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What Is a 1099 Contractor?

The 1099 is an IRS form that an independent contractor receives stating her income from a given business during a given tax year.
2012 1099-misc form.
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A 1099 contractor is a legal and tax-related term used in the United States to refer to the type of worker who contracts his services out to a business or businesses. These contractors exist in multiple fields — from hospital planners, to marketing consultants, to building contractors, to freelance writers. The "1099" refers to the Internal Revenue Service (IRS) form that an independent contractor receives stating his income from a given business during a given tax year. A 1099 contractor is not an employee of the business or businesses with which he works; instead he is an independent contractor, or consultant, who is considered to be self-employed. Like most self-employed workers, they do not typically receive employee benefits, such as health insurance or retirement benefits, but they may have more flexible work schedules and locations.

Compensation

The 1099 contractor is usually not protected by minimum wage laws; in fact, some independent contractors work below minimum wage. His payment is typically assessed by the completion of a job, not by the hours worked — when a job takes more time than expected, earnings may fall below minimum wage. On the other hand, a skilled independent contractor can work for far above minimum wage, particularly those who have expertise in a specific field and work on a consultant basis.

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When balancing the tradeoffs between working as a 1099 contractor or an employee, perhaps the largest consideration should be the way the worker is compensated for his services. In a typical scenario, independent contractors are not paid until the service is fully completed, and they are not offered any type of employment benefits. As a result, the payment scheme for most such workers requires more independence and responsibility, as things such as medical and dental benefits, savings to cover future sick and vacation days, as well as tax obligations fall solely within the purview of the worker.

Tax Differences

1099 contractors who make more than a certain amount per year are issued 1099 forms from the business or businesses that paid them. Regular employees must pay income and Social Security taxes on their income, and independent contractors must do the same; the difference is that employers generally withhold taxes on the employee's behalf, while 1099 contractors are responsible for their own payments. Additionally, employers generally cover half of the total Social Security and Medicare taxes — a 15% tax of net income in 2011 — meaning that the employer covers 7.5% on behalf of the employee; independent contractors are typically responsible for the entire amount.

Since an independent contractor is considered self-employed, he is essentially the employer and employee; therefore, he is responsible for withholding his own taxes and paying the total amount of the Social Security and Medicare taxes. Regular employees usually have estimated tax liabilities withheld from each paycheck, but this is not done for a 1099 contractor. Most self-employed individuals are required to make quarterly installments against their projected tax responsibilities for the year, however.

There are some deductions that can be made to reduce tax obligations, these include work-related expenses, such as home office costs and vehicle costs, if the office and car are used for a work-related purpose. A computer that is purchased in order to work as an independent contractor, for example, may be deductible from the person's net income. Contractors should save all pertinent business receipts for the year in order to claim these as business expenses.

Benefits and Disadvantages

The independent contractor generally has scheduling advantages over the employee — often, he is not restricted to the typical nine-to-five workday and Monday-through-Friday work week like the average employee. Deadlines, of course, may confine the independent contractor's work schedule. On the other hand, he generally doesn't get the benefits that employees often do, such as time off with pay, whether it be due to illness or leisure.

Further, there are different legal implications for an independent contractor than an employee, and these implications can vary greatly based on the specific contract terms between the contractor and the client or business. In many cases, the 1099 contractor can be discharged at will, with or without cause. Additionally, he is usually responsible for his own health insurance and retirement benefits, as the companies worked for are under no obligation to provide benefits.

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Discuss this Article

mysticwoman
Post 143

I worked the whole year as a 1099 self employee. There was never a contract. It was at state minimum wage. We worked at his office, used his equipment, set hours and he provided training needed. I do not know how to file the proper status for taxes since I was truly a full time employee. He didn't withhold anything out of the checks on any of the employees. I could use some advice.

eliejulz
Post 141

Avoid missing out the deadline on your 1099 forms. For fillable 1099 forms or any tax form that you need just go to pdffiller.com

Download, edit, print, save, sign, email or even fax your tax form online.

dmtyler61
Post 140

I do various construction projects for 2 businesses. I usually purchase the materials and then bill for the materials plus labor. This is broken down on the invoice. I am not a licensed contractor so I don't have a resale license. When I get my 1099 it shows material plus labor as income. I've already paid tax on the materials at purchase time. How can I separate the two?

kh2002
Post 139

I previously worked in a company (with three employees) as an independent contractor (bookkeeper). At the end of the year, I sent out a 1099 Misc to three independent contractors (including me, our janitor and our landlord), but did not file the form 1096 with IRS. I did not know we should file one.

