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Legal Issues with my Brother (taxes)

Discussion in 'Business Operations' started by Adam3669, Mar 28, 2009.

  1. Adam3669

    Adam3669 LawnSite Senior Member
    Messages: 311

    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?
  2. DLCS

    DLCS LawnSite Platinum Member
    Messages: 4,386

    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.
  3. bohiaa

    bohiaa LawnSite Fanatic
    Messages: 5,220

    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
  4. wbw

    wbw LawnSite Fanatic
    Messages: 6,095

    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.
  5. LouisianaLawnboy

    LouisianaLawnboy LawnSite Silver Member
    Messages: 2,199

    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.
  6. newz7151

    newz7151 LawnSite Silver Member
    from Tejas
    Messages: 2,419

    no social security, no medicare... but hey it's your brother, right?
  7. Fvstringpicker

    Fvstringpicker LawnSite Fanatic
    Messages: 7,670

    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.
  8. Adam3669

    Adam3669 LawnSite Senior Member
    Messages: 311

    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
  9. TMlawncare

    TMlawncare LawnSite Bronze Member
    Messages: 1,199

    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.
  10. Runner

    Runner LawnSite Fanatic
    Messages: 13,497

    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!

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