Holy Friggin' Cow!!!!!!!!!!!

[Iceweasel]

I think her free accounting service isn't so free after all.

 

[Granny]

The old bat probably got slaughtered by the self-employment tax. If this is her main income and she does it regularly she should form an LLC, make herself an employee of the LLC, then let the LLC contract for work. At least then she could avoid the self-employment tax. Of course, you have got to pay yourself and withhold and match SS and Medicare contributions. So if she only makes squat then it probably is not worth it, but it could be.

Sweetie ... I may be an old bat ... but I'm a damned good old bat, much loved by my children, I still have a sense of humor, have only about $150 of credit card debt, own everything I do have outright, not too bad looking for my age and generally in pretty good shape.

I am sure you are all those things - A spitting image of Angelina Jolie possessing the economic brilliance of Adam Smith and the common sense of Ben Franklin!

LOL - well, Angelina is a pretty woman, but at 72 I'm pretty sure I will never again look THAT young. Most people people peg me from late 50s to mid-60s at most.

 

[Granny]

I was a business for tax purposes and a sole "employee" of that "business" with no intention of ever having anybody else in my "employ." I never solicited business or acted outside the agency on my own behalf. I had some liability coverage through the agency, but never any incidents. I'm sure if I needed to have Articles of Incorporation, By-laws, and all the other business paperwork I would have been told that. I also had the backup of having a licensed business behind me - someone to contact for advice, answer questions and contact in emergencies. Plus we always had a agency folder with information pertaining to each agency client we covered and we were required to keep daily notes which were subject to review at any time by family members and unannounced visits from the agency to see that we were doing what we were supposed to be doing. I physically picked up my paperwork from my accountant today and we went over everything and it's all good. The other thing I could have done was what some (but not all) "privates" do. They work on a cash only basis and don't pay taxes. I'd rather keep it on the up-and-up and pay the taxes.

Tennessee has no individual income tax and that's not likely to happen anytime in the near future - last election the people overwhelming voted to amend the state Constitution so the subject can't be brought up by legislators. I don't understand a lot of TN laws like the "Sunshine Law" but it appears to me that Tennesseans have a hell of a lot more freedom and say-so in what the lawmakers can and can't do than some other states do.

 

[Iceweasel]

I was a business for tax purposes and a sole "employee" of that "business" with no intention of ever having anybody else in my "employ." I never solicited business or acted outside the agency on my own behalf. I had some liability coverage through the agency, but never any incidents. I'm sure if I needed to have Articles of Incorporation, By-laws, and all the other business paperwork I would have been told that. I also had the backup of having a licensed business behind me - someone to contact for advice, answer questions and contact in emergencies. Plus we always had a agency folder with information pertaining to each agency client we covered and we were required to keep daily notes which were subject to review at any time by family members and unannounced visits from the agency to see that we were doing what we were supposed to be doing. I physically picked up my paperwork from my accountant today and we went over everything and it's all good. The other thing I could have done was what some (but not all) "privates" do. They work on a cash only basis and don't pay taxes. I'd rather keep it on the up-and-up and pay the taxes.

Tennessee has no individual income tax and that's not likely to happen anytime in the near future - last election the people overwhelming voted to amend the state Constitution so the subject can't be brought up by legislators. I don't understand a lot of TN laws like the "Sunshine Law" but it appears to me that Tennesseans have a hell of a lot more freedom and say-so in what the lawmakers can and can't do than some other states do.

There's no income tax in WA either and it's entirely irrelevant. Being a sole proprietor with or without employees makes no different to your legal status. You are either an employee or you own a business. If they set the prices and places you were not a subcontractor.

There's no such thing as being a business for tax reasons only. I've been a sole proprietor for 31 years and bylaws, incorporations, bunch of paperwork, etc. have zip to do with whether you are a contractor, subcontrator or employee. You were an employee of the company, they made you pay for the expenses of having an employee and are now modifying it, not because they found Jesus, new laws or anything other than the fact they feel the wrath of God breathing down their necks. If Uncle Sam finds out he'll stomp on their nuts.

 

[Granny]

Well, it's over and done with now and I go forward from here on W-2 status; I'm going to take my courses, try to get a little education and be a better and more knowledgeable caregiver than I've tried to be without a lot of knowledge. But it's been a good little chat we've had and thank you for your input.

 

[Alex.]

My accountant just called me with the damages ... $4,247.00 in taxes due!!! And my hourly rate was $9 for about 90% of the 2015 tax year!! No damned wonder I'm so exhausted and out on leave trying to get myself back together. That's just federal/FICA - thank God TN doesn't have income tax.

Sorry to read about your troubles here. With a 1099 if you have not been paying into your tax all year you may be liable for penalties and interest which would inflate your tax liability. Ask your accountant but you may wish to appeal the penalties/interest that would help.

If you are going to do a 1099 in the future keep copious records on your expenses. You have no idea how this will add up, for example the mileage rate is now 57.5 cents per mile.