Our company is to be audited this Thursday for 2010 payroll. We have all other information readily available for the audit, and also the copy for 1099 except for the 1096. What would the consequences be?

Please help!

anon293191
Post 138

An employer can dictate your hours and you still be an independent contractor. For instance, I work sporting events as an independent contractor. I have to be there a certain number of hours before kick-off until the end of the press conferences.

It is ridiculous to think that just because the hours are set that you are an employee. And companies can hire employees and contractors.

Things you have to purchase and are reimbursed are not items you can write off, unless they are included in the 1099 amount, in which case you can write them off your tax liability.

For the lady who is a private caretaker, your income is not a gift. You do have to pay taxes on it. But the clothing you bought for specific outings is a write off, and buying scrubs to work in is a write off.

If you are getting 1099'd, hire an accountant (a tax write off). A good one is worth the money and time to go see them. They will tell you what you can write off and what you can't.

anon261257
Post 137

I am president and owner of a micro corp (with no current customers), as I have been recovering from an accident. I did provide $26K + of benefits in the way of health insurance, and more money for food, etc. to my daughter and her husband for 2011, as they were here helping me move my household and business closer to where they live the entire year.

Should they file 1099 forms? They received no income, as I had none to pay them, but they did receive benefits through the insurance I got through my corporation.

anon256328
Post 136

I have received a 1099 for the amount I billed, but not the amount that was paid in 2011. It is a big difference. How do I deal with this on my taxes?

I am an independent contractor, running my self-employed biz as cash, and that means cash in, not billed. It is a sizable sum that I billed in December and was paid for mid-Feb so I need to ask.

anon247482
Post 134

If there is no W9, there will be no W2 which makes you a 1099 employee. As far as base pay goes, then you are entitled to the "rights of an employee", but if you are paid commissions you are a "split" employee, meaning you have to pay taxes on the income earned through commissions or other such forms of income. If you are paid base vs. commission, then it's kind of up in the air because most companies will only pay the greater of the two.

anon245183
Post 133

I worked as an administrative assistant, five days a week, 8 to 5, for a company that classified me as an independent contractor.

I had a set schedule, used their office, computer, phones, etc. and did not receive benefits. Should I have been classified as an employee?

Now I have a 1099 for last year and need to file taxes as self employed. However, I do not own a business or have an EIN. What do I do?

anon237656
Post 132

I didn't sign a contract with my employer. It was a stated agreement for commission from sales. If he records my pay as commission should I still receive a 1099?

anon222860
Post 130

The 'independent contractor' scam is being seen more and more here in Canada also. Good jobs are still relatively scarce, and employers know they can pull this crap and offload the burden onto their employees. The odds of the employer getting caught, and the subsequent punishment, must not be very severe or they wouldn't be pulling this crap.

salonMGR
Post 129

I work at a salon as a manager and my boss did not have me fill out a W-4, but told me I will get paid a monthly salary and will have to file a 10-99 at the end of the year. In the state of Texas the tax would be 10 percent with held quarterly, and I'm worried this is going to screw me over at the end of the year. Should I be on a 10-99 at all?

anon208572
Post 128

I work as an independent contractor for a foreign company that does not make me fill out any paper work whatsoever. How will anyone even know if I don't pay taxes?

anon206916
Post 127

If I'm an LLC, can I consult with another company on a 1099 under my corporate name rather than my personal name?

anon202584
Post 126

I was hired by a 501(c) as an independent contractor. They had me sign a contract which details what I will do, when I will do it, and who I follow orders from. They pay me a monthly salary for these services. I have been with this organization for over three years, but the first two years I was not given a 1099 even though I requested it both years. I claimed my salary as misc. income on my taxes those years.

Now they want a W-9 from me or they say they will terminate my contract. Also, the person I am required to follow orders from has breached my contract on several occasions, but they insist I follow the terms of the contract, pointing out what is in my contract. What should I do?

anon201657
Post 125

I am a commission employee. I get a paycheck with deductions for my taxes. Can employer 1099 my tip wages that go through front desk and employer collects them and writes me a check which I am now supposed to 1099 at the end of the year?

anon199889
Post 123

@bsvds - yes it's called employer tax evasion. They can be fined heavily by the IRS, and because the intent is to defraud, as stated in your post - it could be criminal. If there is huge disparities in the way they have treated (given preferential treatment regarding holidays etc) they could be looked at for EEOC violations.

anon195879
Post 122

@bsdvs23: This doesn't sound right. I've seen companies like that, but not as messy as yours sounds.

