Should I withhold taxes for a contractor-turned-employee?
September 23, 2011
Date: 3 Apr 2009
We issued NQSOs to a consultant who later became an employee and now is exercising the options. Since he’s now an employee, is the company required to withhold income taxes?
Date: 6 May 2009
Since the options were issued for services performed as a consultant, payroll tax withholding shouldn’t apply. The income should be reported to this person using Form 1099-Misc.