Small Business and Self-Employed Tax Center

 

[Granny]

My accountant just called me with the damages ... $4,247.00 in taxes due!!! And my hourly rate was $9 for about 90% of the 2015 tax year!! No damned wonder I'm so exhausted and out on leave trying to get myself back together. That's just federal/FICA - thank God TN doesn't have income tax.

Sorry to read about your troubles here. With a 1099 if you have not been paying into your tax all year you may be liable for penalties and interest which would inflate your tax liability. Ask your accountant but you may wish to appeal the penalties/interest that would help.

If you are going to do a 1099 in the future keep copious records on your expenses. You have no idea how this will add up, for example the mileage rate is now 57.5 cents per mile.


Small Business and Self-Employed Tax Center

I'm aware of that. I chose not to make the quarterly payments last year and it was apparently a good thing - I likely would have had a penalty. I may have been working for tax attorneys when the IRS came out with that little trick. My recollection is that the general idea was to make it so IRS wouldn't have to pay out large refunds every year. Used to be people would claim a whole bunch of dependents during the year, then file their actual dependents on their tax returns, resulting in large refunds after they filed. I expected and planned for a big tax bill for 2015 ... many times putting my entire paycheck in savings instead of checking. I just had a long assignment requiring 12 hour days, don't think I took any actual vacation time, plus filled in for my co-worker a lot since she missed time with health issues of her own, plus pulled a couple 24 hour deals on another assignment covering for someone else. These elders cannot be left to fend for themselves, you know what I mean? So I'm exhausted right now - physically, mentally and emotionally. When I go back to work, my assignment could be nothing more than 4 hours a day or 4 hours a week until another situation presents itself because my boss thinks I'll be a good fit for the position. If I want to take it, I will. If I was still in 1099 status for 2016 and paid estimated quarterly payments based on 2015 earnings, and ended up with 2016 earnings of say $12,000 for 2016, I could be penalized for overestimating ... right?

I'm an old school employee - when something came up on the job that needed to be done, I found a way to get it done AND get my own work done - this "it isn't in my job description" shit just doesn't fly with me.

 

[depotoo]

No penalties for over estimating.

My accountant just called me with the damages ... $4,247.00 in taxes due!!! And my hourly rate was $9 for about 90% of the 2015 tax year!! No damned wonder I'm so exhausted and out on leave trying to get myself back together. That's just federal/FICA - thank God TN doesn't have income tax.

Sorry to read about your troubles here. With a 1099 if you have not been paying into your tax all year you may be liable for penalties and interest which would inflate your tax liability. Ask your accountant but you may wish to appeal the penalties/interest that would help.

If you are going to do a 1099 in the future keep copious records on your expenses. You have no idea how this will add up, for example the mileage rate is now 57.5 cents per mile.


Small Business and Self-Employed Tax Center

I'm aware of that. I chose not to make the quarterly payments last year and it was apparently a good thing - I likely would have had a penalty. I may have been working for tax attorneys when the IRS came out with that little trick. My recollection is that the general idea was to make it so IRS wouldn't have to pay out large refunds every year. Used to be people would claim a whole bunch of dependents during the year, then file their actual dependents on their tax returns, resulting in large refunds after they filed. I expected and planned for a big tax bill for 2015 ... many times putting my entire paycheck in savings instead of checking. I just had a long assignment requiring 12 hour days, don't think I took any actual vacation time, plus filled in for my co-worker a lot since she missed time with health issues of her own, plus pulled a couple 24 hour deals on another assignment covering for someone else. These elders cannot be left to fend for themselves, you know what I mean? So I'm exhausted right now - physically, mentally and emotionally. When I go back to work, my assignment could be nothing more than 4 hours a day or 4 hours a week until another situation presents itself because my boss thinks I'll be a good fit for the position. If I want to take it, I will. If I was still in 1099 status for 2016 and paid estimated quarterly payments based on 2015 earnings, and ended up with 2016 earnings of say $12,000 for 2016, I could be penalized for overestimating ... right?

I'm an old school employee - when something came up on the job that needed to be done, I found a way to get it done AND get my own work done - this "it isn't in my job description" shit just doesn't fly with me.

 

[Alex.]

My accountant just called me with the damages ... $4,247.00 in taxes due!!! And my hourly rate was $9 for about 90% of the 2015 tax year!! No damned wonder I'm so exhausted and out on leave trying to get myself back together. That's just federal/FICA - thank God TN doesn't have income tax.

Sorry to read about your troubles here. With a 1099 if you have not been paying into your tax all year you may be liable for penalties and interest which would inflate your tax liability. Ask your accountant but you may wish to appeal the penalties/interest that would help.

If you are going to do a 1099 in the future keep copious records on your expenses. You have no idea how this will add up, for example the mileage rate is now 57.5 cents per mile.