Contact the IRS (1-800-829-1040) to make sure you're not going to be in trouble later.

And it might also be a good time to start looking for another employer. Yours sounds greedy, so it wouldn't surprise me if you can get a better pay for the same work somewhere else.

anon194321
Post 121

I was laid off two months ago. I am now working for a contracting agency. Can they outsource me to perform work for old employer? My old employer has a no rehire policy for a year.

bsdvs23
Post 120

I work for an I.T. Consulting Company, that only offers positions at a 1099 Independent Consultant status and requires “almost” everyone to have, or obtain, an EIN Number to be considered for hire. The consulting company provides everyone with a 1099 agreement, but some of the agreements mention vacation and holiday with pay, while others state you will not be paid for vacation and holidays. Keep in mind everyone is considered a 1099 and everyone works at our clients site, or from their own homes. No equipment from the consulting company is provided.

We have salary and hourly contracts for particular positions. However, consultants given “salary” contracts are told, “If the client is on furlough, then you are not paid”, despite the contract being based on a salary and not hours. No benefits (health, medical, etc.) are offered at all.

The consultant company requires “everyone” to send invoices to the payroll department on a bi-weekly basis by a certain time for payment.

Is this consulting company breaking the law just so they can push the taxes onto the people?

anon180026
Post 119

I have been working almost one year as a private nurse for a family. His business had me sign an independent contractor agreement but I am told my hours to work. 8am-8pm normally. Also, I am requested to wear business suits if they attend a public event or go to his office for work. I also was told I have to come to their house for the job.

It's nice I can write gas off since its 45.6 mile round trip, but I can't help but feel like I am being screwed since there isn't much I can really write off associated with my job. So far all I really have is gas, car maintenance and a new laptop I use while at their house. I use a work computer through a guest username and pass while at the office. Any advice would be great!

anon178440
Post 118

My former employer paid me a my base salary through a payroll company and I received a W2. Then for my sales commissions, I received a 1099. How does this work? I was an employee, but still got 1099'd for commissions. Is this correct and ok with the IRS?

anon169553
Post 117

My ex has been working as a contractor for over three years and has evaded paying child support. Not to sound petty, but if you know the name of the company that is enabling this, can you have funds withheld from 1099 payments to him? Or do I continue to let him rack up thousands more in back child support?

anon168868
Post 116

I am a nurse and took a travel assignment via an agency. I was not told I was an ID or non-employee and was shocked when I got my 1099. Not only that, but they wrote the incorrect SS# on it. Now, I will owe almost $3,000 to the Feds and a few hundred to the state.

anon165881
Post 115

My son works for his father's company (my ex)and is listed as a General Manager of the company on all paperwork, but he's paid by a 1099. My ex says his CPA says this is legal. I don't see how, and I'm worried if my son will get into trouble.

anon163951
Post 114

I was an independent contractor for a company for two years, and they required me to work on site 30 hours a week. They also only paid me half of my fee per hour. They put me under another manager, and a month later my hours went from 30-40 hours a week to two or three. So my question is: Is there anything I can do since they required me to be there certain hours and I was treated like a employee without the benefits?

anon163014
Post 113

Many companies are now using the 1099 contractor as a way to sidestep actually hiring employees. They get to keep their costs down and maintain productivity. I think it speaks volumes about a company that prefers this type of labor vs. a loyal, full time employee. As far as contracting? It's all I've been able to do three years on; nobody's hiring!

anon160106
Post 112

aam1206: Real estate agents are usually considered statutory nonemployees or self employed. Yes, your business expenses do apply, even if you were an employee they would apply. -hrguru

anon160104
Post 111

steveb: You need a W9. I'd also get a copy of their insurance and contractor's license. And of course, a contract outlining the scope of the job. --hrguru

anon151207
Post 110

I never filled out or singed a 1099 form. Today after working there a year and finally getting the employer to agree to give me a w2 I was handed a 1099 tax form which states that I worked there and have to file taxes? What should I do?

anon150442
Post 109

If an employer forces you to be 1099 "employee" as a dodge because to cheap to pay their half of FICA, FUTA, Medicare, etc yet still tells you what, when, and how to perform day-to-day jobs, the IRS and maybe Labor Board have been known to visit such employers and tell them you were not an independent contractor and make them recalculate your pay, benefits, medicare as W2.

