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View Full Version : Legal Issues with my Brother (taxes)


Adam3669
03-28-2009, 07:59 PM
To make a long story short, during 2008 I occasionally helped my big brother out with his mowing business. Anything from helping throw down mulch to hoping in the truck with him and mowing with him all day. Over the summer, he went over to Europe to study abroad and had me take care of all of his lawns until he got back, using all of his equipment and resources. Each time he paid me, he paid me by check. I never once filled out any sort of paperwork while working with him, it was my brother, why worry about it?

Well fast forward to now, he just sent me a text saying he was going to file taxes and I had to pay taxes on the $5500 I made from working for him. I had no idea this was coming.

Keep in mind my brother and I have a terrible relationship, when it comes to money he will do anything possible to further his financial portfolio at the expense of others, including family. It also doesn't help that he is about to get his CPA.

Now, he is claiming me as an Independant Contractor, im guessing so that he doesn't have to pay unemployment or any of the other taxes that come with having employees (He's a solo operation). But, according to the classification between Employee and Independant Contractor...I most closely fit under the classification of employee. But, I never filled out any paperwork, signed any contracts, recieved any sort of benefits or health insurance or anything. The only record he has of ME is that he wrote me checks, and I am having a hard time getting him to show me his records of those checks/payments.

So, what legal rights do I have, if any, pertaining to this matter? I know that if it gets bad enough, I can file for unemployment, cite his company as a previous employer, and when the state provides the test to determine if I was an IC or an employee, I will most certinly be classified as an employee.

What are your thoughts?

DLCS
03-28-2009, 08:23 PM
He paid you by check so now he has paper trail that the IRS would find if he was audited. Now he wants to cover his arse by 1099 you and getting a write off to boot. But you are not considered an IC in the eyes of the government, you are an employee. He should have withheld taxes on you all along.

bohiaa
03-28-2009, 09:53 PM
Not too sure if you are an employe or NOT. you will need to do research on the issue.
however it looks like he's with in his rights. and you will have to Claim the 5500 as income.

To be honest I dont think you can claim yourself as FULL TIME employee, nor he.

it always sucks when things are NOT agreed upon befor the fact.

Best of Luck to you

wbw
03-28-2009, 10:04 PM
What would be the effect on you if you claim this income? How much tax will you owe, if any? You could probably find enough write offs to make this income go away.

LouisianaLawnboy
03-28-2009, 11:27 PM
If you put yourself down as 5500.00 a year. You will in the end pay no taxes. Take it to a local tax place and let them deal with for a 100.00-200.00. I'm pretty confident if you do have to pay any taxes, next year you will get them back.

newz7151
03-28-2009, 11:56 PM
no social security, no medicare... but hey it's your brother, right?

Fvstringpicker
03-29-2009, 12:18 AM
What was the basis of your pay--hourly, daily, weekly? It doesn't sound like you're an independent contractor. See if you meet the requirements. If your clearly an employee, I'd report the 5500 as "bring home" and extrapolate the taxes claiming he didn't give you a w-2.

Adam3669
03-29-2009, 01:06 PM
What was the basis of your pay--hourly, daily, weekly? It doesn't sound like you're an independent contractor. See if you meet the requirements. If your clearly an employee, I'd report the 5500 as "bring home" and extrapolate the taxes claiming he didn't give you a w-2.

For the work before the summer, I was paid hourly and recieved a check at the end of each month. Over the summer I was paid 2k before and 2k after. But, according to the requirments of an employee vs an IC, I fit almost all of the employee classifications

TMlawncare
03-29-2009, 01:30 PM
Since you were using his equipment all along you are classified as an employee. If you do not use your own equipment you can not be using a 1099. Your brother really made a mistake here. If he wanted to lessen his taxable income he should have made you an employee right off the bat. But that would cost him a little more. I believe it's time to pick up the phone.

Runner
03-29-2009, 06:23 PM
I can tell you for FACT that you do not meet the criteria as an IC. This is on him. Also, the advice above about going to the tax place and spending 100 to 200 bucks because you will not owe anything on $5600 is WRONG. you in fact WOULD owe money on this if you were an independent contractor. It would be up to YOU to show exemptions against it (fuel, mileage, depreciation on YOUR equipment, supplies, etc.) - to reduce the taxable amount.
I wish I had the page link handy that explains this, as it has been posted on here numerous times (an IRS link). you tell your brother that if he does this...he is screwed - guaranteed!

Adam3669
03-29-2009, 07:12 PM
I can tell you for FACT that you do not meet the criteria as an IC. This is on him. Also, the advice above about going to the tax place and spending 100 to 200 bucks because you will not owe anything on $5600 is WRONG. you in fact WOULD owe money on this if you were an independent contractor. It would be up to YOU to show exemptions against it (fuel, mileage, depreciation on YOUR equipment, supplies, etc.) - to reduce the taxable amount.
I wish I had the page link handy that explains this, as it has been posted on here numerous times (an IRS link). you tell your brother that if he does this...he is screwed - guaranteed!

Runner, thanks for the info. So what I don't understand is if he does file me as an employee, what taxes would he then be responsible for, and would I save money as apposed to being filed as an IC?

lilweeds
03-29-2009, 08:35 PM
Let hime 1099 you pay the small amount of taxes, Find a few write off's (clothing, protective equipment, mileage, ect) and get over it!

Tim Johnson
03-29-2009, 08:49 PM
I would do some research on irs.gov, but I'm pretty sure if you used his equipment and he told you what to do as far as your job duties and stuff like that your would be an employee of his. Not 100% sure but I would do some reading.

Dunn's
03-29-2009, 09:30 PM
don't listen to the guys telling you top pay the taxes unless you got at least forty percent of your pay left to give the IRS.

As an independent contractor you are responsible for the tax an employee is responsible for and what the company would be responsible for if you where an employee.

since he is your brother you need to go get a sturdy pillow case and 12 pack of ivory. I believe it is like $3-$4 dollars at walmart.

You should be able to figure out what to do with the sheet and soap bars on your own.

punt66
03-29-2009, 09:49 PM
Ok, first of all dont let a little bit of money get between family. Second, the way you and your brother handled it is wrong and at this point you have to be 1099'ed. Either way as an employee or a sub you will pay taxes. So i dont see why your upset? We all have to pay taxes on our income so why should you be exempt? (by the way a sub contractor must use his own tools to qualify as a sub)

Finally in the future to get around such hassles have your brother pay himself and then give you the cash and that way the taxes get paid through your brother on the income and you get your money.