Small Business and Self-Employed Tax Center

I'm aware of that. I chose not to make the quarterly payments last year and it was apparently a good thing - I likely would have had a penalty. I may have been working for tax attorneys when the IRS came out with that little trick. My recollection is that the general idea was to make it so IRS wouldn't have to pay out large refunds every year. Used to be people would claim a whole bunch of dependents during the year, then file their actual dependents on their tax returns, resulting in large refunds after they filed. I expected and planned for a big tax bill for 2015 ... many times putting my entire paycheck in savings instead of checking. I just had a long assignment requiring 12 hour days, don't think I took any actual vacation time, plus filled in for my co-worker a lot since she missed time with health issues of her own, plus pulled a couple 24 hour deals on another assignment covering for someone else. These elders cannot be left to fend for themselves, you know what I mean? So I'm exhausted right now - physically, mentally and emotionally. When I go back to work, my assignment could be nothing more than 4 hours a day or 4 hours a week until another situation presents itself because my boss thinks I'll be a good fit for the position. If I want to take it, I will. If I was still in 1099 status for 2016 and paid estimated quarterly payments based on 2015 earnings, and ended up with 2016 earnings of say $12,000 for 2016, I could be penalized for overestimating ... right?

I'm an old school employee - when something came up on the job that needed to be done, I found a way to get it done AND get my own work done - this "it isn't in my job description" shit just doesn't fly with me.

In have never seen anyone get penalized for overpaying their taxes unless they were somehow trying to manipulate the tax code or the IRS or defraud the government, at least that is my experience. The whole game of putting too many dependents where there were less is an example of such an act at which point the government may act; usually such action is on the part of an employer and even then it must be one that has a number of employees. Generally the IRS gets their revenge in the form of penalties.

 

[flacaltenn]

Had to file 1099 - independent contractor. Very common to home healthcare workers. Cases went to US Supreme Court, new Labor rules, regs. have been issued and my boss has decided not to fight the fight anymore. I jumped on the W-2 bandwagon as soon as we were told they would now hire us as employees. That move alone will reduce my taxes about 7-1/2%. As an independent contractor I had to file as an employer (of a non-existent business) and pay FICA taxes for my one employee (me). As an employee (of my non-existent business) I had to pay the matching employee FICA taxes. Total: approximately 15% in FICA taxes. I'd rather have the taxes go out on a paycheck to paycheck basis.

You were getting hosed. You could get his butt in hot water if you were in reality an employee. No way $9/hr will cover your costs to be in business. You could probably collect if you hauled him in front of a judge. Unless he files bankruptcy. If he did that here Labor & Industries would use him for a door mat.

I tried to do a double quote/reply but obviously screwed that up. Ludley also had a good post. I didn't have a business, so no business expenses. Didn't have a home office, use my phone for business purposes, no business cards - nothing. I suppose I could have claimed mileage but at roughly 9 miles round trip from my place to my lady's place - shit - not worth my time in keeping track of it. True, I had the option to do quarterly payments but it's risky if someone dies or there's a reassignment of jobs and you don't make enough to keep up those quarterly payments as they should be.

I have a good accountant - worked for her and her dad as a tax season temp when I first moved out here - they told me I would have fee free accounting since they considered me "an employee" even though I was on a temp agency payroll. Her dad was a retired IRS auditor and they followed current IRS rules and regs. very strictly. So, no hosing there. Having people working as independent contractors is not illegal, so no grounds for suit. What happened is that a year or so ago, DOL changed the classification of home healthcare workers so that we weren't in the same class as teen aged babysitters - who definitely don't have a boatload of "employment benefits." That classification change created a firestorm for agencies, some unions of some kind, and independents as well as employees. Several lawsuits were filed, some went to the Supreme Court and DOL has issued new rules and regs. Some agencies may still keep the independent contractor stance for awhile, but the one I've been with has decided not to fight the issue anymore - and have taken some great steps that will be beneficial to all of us. There is also a difference between "privates" (a friend of a friend type situation) and "agency" workers. My advice would be "bite the bullet and pay the agency."

If you were filing a 1099 form the yes, you did have a business. You may not see it that way but the government does. If you aren't on someone's payroll and are making money you are a business. You pay all of your Social Security taxes, health insurance, et.c You should be licensed with the state too, unless they are very lax about it.

Quarterly payments on estimated income isn't optional unless you aren't making enough to pay federal income tax. But the point is you were getting screwed big time by getting stuck with all the downsides of being a business and none of the benefits. And all of the downsides of being an employees with none of the benefits. That's why it isn't legal.

Your accounting services were free because it benefited them. Having worked for the IRS means zip, not every IRS employees knows all the tax laws! I'm a contractor and treating a 1099 as an employee is illegal and has been for some time. You were sold a bill of goods.

Subcontracting isn't illegal, I didn't say so. But a subcontractor sets their own prices and terms, not who hires them.

That's all REALLY important.. Because you can't EVER make a case that you are an independent contractor if ALL or MOST ALL of your income comes from a SINGLE 1099.. That's a red flag... And it's the WORKER'S responsibility to make the correct declaration..

So a subcontractor BETTER have more than one client (and one 1099)..

But still Granny -- sounds like a math error. Even with full FICA responsibility that's 0.13 X 22,000 = $2500.

You made the same as my daughter did as an employee last year and she got back $1200. So that's about right if her employer paid 1/2 of the $2500. You owe NO Income tax above the FICA responsibility. I'd be shocked if you did..