And if your hourly pay was the same as a W2 employee, they *may* not ask you to pay missing fees but charge your employer. However, they may charge both employer and you if you owe back taxes mentioned above. "If, maybe, *may*, possibly." If they have assets, a lawyer may help you on contingency for 33 percent-plus of the settlement.

anon149714
Post 108

What happens if you do not get your 1099 before the January 31 deadline? I was told I will be getting one in a few weeks. I thought it had to be mailed by the 31st of January? My taxes are already done, and that deadline has passed.

anon148905
Post 107

I originally signed a 1099 contract to get a position as an independent contractor. Immediately the company put me on PayChecks which I am assuming voided the 1099 contract since I just received a W2 for tax purposes. After a year of not being recognized as the amazing work person that I am and continually being told "no" to benefits and pay and only being able to work up to 29.5 hours, I got myself fired. I also was made to sign a form stating I had medical insurance when the company knew that I did not. I gave this company 100's of opportunities to say yes to benefits. Besides the CA Labor Board filing, what else can I do to compensate for this companies unjustified behavior. I would like to be reimbursed for Medical that amounts to over $20,000.00. My yearly income was only $31,000.00. Most of the expenses relate to my now 19 year old being a normal but still has to have medical costs not covered by Medi-Cal schizophrenic.

anon147048
Post 106

@101, if she paid you cash, don't fill out a 1099. Screw the IRS.

anon147035
Post 105

@101 - in this situation, I think you'd be the woman's employee, not an independent contractor. It's the same with other household employees like nannies and cooks.

It doesn't matter whether you work full time for her or not - even a few hours a week could be considered a part-time employee. So she would be responsible for part of the taxes too. Tell her that you think she should report your income on a W-2, not a 1099. And you could always refuse to give her your social security number.

anon146739
Post 104

Whats the deal here? I see lots of questions, and no real answers, how does this help anyone? Anything besides self important, condescending answers by anonymous persons out there? Guess I'll continue my search for answers, perhaps somewhere a real professional is willing to help. Gee, bank account is empty. "Never Mind!"

Moderator's reply: Thank you for visiting wiseGEEK and participating in our discussions! Unfortunately, we are not equipped to respond to specific questions, which is why we created this discussion section on each article page. In this section, a reader may discuss article topics with other readers. Whether and when questions will be answered, however, depends on fellow readers and posters.

anon145730
Post 102

@101 -- you're not being screwed over because in the USA it is the law to pay income tax on any money that you make. Since taxes were not taken out of your pay, you owe them yourself, and you might be able to deduct job-related expenses if you had any. If you weren't paid much, your taxes likely won't be much either.

anon144574
Post 101

I've been working for a woman since August, walking dogs and cleaning her pet kennel. I make between $50-$100 per week. She pays me cash out of what her customers pay her. Today, she informed me that she wants me to file a 1099.

I am a college student. When I started she told me this was all explicitly off the books. I don't know a thing about 1099s. Am I getting screwed over?

anon140366
Post 100

@Jessica, #17. In this case, you might think about filing as "married, filing separately." Ordinarily, "married, filing jointly" gets you a bigger return or requires you to pay less taxes, but I get the feeling that you want absolutely nothing to do with your husband's tax situation.

I think (I'm not a lawyer or an accountant) that this should protect you personally. The IRS has a tutorial on their website so you can learn about the difference between filing jointly and filing separately.

anon137400
Post 99

I am a private caregiver in CA. I have worked for the same family for one year. They recently asked me to file as a 1099 for 2010 (last minute request) and want me to do so for the 2011 year. I have several reservations - they have an accountant directing them. I'm concerned the amount I made will cause me to pay (undo) taxes.

What is the correct monetary amount I would have had to make to actually pay taxes or to have it declared as, say a monetary "gift"?

They don't seem to clearly understand the process either.

anon135738
Post 98

I have a question about contract laborers. My husband is given tools to use and uniforms to wear for his job. Isn't he, due to being issued these, an employee? He works 40 hours a week, set times, and no more than that. They aren't taking out taxes or anything, which concerns me with their other actions. What are the laws for contract labors in these manors?

anon134350
Post 97

Here's a unique situation: We have gas drilling all around us, and the big trucks have torn up our private road. The gas company recently offered to reimburse us for the amount we have spent buying patch, however they want to use our SSN# for 1099 purposes. What kind of taxes are we looking at here? And since it is reimbursement for material we have already paid sales tax for, what do we do to make it cancel out?

anon130912
Post 96

Wow, a lot of you are being screwed by your 'employers.' Some of the companies are probably just ignorant about the law, but in a lot of cases I'll bet that the company made a conscious decision to pay people as 1099 independent contractors to save them money, figuring the odds are against them being audited and caught.

