IRS Form 8952 Application for Voluntary Classification Settlement Program (VCSP) is the IRS form you can use to avoid significant taxes and penalties for not treating your assistants as employees. Here’s a description of whether or not you are eligible for this program.
Follow these instructions to fill out Form 8952:
Line 2: Enter your Employer Identification Number (EIN) here. If you don’t have one, obtain one online from the IRS or call the IRS at 800-829-4933.
Line 9: You are a sole proprietor (also known as self-employed), unless you have filed papers with your state to be a different entity.
Line 10: Answer “no” and do not fill out lines 11-14.
You do not have to complete Form 2848, Power of Attorney and Declaration of Representative.
You are the contact person. Fill out your contact information in this section.
Line 15: Enter the number of assistants you intend to have in the next tax quarter.
Line 16: Enter “Family child care assistant”
Line 17: You can sign up for this program to start at the beginning of a tax year or a tax quarter. The tax quarters start on January 1st, April 1st, June 1st, and September 1st. You must give the IRS a sixty day notice before one of these deadlines. So, if you wanted to start on January 1, 2015, file this form at least sixty days before then, or November 1, 2014. The sooner you can sign up for this program, the better.
Line 18: Enter the total amount you paid for all assistants for the past calendar year. In other words, if you file this form in 2014, enter the amount you paid your assistants in 2013. Put the amount you paid in Column A. Do not enter any amount in Column B. Re-enter the amount from Column A in Column C.
Line 19: Multiply the amount on Line 18 by 3.24% (.0324) (2014 rate). For example, if you paid $1,000 to independent contractors in 2013, enter $32.40 ($1,000 x .0324).
Line 20: Leave blank.
Line 21: Enter the same number from line 18.
Line 22: Mulitply Line 21 by 7.44% (.0704) (2014 rate). For example, if Line 21 is $1,000, enter $74.40 ($1,000 x .0744).
Line 23: Add lines 19 and 22. In our example, this would be $106.80 ($32.40 + $74.40)..
Line 24: Multiply line 23 by 10% (.10). In our example, this would be$10.68 ($106.80 x .10).
Sign your name at the bottom of the form and send it to: Internal Revenue Service, Government Entities Compliance Unit, P.O. Box 12220, Ogden, UT 84412.