 

[Alex.]

Had to file 1099 - independent contractor. Very common to home healthcare workers. Cases went to US Supreme Court, new Labor rules, regs. have been issued and my boss has decided not to fight the fight anymore. I jumped on the W-2 bandwagon as soon as we were told they would now hire us as employees. That move alone will reduce my taxes about 7-1/2%. As an independent contractor I had to file as an employer (of a non-existent business) and pay FICA taxes for my one employee (me). As an employee (of my non-existent business) I had to pay the matching employee FICA taxes. Total: approximately 15% in FICA taxes. I'd rather have the taxes go out on a paycheck to paycheck basis.

You were getting hosed. You could get his butt in hot water if you were in reality an employee. No way $9/hr will cover your costs to be in business. You could probably collect if you hauled him in front of a judge. Unless he files bankruptcy. If he did that here Labor & Industries would use him for a door mat.

I tried to do a double quote/reply but obviously screwed that up. Ludley also had a good post. I didn't have a business, so no business expenses. Didn't have a home office, use my phone for business purposes, no business cards - nothing. I suppose I could have claimed mileage but at roughly 9 miles round trip from my place to my lady's place - shit - not worth my time in keeping track of it. True, I had the option to do quarterly payments but it's risky if someone dies or there's a reassignment of jobs and you don't make enough to keep up those quarterly payments as they should be.

I have a good accountant - worked for her and her dad as a tax season temp when I first moved out here - they told me I would have fee free accounting since they considered me "an employee" even though I was on a temp agency payroll. Her dad was a retired IRS auditor and they followed current IRS rules and regs. very strictly. So, no hosing there. Having people working as independent contractors is not illegal, so no grounds for suit. What happened is that a year or so ago, DOL changed the classification of home healthcare workers so that we weren't in the same class as teen aged babysitters - who definitely don't have a boatload of "employment benefits." That classification change created a firestorm for agencies, some unions of some kind, and independents as well as employees. Several lawsuits were filed, some went to the Supreme Court and DOL has issued new rules and regs. Some agencies may still keep the independent contractor stance for awhile, but the one I've been with has decided not to fight the issue anymore - and have taken some great steps that will be beneficial to all of us. There is also a difference between "privates" (a friend of a friend type situation) and "agency" workers. My advice would be "bite the bullet and pay the agency."

If you were filing a 1099 form the yes, you did have a business. You may not see it that way but the government does. If you aren't on someone's payroll and are making money you are a business. You pay all of your Social Security taxes, health insurance, et.c You should be licensed with the state too, unless they are very lax about it.

Quarterly payments on estimated income isn't optional unless you aren't making enough to pay federal income tax. But the point is you were getting screwed big time by getting stuck with all the downsides of being a business and none of the benefits. And all of the downsides of being an employees with none of the benefits. That's why it isn't legal.

Your accounting services were free because it benefited them. Having worked for the IRS means zip, not every IRS employees knows all the tax laws! I'm a contractor and treating a 1099 as an employee is illegal and has been for some time. You were sold a bill of goods.

Subcontracting isn't illegal, I didn't say so. But a subcontractor sets their own prices and terms, not who hires them.

That's all REALLY important.. Because you can't EVER make a case that you are an independent contractor if ALL or MOST ALL of your income comes from a SINGLE 1099.. That's a red flag... And it's the WORKER'S responsibility to make the correct declaration..

So a subcontractor BETTER have more than one client (and one 1099)..

But still Granny -- sounds like a math error. Even with full FICA responsibility that's 0.13 X 22,000 = $2500.

You made the same as my daughter did as an employee last year and she got back $1200. So that's about right if her employer paid 1/2 of the $2500. You owe NO Income tax above the FICA responsibility. I'd be shocked if you did..

Unless your daughter is a 72 YO women who mirrors the OP then you cannot say for sure what the OP's tax liability would be. Best left up to the professionals the OP dealt with.

 

[Iceweasel]

She should see a different tax person, one that doesn't have an invested interest.

 

[Alex.]

She should see a different tax person, one that doesn't have an invested interest.

I agree on second opinion.

 

[flacaltenn]

Had to file 1099 - independent contractor. Very common to home healthcare workers. Cases went to US Supreme Court, new Labor rules, regs. have been issued and my boss has decided not to fight the fight anymore. I jumped on the W-2 bandwagon as soon as we were told they would now hire us as employees. That move alone will reduce my taxes about 7-1/2%. As an independent contractor I had to file as an employer (of a non-existent business) and pay FICA taxes for my one employee (me). As an employee (of my non-existent business) I had to pay the matching employee FICA taxes. Total: approximately 15% in FICA taxes. I'd rather have the taxes go out on a paycheck to paycheck basis.

You were getting hosed. You could get his butt in hot water if you were in reality an employee. No way $9/hr will cover your costs to be in business. You could probably collect if you hauled him in front of a judge. Unless he files bankruptcy. If he did that here Labor & Industries would use him for a door mat.