But the IRS and US Department of Labor announced that starting in 2010 they are cracking down on employee misclassification abuse.

Simple way to determine if a company has classified/paid you correctly:

If a company hires you to work for them (doesn't matter if it's for 1 or 40 hours a week), tells you what hours you'll work, directs you to work at their site, gives you tools/equipment/computer to use, supervises/directs your work, gives you instruction or training on how to do the work, and has the right to fire you at any time, you are their employee and they should be withholding taxes from your checks, paying you overtime based on state law, and they should be paying employer taxes on you.

If they are doing the above but calling you an independent contractor or freelancer, they are screwing you to save money! You can report them to the IRS, anonymously if you want.

aljenn09
Post 95

I am an independent contractor, who has signed a 1099 with an S-Corporation. Is my employer required to give me a detailed pay stub with each check I receive? Are they even required to give me a pay stub with each check?

anon120478
Post 94

I have been working as a 1099 contractor for most of the year but but i was recently told that in order to be a 1099 contractor i must either have a business license or work through a temp company. is this true and if so what do i need to do about my taxes?

anon106418
Post 93

I provide respite to military families with disabled children. The department on post that runs the program requires our hours to be turned in by the fourth of each month for the previous month's work. They, in turn, are supposed to be submitting our time sheets to the military payroll company.

It is the end of August and people are just starting to get paid for hours that they worked in April. As independent contractors, do we have any legal recourse against this?

anon106050
Post 92

Concerning vacation, I am wondering if taking four to five weeks a year is realistic/feasible when working as a 1099 or corp-to-corp? Any experience of people taking more than two weeks a year? I see the possibility of more vacation than regular employees a big plus of contracting. What do you think? Thanks.

anon97930
Post 91

I'm a 1099 contractor and I work as a sales rep for Vector marketing. Is Vector legally required to give me a paper pay stub with every paycheck I earn, even if I am signed up for direct deposit?

anon96570
Post 89

I am an American living abroad and I have been asked to do contract work for a company here. I need to set myself up as an "independent contractor" in the US because I want to be legit and pay all taxes that are due. How will I go about not having a 1099 form from the foreign company because they do not issue them? Thanks.

anon95840
Post 88

In the state of South Carolina, is an S Corporation required to offer their self-contracted employees the same benefits that the shareholders/owners of the S Corporation receive? How many employees is a S Corporation required to have? Mine has two shareholder/employees and one self-contracted employee. And last, is the S Corporation required to pay half of their self-contracted employees FICA? Thank you!

anon94301
Post 87

I have been working as an independent contractor (1099) for more than one year. I started working 20, and I've been working 40 hrs a week, M-F, 9-5 schedule for more than 10 months. Am I considered an employee? Should I file a claim?

anon92502
Post 86

If you are 1099 can you still collect unemployment for missing hours or for time not worked?

anon91383
Post 84

Where do I find the schedule and percentage of quarterly payments for a 1099 contractor?

anon88931
Post 83

W-2 vs Nothing!

Did you know that as an employer, when someone tells you to get an Employer Identification Number from the feds technically turns you into a Federal Employer? Yes - along with all the other federal hassles and benefits. You can get a State ID number, which you should do, as you are really only responsible to the state for taxes, unless you live in a federally controlled area such as WDC. What a surprise, huh?

If you decide to be a State employer, and some of your employees want the benefits of Social Security, they can submit quarterly payments just like a self-employed person. There are forms just for that.

State employers don't pay federal taxes, federal unemployment insurance (the state also offers UI), etc.

Why add the overhead of being a federal employer? Ask your employer if they want to switch from feds to state! They will love you.

anon86523
Post 82

Can a resident alien on a school visa work as a 1099 contractor? If so, how do I fill out the 1099?? No social security number.

anon85084
Post 81

i worked for a company and received a 1099. Now the company was mowing grass and using their equipment. They did not charge me to use it! i was paid hourly like any other job under a W2.

i worked a lot of hours overtime and was treated like an employee, not a sub contractor, but the problem was i was not paid for my overtime. is this against the law under the 1099 guidelines?

anon81039
Post 80

I have applied for a job with a company, and I'm supposed to find out by the end of this week if I got it. The company sets up appointments for you at schools. You just have to call and confirm the date/time.

