Taxpayer asks:
Several elderly friends have asked me to help them with administratrive work in there home. I would probably do this on an ongoing basis and I am sure each would end up paying me more that $600 a year. I would report all of this money (Schedule C I think) but am concerned for the people I would be doing the work for. Do they have to issue a 1099 for the work I would do for them? Could I just report the money quarterly without ever getting a form from them and have it be legal, I don’t want to get them into trouble?
Taxgirl says:
If I understand it, you’re going to be kind of like a Girl Friday? Opening mail, paying bills, that sort of thing, at times that are convenient for you – and for a number of different people?
Assuming that you can’t be classed as a household employee (which I think you’re not if my understanding of your situation is correct), then there is no obligation for your customers to report payments made to you.
Forms 1099-MISC are generally issued when payments are made in the course of trade or business. Personal payments are not reportable. If your customers are making payments to you for services in much the same way that they would pay their hairdresser or a kid that occasionally mows the law, there’s no reason to submit a 1099 to you.
Again, this assumes that you’re self-employed and that you control how the work is done. A self-employed worker also usually provides his or her own tools and offers services to the general public in an independent business – which sounds like what you’re doing.
If, however, you could be classified as a household or other employee (which would result in a form W-2 issued to you), or if you’re performing services for your customer’s trade or business (which would result in a form 1099-MISC issued to you), that’s a different story. You can read more about household employees here.
I hope that helps. And good luck with your business!
Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.
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Taxpayer asks:
Hello, I have a question concerning a 1099 . I work for a company full time and get a w-2 at the end of the year. I have been asked to work additional hours and know that they usually do not like overtime. Can i ask them to 1099 me at the end of the year for the additional hours? Can I use my ss # or would i need to maybe go under a dba name and tax id #?
Thanks so much for your help!
Taxgirl says:
If you’re doing the same kind of work under the same terms, you need to be paid overtime using your regular tax ID so that you can be issued a W-2 for the entire amount. You’re still an employee for that additional work.
I know that employers don’t like to pay overtime. Of course not. They have to pay more for the same work. But tough! If they’re going to ask you to work it, they need to pay you for it. Not only is it the right thing to do, it’s the law. There are employment laws that your employer might be violating by structuring your compensation differently to avoid overtime.
Besides, you’re just shorting yourself by taking the 1099 in this case. As a W-2 employee, your employer withholds your taxes and pays half of FICA (Social Security and Medicare) tax out of their pocket. If you accept a 1099 for this extra work, not only will you lose the benefit of your overtime rate, you will be stuck paying 100% of the FICA tax as SE tax – you’ll essentially be taking an additional 7% hit.
It sounds like you’re trying to be accommodating and I appreciate that. But don’t talk yourself into getting a bad deal in your efforts to be a good team player.
Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.
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Taxpayer asks:
Hi there. I work for a church that has musicians perform on a regular basis (at least once a month). We cut them a check each time they perform; nothing is run through payroll. Do they need to fill out a W-9? If yes, what do I need to do on my end? Appreciate any help you can offer.
Taxgirl says:
If you intend to treat the musicians (who I am assuming are not incorporated) as independent contractors, then you should have them fill out a form W-9. I don’t know the going rates for musicians these days (as a pretty sad trombone player and only a decent floutist, I can’t say) but I’m guessing that it is likely that you would pay out more than $600 in a taxable year. To ensure that you’re in compliance at the end of the year, I would issue a form W-9 to the musicians in advance of their performances. If you’ve already paid out some for 2009, just issue one now, no worries. It’s just easier to do it at the beginning in case there are compliance or backup withholding issues.
Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.
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Taxpayer asks:
I have a Q. We run a large tow truck company. We tow for the Police, Sheriff, and Highway Patrol, as well as Federal Military Police. We also take private callers with disabled vehicles. We do our taxes every year with our CPA.
We received an emergency call in January. It was a construction company that their truck had been run off the road by a vehicle going the wrong way. We responded, as we usually do,and pulled this truck back on the highway….A recovery situation. Normally, we impound the vehicles until payment is made. However, this time, the vehicle was running OK, and the driver iof the recovered vehicle wanted to drive away. He gave us a PO from his established company. We trusted the large company.
Then, they refused to pay us the $300 for tow services unless we filled outa W-9. As a matter of principle, I refused to submit my SSN or Federal ID, as recommended by my CPA. It was like extortion. I threatened to turn them into collections,. Now the company has told me they reported me to the IRS for failure to fill out a W-9.
I am not an independent contractor. We do not contract with them. This is the one and only time they called us to respond to this emergency call. I already prepare my taxes every year with a CPA. What is going on here? Do I have to worry? When you go to the store to buy groceries, you don’t force the market to fill out a W-9? We are no different. We are an established business.
Thank you.
Taxgirl says:
Based on these facts, I’m guessing that the company does not have to file a form 1099 for money paid to your company. That would mean that they don’t need you to complete a form W-9.
I’m also guessing however, that this “big company” routinely issues forms W-9 as a matter of practice. This is because companies who fail to obtain a proper tax ID number when it’s actually required can be subject to a fine. So, as a matter of course, many of those companies issue a form W-9 to every vendor to cover themselves. Most of the time, I advise my clients to complete the form to avoid the agita. Rarely does anything come of it.
That said, I appreciate that you feel that you didn’t have to complete the form and that you should be paid for the work that you’ve done. If you insist on not completing the form W-9, I would ask your CPA (or attorney) to send a letter to the company asking why they believe it is necessary for you to complete one and note that in the absence of a valid reason, you expect to be paid promptly. My guess is that there is no valid reason. And in the absence of a valid reason, there’s no harm, no foul on the IRS side for not completing the form (the form itself doesn’t get sent to the IRS).
But one more word of advice: I highly recommend doing a quick cost analysis. The cost to you – in fees and time – to get paid for the time that you’ve already expended providing a service is probably more than the payments due you. In situations like this, as sucky as it is, I usually advise my clients to bite the bullet, fill out the form and call it a day. And maybe next time, let ‘em sit by the side of the road for a bit… 
Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.
Have a question? Ask the taxgirl! – Now on Facebook!