I tried to do a double quote/reply but obviously screwed that up. Ludley also had a good post. I didn't have a business, so no business expenses. Didn't have a home office, use my phone for business purposes, no business cards - nothing. I suppose I could have claimed mileage but at roughly 9 miles round trip from my place to my lady's place - shit - not worth my time in keeping track of it. True, I had the option to do quarterly payments but it's risky if someone dies or there's a reassignment of jobs and you don't make enough to keep up those quarterly payments as they should be.

I have a good accountant - worked for her and her dad as a tax season temp when I first moved out here - they told me I would have fee free accounting since they considered me "an employee" even though I was on a temp agency payroll. Her dad was a retired IRS auditor and they followed current IRS rules and regs. very strictly. So, no hosing there. Having people working as independent contractors is not illegal, so no grounds for suit. What happened is that a year or so ago, DOL changed the classification of home healthcare workers so that we weren't in the same class as teen aged babysitters - who definitely don't have a boatload of "employment benefits." That classification change created a firestorm for agencies, some unions of some kind, and independents as well as employees. Several lawsuits were filed, some went to the Supreme Court and DOL has issued new rules and regs. Some agencies may still keep the independent contractor stance for awhile, but the one I've been with has decided not to fight the issue anymore - and have taken some great steps that will be beneficial to all of us. There is also a difference between "privates" (a friend of a friend type situation) and "agency" workers. My advice would be "bite the bullet and pay the agency."

If you were filing a 1099 form the yes, you did have a business. You may not see it that way but the government does. If you aren't on someone's payroll and are making money you are a business. You pay all of your Social Security taxes, health insurance, et.c You should be licensed with the state too, unless they are very lax about it.

Quarterly payments on estimated income isn't optional unless you aren't making enough to pay federal income tax. But the point is you were getting screwed big time by getting stuck with all the downsides of being a business and none of the benefits. And all of the downsides of being an employees with none of the benefits. That's why it isn't legal.

Your accounting services were free because it benefited them. Having worked for the IRS means zip, not every IRS employees knows all the tax laws! I'm a contractor and treating a 1099 as an employee is illegal and has been for some time. You were sold a bill of goods.

Subcontracting isn't illegal, I didn't say so. But a subcontractor sets their own prices and terms, not who hires them.

That's all REALLY important.. Because you can't EVER make a case that you are an independent contractor if ALL or MOST ALL of your income comes from a SINGLE 1099.. That's a red flag... And it's the WORKER'S responsibility to make the correct declaration..

So a subcontractor BETTER have more than one client (and one 1099)..

But still Granny -- sounds like a math error. Even with full FICA responsibility that's 0.13 X 22,000 = $2500.

You made the same as my daughter did as an employee last year and she got back $1200. So that's about right if her employer paid 1/2 of the $2500. You owe NO Income tax above the FICA responsibility. I'd be shocked if you did..

Unless your daughter is a 72 YO women who mirrors the OP then you cannot say for sure what the OP's tax liability would be. Best left up to the professionals the OP dealt with.

Have you looked at the tax tables for $22K income? Virtually NO ONE at that level has any tax liability other than FICA.. But OK --- I'm not a professional accountant. I'm just not totally defenseless when it comes to MONITORING what the "professionals" do to me (us)...

 

[Alex.]

You were getting hosed. You could get his butt in hot water if you were in reality an employee. No way $9/hr will cover your costs to be in business. You could probably collect if you hauled him in front of a judge. Unless he files bankruptcy. If he did that here Labor & Industries would use him for a door mat.

I tried to do a double quote/reply but obviously screwed that up. Ludley also had a good post. I didn't have a business, so no business expenses. Didn't have a home office, use my phone for business purposes, no business cards - nothing. I suppose I could have claimed mileage but at roughly 9 miles round trip from my place to my lady's place - shit - not worth my time in keeping track of it. True, I had the option to do quarterly payments but it's risky if someone dies or there's a reassignment of jobs and you don't make enough to keep up those quarterly payments as they should be.

I have a good accountant - worked for her and her dad as a tax season temp when I first moved out here - they told me I would have fee free accounting since they considered me "an employee" even though I was on a temp agency payroll. Her dad was a retired IRS auditor and they followed current IRS rules and regs. very strictly. So, no hosing there. Having people working as independent contractors is not illegal, so no grounds for suit. What happened is that a year or so ago, DOL changed the classification of home healthcare workers so that we weren't in the same class as teen aged babysitters - who definitely don't have a boatload of "employment benefits." That classification change created a firestorm for agencies, some unions of some kind, and independents as well as employees. Several lawsuits were filed, some went to the Supreme Court and DOL has issued new rules and regs. Some agencies may still keep the independent contractor stance for awhile, but the one I've been with has decided not to fight the issue anymore - and have taken some great steps that will be beneficial to all of us. There is also a difference between "privates" (a friend of a friend type situation) and "agency" workers. My advice would be "bite the bullet and pay the agency."

If you were filing a 1099 form the yes, you did have a business. You may not see it that way but the government does. If you aren't on someone's payroll and are making money you are a business. You pay all of your Social Security taxes, health insurance, et.c You should be licensed with the state too, unless they are very lax about it.