So, the company tells you where to go to do the work. Then you go and give a presentation telling them about the company and their services. They said they do not provide you with a script, but they do give you some suggestions on what to say.

Then you sit up at a table and hand out flyers/info. They require you to fill out an online form as a follow up within 48 hours after having gone to the school.

The company is located in California and I would be working for them in Ohio. So, if I get this job would I be considered an employee or a 1099?

Also, if you're a 1099, how do you know how much you are supposed to pay for taxes? I have no idea how to do that as I've never dealt with any 1099 before.

anon80555
Post 79

I have been a W2 employee for a company for many years. I relocated to another state and have been telecommuting for the same company.

Since "laws are different", the employer has now turned me into a 1099 contractor(without my written consent or notification), stating I am technically not employed by them any longer.

Can I refuse to file for a business license and accept this change (since I did not consent to it) and file unemployment? Does this consider me being "fired".

Also, I signed a non-compete while I was a W2 employee several years ago. Is it even valid since 1) I moved out of 100 mile radius 2) I am now considered 1099?

anon77519
Post 78

If my spouse collected unemployment and was also a 1099 and was still not claiming it on weekly benefits, what are the consciousness of her actions as far as receiving unemployment and not claiming that she was a 1099 employee?

anon77480
Post 77

I have been working for one company as independent contractor for two months last year. When I ask them to provide me 1099, because the amount they pay me was more then $600. They told me that they can't give it to me, because I give them invoices for the job. I don't know what to do?

anon71485
Post 76

in response to #72: I am a US citizen living in the US, working as a "1099" marketing consultant for a foreign software development firm.

It sounds like you are trying to avoid paying taxes. rather than worry about if the company is reporting your income to IRS (if they aren't then you probably think "hey I don't have to report my income either"), you should just worry about doing your responsibility (report your income to IRS).

don't worry about the company. if you have income (over $24k or whatever is the minimum per year) then you owe taxes. that's all you gotta worry about. and since you are a USA citizen living in USA, then you owe the IRS, not any other foreign government.

anon71218
Post 75

I'm a carpenter and a contractor wants to hire me. Do I need a contractor's license for him to 1099 me?

anon70344
Post 74

I am a consultant for a bank and I'm receiving payments through my job placement agency. Am I considered an independent consultant or an employee?

anon69016
Post 73

I am with a foreign company working on 1099 with a US company. In addition to this job, my company has other business.

On the 1099, what income should be reported. We are not making money for 2009, but we made some money from the 1099 job.

anon68470
Post 72

I am a US citizen living in the US, working as a "1099" marketing consultant for a foreign software development firm. They said that they are not required to send anything to the IRS, but I have been making quarterly payments based on anticipated earnings. Do foreign firms need to file a 1099 or any other form to the IRS if they are using/paying a US consultant?

anon68377
Post 71

i haven't received my 1099 forms from my former employer and they haven't returned a phone call or email. What should I do?

anon66451
Post 70

Do you have to have a business license to be paid on a 1099 misc form? I was unemployed but still doing random work for the same company. I received the 1099 misc form for the work done but it is confusing when doing my taxes and it's asking me about my business.

tpivec
Post 69

Can a 1099 contractor be an LLC? My assumption is yes - but thought I'd double check.

anon64163
Post 68

If a business paid me less than $600 in a year, do I need to report it anywhere on my tax return?

anon63575
Post 67

I have an employee living in Columbia. He recently worked for me in the United States. He is not a US citizen but has a social security number. How do I employ him with him being in Columbia and not on a 1099? I also have a subsidiary in Columbia. Should he be employed by that firm and how would I pay him?

anon63086
Post 66

*W2 OR 1099 as an employee?

A good way to determine the differences is to have a look a the IRS Control Test ("an analytical tool for distinguishing employees

from independent contractors").

The consequences can be very severe for an employer who misclassifies a worker as an independent contractor (1099 worker) rather than a W-2 employee. Many accountants will imply that this is the employer's choice, but that is completely inaccurate.

When an employer controls when, where or how the employee works, that person is an employee, not an independent contractor under federal law. Employers must pay payroll tax and federal employment taxes for employees. In addition, employees are entitled to overtime, while 1099 workers are not. Very simply, when an employer misclassifies an employee as an independent contractor, the employer is conspiring to violate the federal minimum wage, overtime, social security and unemployment laws…among others.

