HELP!!! I think I've gotten myself into a huge (tax) mess...
I own an in-home daycare and hired 5 part-time assistants in 2010. I had
NO idea how to withold taxes from their pay, so I had them sign a form that stated they would work as Independent Contractors. From reading on the Internet, it looks like I should have been withholding taxes from their pay or I
could be fined by the IRS. Yikes!!!
If I am wrong, and am able to treat them as Independent Contractors, I already missed the deadline (1/31/2011) to send my assistants their 1099 forms. One of the assistants (who quit) e-mailed me and said I missed the deadline, so she will consider the monies she earned from me in 2010 as "working under the table."
What should I do???
A) Should I forget the $10,000.00 I paid to assistants in 2010 and just claim it as my own income (which means I will have to pay a LOT of taxes on it)?
B) Should I send my assistants a 1099 (a week late) and run the risk of penalties and fines from the IRS for treating them as Independent Contractors when they should have been employees?
C) Should I move to Mexico? Just kidding...
I TRULY would appreciate any input or suggestions on this matter. I am terrified I created a huge problem for myself by not taking the time to figure out how to pay my assistants correctly.
Thank you for you time, input, suggestions, etc.,
CC
PS: Can anyone direct me to a website/blog/post on how to withold taxes from part-time employees? Thanks.
I own an in-home daycare and hired 5 part-time assistants in 2010. I had
NO idea how to withold taxes from their pay, so I had them sign a form that stated they would work as Independent Contractors. From reading on the Internet, it looks like I should have been withholding taxes from their pay or I
could be fined by the IRS. Yikes!!!
If I am wrong, and am able to treat them as Independent Contractors, I already missed the deadline (1/31/2011) to send my assistants their 1099 forms. One of the assistants (who quit) e-mailed me and said I missed the deadline, so she will consider the monies she earned from me in 2010 as "working under the table."
What should I do???
A) Should I forget the $10,000.00 I paid to assistants in 2010 and just claim it as my own income (which means I will have to pay a LOT of taxes on it)?
B) Should I send my assistants a 1099 (a week late) and run the risk of penalties and fines from the IRS for treating them as Independent Contractors when they should have been employees?
C) Should I move to Mexico? Just kidding...

I TRULY would appreciate any input or suggestions on this matter. I am terrified I created a huge problem for myself by not taking the time to figure out how to pay my assistants correctly.
Thank you for you time, input, suggestions, etc.,
CC
PS: Can anyone direct me to a website/blog/post on how to withold taxes from part-time employees? Thanks.

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