Quarterly payments on estimated income isn't optional unless you aren't making enough to pay federal income tax. But the point is you were getting screwed big time by getting stuck with all the downsides of being a business and none of the benefits. And all of the downsides of being an employees with none of the benefits. That's why it isn't legal.

Your accounting services were free because it benefited them. Having worked for the IRS means zip, not every IRS employees knows all the tax laws! I'm a contractor and treating a 1099 as an employee is illegal and has been for some time. You were sold a bill of goods.

Subcontracting isn't illegal, I didn't say so. But a subcontractor sets their own prices and terms, not who hires them.

That's all REALLY important.. Because you can't EVER make a case that you are an independent contractor if ALL or MOST ALL of your income comes from a SINGLE 1099.. That's a red flag... And it's the WORKER'S responsibility to make the correct declaration..

So a subcontractor BETTER have more than one client (and one 1099)..

But still Granny -- sounds like a math error. Even with full FICA responsibility that's 0.13 X 22,000 = $2500.

You made the same as my daughter did as an employee last year and she got back $1200. So that's about right if her employer paid 1/2 of the $2500. You owe NO Income tax above the FICA responsibility. I'd be shocked if you did..

Unless your daughter is a 72 YO women who mirrors the OP then you cannot say for sure what the OP's tax liability would be. Best left up to the professionals the OP dealt with.

Have you looked at the tax tables for $22K income? Virtually NO ONE at that level has any tax liability other than FICA.. But OK --- I'm not a professional accountant. I'm just not totally defenseless when it comes to MONITORING what the "professionals" do to me (us)...

There are other factors and other possible incomes etc.

 

[depotoo]

I bet she also had to take a retirement distribution and thus the higher rate, or she needs a new accountant, because it isn't possible on that income alone.

You were getting hosed. You could get his butt in hot water if you were in reality an employee. No way $9/hr will cover your costs to be in business. You could probably collect if you hauled him in front of a judge. Unless he files bankruptcy. If he did that here Labor & Industries would use him for a door mat.

I tried to do a double quote/reply but obviously screwed that up. Ludley also had a good post. I didn't have a business, so no business expenses. Didn't have a home office, use my phone for business purposes, no business cards - nothing. I suppose I could have claimed mileage but at roughly 9 miles round trip from my place to my lady's place - shit - not worth my time in keeping track of it. True, I had the option to do quarterly payments but it's risky if someone dies or there's a reassignment of jobs and you don't make enough to keep up those quarterly payments as they should be.

I have a good accountant - worked for her and her dad as a tax season temp when I first moved out here - they told me I would have fee free accounting since they considered me "an employee" even though I was on a temp agency payroll. Her dad was a retired IRS auditor and they followed current IRS rules and regs. very strictly. So, no hosing there. Having people working as independent contractors is not illegal, so no grounds for suit. What happened is that a year or so ago, DOL changed the classification of home healthcare workers so that we weren't in the same class as teen aged babysitters - who definitely don't have a boatload of "employment benefits." That classification change created a firestorm for agencies, some unions of some kind, and independents as well as employees. Several lawsuits were filed, some went to the Supreme Court and DOL has issued new rules and regs. Some agencies may still keep the independent contractor stance for awhile, but the one I've been with has decided not to fight the issue anymore - and have taken some great steps that will be beneficial to all of us. There is also a difference between "privates" (a friend of a friend type situation) and "agency" workers. My advice would be "bite the bullet and pay the agency."

If you were filing a 1099 form the yes, you did have a business. You may not see it that way but the government does. If you aren't on someone's payroll and are making money you are a business. You pay all of your Social Security taxes, health insurance, et.c You should be licensed with the state too, unless they are very lax about it.

Quarterly payments on estimated income isn't optional unless you aren't making enough to pay federal income tax. But the point is you were getting screwed big time by getting stuck with all the downsides of being a business and none of the benefits. And all of the downsides of being an employees with none of the benefits. That's why it isn't legal.

Your accounting services were free because it benefited them. Having worked for the IRS means zip, not every IRS employees knows all the tax laws! I'm a contractor and treating a 1099 as an employee is illegal and has been for some time. You were sold a bill of goods.

Subcontracting isn't illegal, I didn't say so. But a subcontractor sets their own prices and terms, not who hires them.

That's all REALLY important.. Because you can't EVER make a case that you are an independent contractor if ALL or MOST ALL of your income comes from a SINGLE 1099.. That's a red flag... And it's the WORKER'S responsibility to make the correct declaration..

So a subcontractor BETTER have more than one client (and one 1099)..

But still Granny -- sounds like a math error. Even with full FICA responsibility that's 0.13 X 22,000 = $2500.

You made the same as my daughter did as an employee last year and she got back $1200. So that's about right if her employer paid 1/2 of the $2500. You owe NO Income tax above the FICA responsibility. I'd be shocked if you did..

Unless your daughter is a 72 YO women who mirrors the OP then you cannot say for sure what the OP's tax liability would be. Best left up to the professionals the OP dealt with.

