Question

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. None of these choices are correct.
c. to avoid the 2%-of-AGI floor on unreimbursed work-related expenses.
d. to avoid the self-employment tax.
e. to avoid the cutback adjustment on unreimbursed business entertainment expenses.

Answer 1

A worker may prefer to be classified as an employee (rather than an independent contractor) for reasons such as claiming work-related expense deductions, avoiding self-employment tax, and avoiding the 2%-of-AGI floor on expense deductions.

Step-by-step explanation:

A worker may prefer to be classified as an employee (rather than an independent contractor) for different reasons. One reason is to claim unreimbursed work-related expenses as a deduction for AGI. As an employee, certain work-related expenses, such as travel expenses or office supplies, can be deducted from the worker's adjusted gross income (AGI) when filing taxes. Another reason is to avoid the self-employment tax. As an independent contractor, the worker is responsible for paying both the employer and employee portions of the payroll taxes (Social Security and Medicare), while an employee only pays a portion of these taxes. Finally, being classified as an employee allows the worker to avoid the 2%-of-AGI floor on unreimbursed work-related expenses. This means that they can deduct these expenses without having to meet a specific threshold.