taxes for one-time job help

[idreamgreen]

So I was lucky enough to land a great pressure washing job and because of it's size I asked my brother-in-law to help me. I agreed we'd split the money for splitting the work. The check will be made to my landscape business, so obviously I will be stuck paying the taxes for all of the money. How much should I withold for taxes before splitting the monies??

[bohiaa]

your kidding, RIGHT ?

[lawnMaster5000]

does your brother in law have his own company?

If yes - then pay him as a sub and write him a check for half.

If no - then pay him as an employee. It is up to you two if his portion is before or after employment taxes. I would think that you agreed to pay him half then your pre-withholding amount is his 1/2. The actual check written to him will be for less than half of the total bill.

[bohiaa]

does your brother in law have his own company?

If yes - then pay him as a sub and write him a check for half.

If no - then pay him as an employee. It is up to you two if his portion is before or after employment taxes. I would think that you agreed to pay him half then your pre-withholding amount is his 1/2. The actual check written to him will be for less than half of the total bill.

cant really pay him as an employee, you just 1099 him, that is that.

then it's up to him to pay his taxes,

If you loophole it and try to pay im as an employee, your gonna open up a huge can of worms,

[lawnMaster5000]

I may be missing something - so please help me

Why would he be "loophole"ing anything if he paid him as an employee?

Someone that worked as an employee cant be paid as a contractor, as you are suggesting by having him 1099.

[bohiaa]

I may be missing something - so please help me

Why would he be "loophole"ing anything if he paid him as an employee?

Someone that worked as an employee cant be paid as a contractor, as you are suggesting by having him 1099.

Simple. you cant have him as an employee, you can only 1099 him.

quick and sweet, an employee is a person that you say here's a list, take that truck and equiptment and go do the job.

a non employee is a person you say get in the truck lets go. = 1099

now, if he's employee, he needs to be on your insurance, and workers comp,
you PROVIDE EVERYTHING.....

if he's 1099 you dont provide insurance, or Workers Comp.

Employee YOU take out taxes, and SS.
1099 He's responable for it...

[lawnMaster5000]

bohiaa

I am not sure where you are getting your information but you may want to check with the IRS on this matter.

According to the IRS:
"A general rule is that anyone who performs services for you is your employee if you can control what will be done and how it will be done. This is so even when you give the employee freedom of action. What matters is that you have the right to control the details of how the services are performed.

Before you can know how to treat payments that you make for services, you must first know the business relationship that exists between you and the person performing the services. The person performing the service may be:

An independent contractor
A common-law employee
A statutory employee
A statutory nonemployee
For additional information on the different types of employees and information on independent contractors, refer to Independent Contractors vs... Employee."

Furthermore the IRS states:
"Who is an Independent Contractor?
A general rule is that you, the payer, have the right to control or direct only the result of the work done by an independent contractor, and not the means and methods of accomplishing the result."

My understanding of these documents shows that the brother can ONLY be an employee, but if the brother provides his own equipment and schedule it can be argued that he was working as a contractor.

Please consult these 2 websites for further information on this matter.
http://www.irs.gov/businesses/small/article/0,,id=99921,00.html
http://www.irs.gov/businesses/small/article/0,,id=98862,00.html#2

[bohiaa]

According to the IRS:
"A general rule is that anyone who performs services for you is your employee if you can control what will be done and how it will be done. This is so even when you give the employee freedom of action. What matters is that you have the right to control the details of how the services are performed.

RIGHT......... this is how it was explaned to me, by my tax man.
If you provide the jobs, the equiptment, and hand a guy a list and say take that truck and go mow these lawns, be back here at 5:00 PM
He's an employee

If you say get in the truck lets go, he's 1099, also you can 1099 up to 600.00

[lawnMaster5000]

Bohiaa please don't take this as me trying to argue with you I am trying to understand the tax laws.

If you are directing an individual where to be and what to do with equipment you provide that person is going to be an employee as you agreed.

If you are telling someone to jump in the truck and lets go, then how is that not telling them when and what to do?

I agree with your example of
"If you provide the jobs, the equipment, and hand a guy a list and say take that truck and go mow these lawns, be back here at 5:00 PM
He's an employee"

However if you give that same person a list and tell them to get the jobs done sometime Tuesday with their own equipment then they are a contractor and you should 1099 them.

If I get an individual off the street to jump in the truck with me to go mow a few lawns real quick then that person is an employee no way around it. As an employee they do not receive a 1099 but rather the whole employee tax package. do you agree?

[bohiaa]

Not the way it was explaned to me...

I sometimes use day labors. the guy who's working FOR you, "or me" and he's just doing a job for a day or two, is NOT an employee, even though he's using your equiptment, and WERE TELLING HIM. do this do that.
even though the tax laws say that's an employee. according to my tax man he's NOT,

there is the 600.00 rule that applys here, untill he reaches 600.00 he's NOT an employee, after that HE is.

I hear ya, It's hard to understand, If we sub'ed out work there 1099's
and because this "day labor" is NOT going to reach over the dollar ammount he's not an employee,

were NOT really liable for his insurance, Workers comp and such,
he wont be driving a truck so there's no need to put him on the driving insurance, <---- "Hope I said that right"


If you are telling someone to jump in the truck and lets go, then how is that not telling them when and what to do?

Yes Kind-of, this is where I got stuck too.

your right, If I take a day labor and say here's my mower, there's the lawn cut it, I am Directing him, BUT, I'm not standing over him and saying Pull this weed, now pull that one,
Nor am I saying, push the mower up this side, then go down that side,
It falls under a more STRICT guideline, of like written instructions. and we dont do that.

However we do say put the mower on a 3" and cut the front yard, so it gets tricky there,
the only thing that makes the diffreance is the 600.00 thing....

this is the way my guy explaned it,

But even though he dont reach the 600.00 he's still tax ductable...