Have you looked at the tax tables for $22K income? Virtually NO ONE at that level has any tax liability other than FICA.. But OK --- I'm not a professional accountant. I'm just not totally defenseless when it comes to MONITORING what the "professionals" do to me (us)...

 

[Granny]

Had to file 1099 - independent contractor. Very common to home healthcare workers. Cases went to US Supreme Court, new Labor rules, regs. have been issued and my boss has decided not to fight the fight anymore. I jumped on the W-2 bandwagon as soon as we were told they would now hire us as employees. That move alone will reduce my taxes about 7-1/2%. As an independent contractor I had to file as an employer (of a non-existent business) and pay FICA taxes for my one employee (me). As an employee (of my non-existent business) I had to pay the matching employee FICA taxes. Total: approximately 15% in FICA taxes. I'd rather have the taxes go out on a paycheck to paycheck basis.

You were getting hosed. You could get his butt in hot water if you were in reality an employee. No way $9/hr will cover your costs to be in business. You could probably collect if you hauled him in front of a judge. Unless he files bankruptcy. If he did that here Labor & Industries would use him for a door mat.

I tried to do a double quote/reply but obviously screwed that up. Ludley also had a good post. I didn't have a business, so no business expenses. Didn't have a home office, use my phone for business purposes, no business cards - nothing. I suppose I could have claimed mileage but at roughly 9 miles round trip from my place to my lady's place - shit - not worth my time in keeping track of it. True, I had the option to do quarterly payments but it's risky if someone dies or there's a reassignment of jobs and you don't make enough to keep up those quarterly payments as they should be.

I have a good accountant - worked for her and her dad as a tax season temp when I first moved out here - they told me I would have fee free accounting since they considered me "an employee" even though I was on a temp agency payroll. Her dad was a retired IRS auditor and they followed current IRS rules and regs. very strictly. So, no hosing there. Having people working as independent contractors is not illegal, so no grounds for suit. What happened is that a year or so ago, DOL changed the classification of home healthcare workers so that we weren't in the same class as teen aged babysitters - who definitely don't have a boatload of "employment benefits." That classification change created a firestorm for agencies, some unions of some kind, and independents as well as employees. Several lawsuits were filed, some went to the Supreme Court and DOL has issued new rules and regs. Some agencies may still keep the independent contractor stance for awhile, but the one I've been with has decided not to fight the issue anymore - and have taken some great steps that will be beneficial to all of us. There is also a difference between "privates" (a friend of a friend type situation) and "agency" workers. My advice would be "bite the bullet and pay the agency."

If you were filing a 1099 form the yes, you did have a business. You may not see it that way but the government does. If you aren't on someone's payroll and are making money you are a business. You pay all of your Social Security taxes, health insurance, et.c You should be licensed with the state too, unless they are very lax about it.

Quarterly payments on estimated income isn't optional unless you aren't making enough to pay federal income tax. But the point is you were getting screwed big time by getting stuck with all the downsides of being a business and none of the benefits. And all of the downsides of being an employees with none of the benefits. That's why it isn't legal.

Your accounting services were free because it benefited them. Having worked for the IRS means zip, not every IRS employees knows all the tax laws! I'm a contractor and treating a 1099 as an employee is illegal and has been for some time. You were sold a bill of goods.

Subcontracting isn't illegal, I didn't say so. But a subcontractor sets their own prices and terms, not who hires them.

That's all REALLY important.. Because you can't EVER make a case that you are an independent contractor if ALL or MOST ALL of your income comes from a SINGLE 1099.. That's a red flag... And it's the WORKER'S responsibility to make the correct declaration..

So a subcontractor BETTER have more than one client (and one 1099)..

But still Granny -- sounds like a math error. Even with full FICA responsibility that's 0.13 X 22,000 = $2500.

You made the same as my daughter did as an employee last year and she got back $1200. So that's about right if her employer paid 1/2 of the $2500. You owe NO Income tax above the FICA responsibility. I'd be shocked if you did..

Good Lord ... I had no idea this OP would stir up such heated controversy. Jesus! Now I forget who I'm even responding to or why. All I can tell you is that my 1099 was issued in my personal name, using my personal SSN, showing the agency as the entity issuing the 1099. All my life I was a W-2 employee and I could read my pay stub: $x gross, $x to state income, $x to federal, $x to Medicare, $x to FICA, $x insurance, $x OT pay, $x reg. pay, $x net. Now all I know is that I made $x gross. If the business hired us wrong, that's on them. I've paid what I owe.

 

[Alex.]

Had to file 1099 - independent contractor. Very common to home healthcare workers. Cases went to US Supreme Court, new Labor rules, regs. have been issued and my boss has decided not to fight the fight anymore. I jumped on the W-2 bandwagon as soon as we were told they would now hire us as employees. That move alone will reduce my taxes about 7-1/2%. As an independent contractor I had to file as an employer (of a non-existent business) and pay FICA taxes for my one employee (me). As an employee (of my non-existent business) I had to pay the matching employee FICA taxes. Total: approximately 15% in FICA taxes. I'd rather have the taxes go out on a paycheck to paycheck basis.

