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Federal & state withholding for a 1099-NEC worker

Level 4

I have a client who is an appraiser.  She has other appraisers working for her and wants to put them on payroll; however, since they have eliminated the deduction for UN-reimbursed employee expenses, that really hurts the workers.  They spend a great deal personally (continuing education, licensing, etc.) and obviously mileage is a big deduction for them.  Can you withhold Federal and State tax and submit it along with other W2 employees for the company?  Or, are you only allowed to withhold backup withholding on a 1099 worker?

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1 Comment 1
Level 15

If she puts them on payroll, she also can Reimburse them for those costs, per the IRS regulations that apply to each specific type of cost.

So, it doesn't Hurt them; it Helps them.

If you do backup withholding on notification of the requirement, which is Income tax (not FICA), then you send it along, but not reporting on 941/944. I would never do voluntary withholding for 1099 workers; they should be making their own Quarterly payments or otherwise meeting their own safe harbor obligation. You don't know their personal financial tax reporting needs.

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