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You do not qualify as a 1099 employee. The IRS is very specific in regards to what a 1099 employee is and you do not fit the profile.
Following are the 20-points that have been established:
1. Must the individual take instructions from your management staff regarding when, where, and how work is to be done?
2. Does the individual receive training from your company?
3. Is the success or continuation of your business somewhat dependent on the type of service provided by the individual?
4. Must the individual personally perform the contracted services?
5. Have you hired, supervised, or paid individuals to assist the worker in completing the project stated in the contract?
6. Is there a continuing relationship between your company and the individual?
7. Must the individual work set hours?
8. Is the individual required to work full time at your company?
9. Is the work performed on company premises?
10. Is the individual required to follow a set sequence or routine in the performance of his work?
11. Must the individual give you reports regarding his/her work?
12. Is the individual paid by the hour, week, or month?
13. Do you reimburse the individual for business/travel expenses?
14. Do you supply the individual with needed tools or materials?
15. Have you made a significant investment in facilities used by the individual to perform services?
16. Is the individual free from suffering a loss or realizing a profit based on his work?
17. Does the individual only perform services for your company?
18. Does the individual limit the availability of his services to the general public?
19. Do you have the right to discharge the individual?
20. May the individual terminate his services at any time?
Quote:
Originally Posted by Mystique13
I ran into this during the beginning of the Recession. As I am a former paralegal I know the labor and tax laws. These employers are just trying to ********* on the taxes. You end up paying their portion of it. You also can't claim for unemployment later down the line, or any of the things you end up paying taxes for had you gone under the W2.You get screwed for the future. The 1099 is going to ********* on part time jobs. It's the IRS who is not going to be happy. Sounds like the employer would be misclassifying you. IRS will make the employer pay it if they misclassify you. You will have a headache trying to prove they misclassified you, with hearings, lawyers, and a bitter employer. Soooo not worth it.
I say W2 only or let them suck _______. End of story.
Wartrace nails it on the head. You can be "1099'd" if you are a legitimate contractor who comes and goes on your schedule and gets most of the work done with little to no supervision or training, and/or you do some of the work off premises. Your doctor has to be 1099'd for instance, as does an accountant or lawyer (whether or not any of these are LLC's or S-Corps.)
But as for the whole tax conversation, the only portion of the taxes paid for an employee by the employer is 1/2 the FICA (Social Security) tax. All the other taxes are taken out of your check and turned over to the appropriate taxing bodies - city, state, county, fed. So it's a wash. You will either pay those taxes with your paycheck or you will pay them when you file a tax return.
So all an employer is "saving" by not having you as a legitimate employee are the costs associated with FICA and any disability and unemployment insurance costs. But those costs are on total payroll anyway, so if you are very low-hour part-time worker and not making a lot, then the added costs to TDI, Work Comp, and UI are negligible. If they are already doing payroll, adding one more person to the process is no big deal either.
This statement, "You also can't claim for unemployment later down the line, or any of the things you end up paying taxes for had you gone under the W2" is slightly misleading. While it's true you can't file unemployment on an independent contractor job, you don't pay for your own unemployment tax, nor do you pay for your own disability or workers compensation insurance. Those are burdens paid for by the employer. And again, for low hour workers, there isn't a lot here we're talking about. If I paid you $2,300 last quarter, my unemployment insurance for you would cost me less than $23. That's hardly worth risking an IRS audit for.
The point is what the employer is doing is not legitimate. He is leveraging the OP's dire need for a job to bone him on self employment taxes and cheat the government.
A 1099 employee is hired for a specific project of defined scope like build a roof, design a web page, film a wedding, not I'll give you stuff to do and direct you like an employee but I don't feel like paying payroll so I'll pretend you are an independent contractor.
What happens if you get physically hurt while at that employer's place of business? You can't claim disability. You will have to sue. Worker's comp? Same. Unemployment? Nope.
And yet you pay into them in your SE taxes. So fun =D
The point is what the employer is doing is not legitimate. He is leveraging the OP's dire need for a job to bone him on self employment taxes and cheat the government.
A 1099 employee is hired for a specific project of defined scope like build a roof, design a web page, film a wedding, not I'll give you stuff to do and direct you like an employee but I don't feel like paying payroll so I'll pretend you are an independent contractor.
Also an independent contractor is perfectly free to work for your competition. Next time a clown requests you be a 1099 inaccurately, remind them who their competitor is, and say "Oh Good. Once I work for you, with the knowledge I gain, Corp XYZ will reply to my resume submissions". when they protest, remind them, as an independent contractor, you'd be within your rights to do just that.
This statement, "You also can't claim for unemployment later down the line, or any of the things you end up paying taxes for had you gone under the W2" is slightly misleading. While it's true you can't file unemployment on an independent contractor job, you don't pay for your own unemployment tax, nor do you pay for your own disability or workers compensation insurance. Those are burdens paid for by the employer. And again, for low hour workers, there isn't a lot here we're talking about. If I paid you $2,300 last quarter, my unemployment insurance for you would cost me less than $23. That's hardly worth risking an IRS audit for.
There is nothing misleading about it. Let's speak English and address serious issues. Let's scrap the law textbook and legalese lingo.
The question is will you get any of the things I mentioned? The correct answer is no. Even if you sue, chances are you will lose. For someone who wants to protect one's self, under the 1099 you do not get the same protection as you would under the W2. 1099 disqualifies you from getting those things. You pay certain taxes under the W2 and are designated as an employee so you can have certain rights and certain protection. People need to think for themselves and cover their own a**. EMPLOYERS CARE ABOUT PROFIT ABOVE ALL ELSE.The concept of humanity is gone.
It's a sad commentary that no one wants to have employees on the books.
Look for it to get worse now that Health Care is entering into the picture.
I find it interesting that most of the Doctors in my area have outside vendors supply their office staff... the Doctor hires, fires, directs... yet the individual receives their paycheck from an outside company
Some have been doing this for years and rightly or wrongly use it to get around city per employee taxes.
Also an independent contractor is perfectly free to work for your competition. Next time a clown requests you be a 1099 inaccurately, remind them who their competitor is, and say "Oh Good. Once I work for you, with the knowledge I gain, Corp XYZ will reply to my resume submissions". when they protest, remind them, as an independent contractor, you'd be within your rights to do just that.
That would depend on how bad you need the job. Tell me that at the interview and that would be our last contact.
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That would depend on how bad you need the job. Tell me that at the interview and that would be our last contact.
