A worker may prefer to be classified as an employee (rather than an independent contractor) for which of the following reasons:
A)To claim unreimbursed work-related expenses as a deduction for AGI.
B)To avoid the self-employment tax.
C)To avoid the cutback adjustment on unreimbursed business entertainment expenses.
D)To avoid the 2%-of-AGI floor on unreimbursed work-related expenses.
E)None of the above.

Question

Quizplus · Accepted Answer

Independent contractors are responsible for paying their own self-employment tax, which is equivalent to both the employer and employee portions of Social Security and Medicare tax. By being classified as an employee, the worker can avoid this tax burden. Option A, C, and D are not valid reasons as employees can also claim these deductions.

A Worker May Prefer to Be Classified as an Employee