• Place misclassified workers on payroll right away!

• All payments since the beginning of the year must be run through payroll –do NOT issue a W-2 and a 1099-MISC.

• Back withholding taxes are calculated at the regular rates. You will then need to seek any reimbursement from the employee for the taxes retroactively withheld.

• The taxes are reported on and remitted with form 941-X (amended quarterly federal payroll tax return).

• State unemployment tax returns will need to be corrected as well.

• Determine if 530 relief applies –this may give federal relief, but not state relief.