In addition, various states have laws that prohibit misclassifying employees as independent contractors.

anon61650
Post 65

And because it is a comment only area, people who have the answer to a question can "Comment on it"

anon58153
Post 64

This is just a comment area, not for questions.

anon55079
Post 63

I am a 1099 independent contractor and want to suncontract to another contractor. What are my tax responsibilities?

anon54999
Post 62

A USA based employer who I may hire me as an "employee" to based in China, stated that they would have me work under a 1099 classification but that I would be an employee of the company and not a contractor. Is this possible? Also, my salary would be paid half in CNY and half in USD. Any thoughts, suggestions? Thank you.

anon53804
Post 61

I just started a job that offered me a 1099 instead of the W-2 norm. I have researched this, and it seems not too bad of a deal, I just have to pay my own taxes every quarter right? That is, instead of having them taken out for me by the company I work for...

anon52819
Post 60

I am working as a 1099 contractor for a technical services firm. I am "required" to submit my bi-weekly hours and they are now deducting for any days not worked. My contract simply states that I am paid a set rate ( no mention of the number of hours to be worked however there is a clause that states I will not be paid overtime ).

My question is "Is it legal for them, under the IRS guidelines, to deduct any amount if I miss a day?"

anon48973
Post 59

Our law firm has many outside attorneys that are issued a 1099. Do we need to have them listed on our E&O Insurance as a contracted attorney?

anon48758
Post 58

I was fired after nine years of working for a home improvements company. Since i started in 2000 I have received 1099 forms. Can i get any compensation time from my former employer?

Barbara298
Post 57

I help my sister in her store for six weeks (360 hours) and she compensates me $1,000. Which pays for room/board and travel. I am retired and have no other income. Do I report this on my tax return and does she need to take out taxes and report me to the IRS with a W2?

anon45189
Post 56

I want to work as a 1099, independent contractor. What do I need to provide to companies that hire me? Also, is there a salary pay scale some where where I can check out what the average a contractor gets for a particular job?

anon44472
Post 55

I work for a company where I receive a w2, but I'm a contractor on-site at another company. Is it in my best interests to request to be a 1099 contractor? I get my benefits through my husbands company. My company doesn't give me any "pay into accts" or vacation/holiday/sick/401k etc.

The company I am on-site at only allows me to take a certain number of days off, just as their full time employees have (obviously I don't get paid for the days I take off) and are only closed two days out of the year.

anon42417
Post 54

a friend offered me a job at her company. I asked her if I would be a 1099 employee as I am currently on unemployment. She said yes. Question, I have another friend who told me he works a Saturday job where he gets 1099d for that job and also is on unemployment and does not report the Saturday job because he said he will get a 1099. Can someone explain this? I do not know whether to take the job. normally i have received a W2 from past jobs.

anon41939
Post 53

Do I have to have a business license to work as a contractor to a Remodeling/Builder or will my SSN work for the 1099 process?

anon39214
Post 52

44-ITIN is SSN, SSN stands for Social Security Number (US citizen identification number) and ITIN is an identification number a foreigner receives from the IRS when a foreigner applies for and wants to claim a member of their family as dependents in the US. Mostly for tax purpose, more dependents (living in the US) the less taxes the foreigner has to pay.

anon37850
Post 51

I am living in India & I have got an opportunity to work with USA Company as a freelancer? But they are asking me TIN or SSN, How do I approach them? Regards, Nilesh

anon37579
Post 49

I filled in for a doctors office a couple of times and may be possibly filling in for one day a week as a freelance temp. I also am on disability and unemployment and now found out that the doctor is talking about a 1099 form. How does that affect my claim status?

anon36771
Post 48

Hi, I'm a nursing asst. that has worked for a company now for 7 yr. and I do pay my own taxes yearly. I am working 6 days a week now, and I do 42 hours. I wanted to know, even though I may have to pay taxes, at tax time. Am I entitled to over time for the 2 hours I do over the 42 hours a week I work? where do I stand with this. I have been working for 6 mo. doing this case. I do work for a nursing agency in the city I live in.

Brando26
Post 46

I am an independent Sub Contractor for Time Warner Cable. I get a 1099 at the end of the year. I was told if you made $40,000 or less that I will owe about 15% of that in taxes. Right now I've made about $12,000 this year. 15% of that is roughly $1800.00. If i make more then $40,000 that puts me in a different tax bracket. The rate i'm going i'm not going to make over $40,000. So is the 15% correct? Do I take 15% out of each check, or 15% of my final net income? Thanks

rabrown75
Post 45

If i file a 1099 and work 40 hours a week for one company am i a contractor or am i considered an employee of the company?

quincydental
Post 44

My daughter accepted a position as a general contractor with a company in hindsight seems a little shady. They have been promising her payment for weeks and there is always some excuse why she never receives the check. Now they want her ss# and I am leary about her giving it to them. Can they issue her a 1099 without her ss#?

jalucas
Post 43

I am a resident(physically and fiscally) in Europe and I am about to contract with a US company that wants to issue a 1099 form for me.