[TSG]

cant really pay him as an employee, you just 1099 him, that is that.

then it's up to him to pay his taxes,

If you loophole it and try to pay im as an employee, your gonna open up a huge can of worms,

Bohia
You need a new tax guy.
If you pick up a guy for 1 day, let him use your tools
bring him to a job, and tell him what to do.
He is yours.
If he hurts himself, he is intittled to workmanscomp,,,,,,ect.
I found this out the hard way in a former buisness.
I paid someone as a sub, months after not needing their service, they
went to unemployment,,,,and won, even though thay had buisness cards, transportation, and could do the work on there own time.
Just .02

[zz4guy]

For one job? Take the money out of your own pocket and you'll get that money back at the end of the year in your profit/salary.
That's what I did for a buddy that helped out last weekend.

You don't get the writeoff, but you also dont have to go thru all the workman's comp BS. And he doenst have to pay taxes so you can pay him less. It's a win-win situation!


It's better to keep it under the table IMO. The IRS has bigger fish to fry.

[TSG]

For one job? Take the money out of your own pocket and you'll get that money back at the end of the year in your profit/salary.
That's what I did for a buddy that helped out last weekend.

You don't get the writeoff, but you also dont have to go thru all the workman's comp BS. And he doenst have to pay taxes so you can pay him less. It's a win-win situation!


It's better to keep it under the table IMO. The IRS has bigger fish to fry.

What people say and what they do are different stories, but telling someone to break the
law via the internet is just wrong.
What makes that any better than the illegals.
You also just posted something that can be tracked back to you.
Alan

[zz4guy]

What people say and what they do are different stories, but telling someone to break the
law via the internet is just wrong.
What makes that any better than the illegals.
You also just posted something that can be tracked back to you.
Alan

Tell somebody who cares.

I've also broken the speed limit, brought fireworks accross a state line, littered, and drank beer and wine at the same time.

This is such a small amount it doesn't matter.

[bohiaa]

Bohia
You need a new tax guy.
If you pick up a guy for 1 day, let him use your tools
bring him to a job, and tell him what to do.
He is yours.
If he hurts himself, he is intittled to workmanscomp,,,,,,ect.
I found this out the hard way in a former buisness.
I paid someone as a sub, months after not needing their service, they
went to unemployment,,,,and won, even though thay had buisness cards, transportation, and could do the work on there own time.
Just .02

hummm, maybe it's diffrent in Texas, we do this all the time,

We just 1099 them turn it in and everyone's happy...

they become contract labor

[bohiaa]

also, around Texas anyway, it's real hard to get a full time JOB, MOST companies go with temps, and work them 39 3/4 hrs a week, this way there NOT considered full time employees and there is NO insurance.

We had several congressmen trying to pass a bill to prevent this,
it was a way for the rich co's to make more money while the Public has no insurance, nor benifits

[bohiaa]

Bohia
You need a new tax guy.
If you pick up a guy for 1 day, let him use your tools
bring him to a job, and tell him what to do.
He is yours.
If he hurts himself, he is intittled to workmanscomp,,,,,,ect.
I found this out the hard way in a former buisness.
I paid someone as a sub, months after not needing their service, they
went to unemployment,,,,and won, even though thay had buisness cards, transportation, and could do the work on there own time.
Just .02

sounds like you paid hom over 600.00 That my firend makes him your employee

[mslawn]

Bohiaa - you are way off. Get a new tax man!! Why be so persistent on something you have no clue about?

[mslawn]

hummm, maybe it's diffrent in Texas, we do this all the time,

We just 1099 them turn it in and everyone's happy...

they become contract labor
If you paid less than 600.00 and they were true contract labor there is no need for a 1099. A 1099 is for contract labor over 600.00.

[mslawn]

If you say get in the truck lets go, he's 1099, also you can 1099 up to 600.00

Please look at above post^^^^^. I again say " You have no clue."

[TSG]

We all know how business is done
and many know how it is supposed to be done.
Ignorance of the law is no excuse to break it.
There are 3 Internal revenue test to see if someone is an employee.
In your case,,,,,employee,,,,,,,,,,,you can have the free will to handle it as you wish.
If you pull an audit, it will cost you more .
Also, if that "day laborer, who you want to call a subcontractor, gets hurt,
he can claim workmans comp,,,,if he is not on your policy, the penalty is huge .
Talk business insurance agent ,,,he will clarify it for you

[Howard Roark]

If you paid less than 600.00 and they were true contract labor there is no need for a 1099. A 1099 is for contract labor over 600.00.

CORRECT...CORRECT, AND CORRECT AGAIN.

And BTW, it might be best to not ask for tax advice on a LAWN forum.

[TSG]

CORRECT...CORRECT, AND CORRECT AGAIN.

And BTW, it might be best to not ask for tax advice on a LAWN forum.

Very true, however many times you don't know if you will exceed the 600.00
until the end of the year.
In the mean time they still must be covered by your workman's-comp , unless they truly have their own buisness.

The bottom line is that
I am not telling anyone how to run or pay people that work for them.
The original question was about paying a single job partner.
Bad/illegal advise was given from members of this board.
Advise to talk to a deffer ant acct was given. (Good Advise).

Everyone one flirts with,,,,,,what can I take as a deduction,,,,,how aggressive is it,,
and how likely am I to get caught. All are personal decisions.
I just hate it when "illegal" advise is given on a public forum.
I would bet more than 1/2 the folks on this board are part-timers and are not running
it like there lively hood depended on it.
Just my .02
and that is the end of my replies
Alan

ps....and yes I have a IRS tax auditor in my family, who sometimes works for me.
When he works (under 600.00) year he is still covered by WC.