You were getting hosed. You could get his butt in hot water if you were in reality an employee. No way $9/hr will cover your costs to be in business. You could probably collect if you hauled him in front of a judge. Unless he files bankruptcy. If he did that here Labor & Industries would use him for a door mat.

I tried to do a double quote/reply but obviously screwed that up. Ludley also had a good post. I didn't have a business, so no business expenses. Didn't have a home office, use my phone for business purposes, no business cards - nothing. I suppose I could have claimed mileage but at roughly 9 miles round trip from my place to my lady's place - shit - not worth my time in keeping track of it. True, I had the option to do quarterly payments but it's risky if someone dies or there's a reassignment of jobs and you don't make enough to keep up those quarterly payments as they should be.

I have a good accountant - worked for her and her dad as a tax season temp when I first moved out here - they told me I would have fee free accounting since they considered me "an employee" even though I was on a temp agency payroll. Her dad was a retired IRS auditor and they followed current IRS rules and regs. very strictly. So, no hosing there. Having people working as independent contractors is not illegal, so no grounds for suit. What happened is that a year or so ago, DOL changed the classification of home healthcare workers so that we weren't in the same class as teen aged babysitters - who definitely don't have a boatload of "employment benefits." That classification change created a firestorm for agencies, some unions of some kind, and independents as well as employees. Several lawsuits were filed, some went to the Supreme Court and DOL has issued new rules and regs. Some agencies may still keep the independent contractor stance for awhile, but the one I've been with has decided not to fight the issue anymore - and have taken some great steps that will be beneficial to all of us. There is also a difference between "privates" (a friend of a friend type situation) and "agency" workers. My advice would be "bite the bullet and pay the agency."

If you were filing a 1099 form the yes, you did have a business. You may not see it that way but the government does. If you aren't on someone's payroll and are making money you are a business. You pay all of your Social Security taxes, health insurance, et.c You should be licensed with the state too, unless they are very lax about it.

Quarterly payments on estimated income isn't optional unless you aren't making enough to pay federal income tax. But the point is you were getting screwed big time by getting stuck with all the downsides of being a business and none of the benefits. And all of the downsides of being an employees with none of the benefits. That's why it isn't legal.

Your accounting services were free because it benefited them. Having worked for the IRS means zip, not every IRS employees knows all the tax laws! I'm a contractor and treating a 1099 as an employee is illegal and has been for some time. You were sold a bill of goods.

Subcontracting isn't illegal, I didn't say so. But a subcontractor sets their own prices and terms, not who hires them.

That's all REALLY important.. Because you can't EVER make a case that you are an independent contractor if ALL or MOST ALL of your income comes from a SINGLE 1099.. That's a red flag... And it's the WORKER'S responsibility to make the correct declaration..

So a subcontractor BETTER have more than one client (and one 1099)..

But still Granny -- sounds like a math error. Even with full FICA responsibility that's 0.13 X 22,000 = $2500.

You made the same as my daughter did as an employee last year and she got back $1200. So that's about right if her employer paid 1/2 of the $2500. You owe NO Income tax above the FICA responsibility. I'd be shocked if you did..

Good Lord ... I had no idea this OP would stir up such heated controversy. Jesus! Now I forget who I'm even responding to or why. All I can tell you is that my 1099 was issued in my personal name, using my personal SSN, showing the agency as the entity issuing the 1099. All my life I was a W-2 employee and I could read my pay stub: $x gross, $x to state income, $x to federal, $x to Medicare, $x to FICA, $x insurance, $x OT pay, $x reg. pay, $x net. Now all I know is that I made $x gross. If the business hired us wrong, that's on them. I've paid what I owe.

No controversy just a discussion. A much needed one, in fact. Good topic

 

[Luddly Neddite]

What hurt Granny is the self-employment tax. I don't remember how much it is now - something like 15%. Way too high and likely to go higher.

We filed our taxes today. Between state and fed, we broke even. Actually getting a small amount back, like $30 or so. Just the way I like it and just the way we planned. Now we're planning for what will happen with our TIA-Creff. Its a large amount of money and the last thing we would want is to pay tax on it. So, rolling it over into a couple of other programs - IRA and another.

The thing to remember is that once we're past 12-31, there's nothing you can do. You're stuck. So, now is the time to see your tax adviser or financial adviser. Don't wait.

If you're self-employed, plan ahead because you don't have an employer withholding for you. You've got to do it yourself. What is pissy about that is you can't make much on it.

I've always thought - I don't want ti give the IRS the use of my money all year and then get it back in the form of a refund because they're not gonna pay me any interest. If I've got it, then I could invest it the way I want or even just put it in a regular savings account.

Those days are gone (Thanks to the fucking Rs). No interest in savings and if you're going to need it, it needs to be liquid. That's limits what you can do with it. That's why we keep a pretty good sized pile of cash on hand. We're not making anything from it but if we need cash, we've got it.

That's what works for us.

 

[Granny]

I know. The FICA is about 15% after you've paid it double! Well, like I said, we're on W-2 status now, an outside payroll company is doing all the payroll now and it's direct deposited to boot.