank you so much for the information. I thought it was strange when the company called me and said on the phone that I would be an independent contractor. Not knowing enough about it, I did figure the tax situation would not be to my benefit. I also would be concerned about many other aspects. Much better to work as an employee for a company from what I'm gathering from your replies and other resources.

Thank you for taking the time to explain! :)

chorkle · Oct 23, 2010

Caliotter is correct--your "employer" may wish to think of you as an independent contractor, but (eventually) IRS will consider this an employment situation. At that point, they ding the employer for unfiled & unpaid employee withholding, employment taxes, penalties & interest--if the employer can be found.

In the meantime, the "employer" issues you in January a Form 1099 instead of a W-2. A few months later, you get a query from IRS, as to why you didn't show this 1099 income on a Schedule C, why you haven't filed and paid the employment taxes, and why you didn't pay estimated taxes during the year on all of this.

caliotter3 · Oct 23, 2010

In the every day realm, most of us are employees most of the time. When an employer goes out of their way to tell you that you will be an independent contractor, your red flags should pop up and you know that there is a very good reason for the employer to be making this claim.