How does it work regarding taxes?

Must I register my business in the country?

StreamTeam
Post 42

I am planning on hiring my friend to care for our child full-time in her house. Would I still be responsible for paying for social security, medicare, unemployment since my child is going over to her house and she is not coming into our house (ie. we would be treating her as an independent contractor) or is this still considered a nanny that we have full control over?

sussex3737
Post 41

I work for a insurance company and they only allow me to sell their products and I must also be there between certain hours. Any secretary that I hire must be approved by them before I can hire her and I must paid her out of my commissions. I must go to their meetings that they have or I am threatened and when they have a contract change you ask do I have to sign it and you are told that if you don't then you will be terminated.

Is this a 1099 employee relationship?

anon27638
Post 40

The company I work for sends me a 1099 each year. However, they tell me what hours I have to be available, they provide me with clients and the time to meet them. I have to use the sales script they trained me on, I attend mandatory meetings, and they supply me whatever tools are needed to do the job. Am I an employee under law or can they continue to 1099 me.

anon27337
Post 39

david321...I typically handle the acctg for a local company that has 1099 employees...and when we pay them we simply classify them as a 1099 contractor and allocate that expense to the type of work they perform for us...and also without stipulating ...exactly...how they will do that...but with the confines of requirements of the work to be performed...

anon27334
Post 38

re: mjm205...certainly seems to me like they are treating you like an employee with their strict mgmt over your activities etc...and not a 1099 contractor...

anon27333
Post 37

anon 163....= just call the employer that issued your 1099 and coordinate a return to them of their copy of the 1099...they will appreciate that...

mjm205
Post 36

I am working for a company that might be defrauding homeowners who are in foreclosure. They offer "loss mitigation" counseling to homeowners who are financially distressed because they are unable to make their mortgage payments and are in foreclosure or their home is designated for an auction sale.

This company pays its people under 1099 independent contractor a minimal hourly wage and promised commission, yet they require us to be in the office 8 hrs. per day to answer incoming phone calls from a mailer response.

There is nothing "independent" about this job. Are they violating IRS rules for 1099 vs W-2 employees? Sure seems like it to me.

They are also holding back one weeks paycheck (I worked 80 hrs in two weeks) and only paying me 40 hrs and not the 80 I worked as a 1099 contractor. Can they do this? The whole situation seems so contradictory to the definition of a 1099 contractor.

Also, the company is made up of 3 different companies, like a trail. I noticed that the various companies appeared on various agreements in the document packet they send to homeowners to get their money. Need your help.

anon25384
Post 35

This post is in response to anon 17703. The nanny. She can ask for your social but you do not have to give it to her. Just tell her that you are a nn tax payer. Filing taxes is completely voluntary.

lenarosebure
Post 34

i have a money judgment against someone who is a claiming to be a 1099 employee. is there any way the company who the 1099 employee is working for garnish $ that is owed to me prior to paying the 1099 employee?

anon19068
Post 32

Hey everybody asking questions here, The answer to your question is CONSULT A LAWYER.

anon17703
Post 31

I was a nanny for a doctor and she was paying me with a check under her practices' name. I was only working to fill in for her regular nanny and only worked maybe a few hours a week for maybe a month in total. We never discussed anything about a 1099 or taxes. Now after receiving my last paycheck she wants my social security number, I am guessing for a 1099. I did not know this would happen or I wouldn't have taken the job. I am a college student and still new to all this. I can't possibly pay all the taxes I could owe at once. Can she 1099 me after the fact when it was never discussed upfront and do I have the right to not give her my social security number?

anon17636
Post 30

I know that a 1099 employee may be terminated at will, with or without cause; however, if the agency hiring someone fires them because they are pregnant and hires someone in place of them, does that violate the pregnancy discrimination law?

jhudeene
Post 28

I am looking to market myself to companies as a temp worker vs. going through a temp agency, pretty much looking to be self employed. How do I become a 1099 contractor?

anon16196
Post 27

I am an OPT student, can I work on 1099?

suvi
Post 26

Hello,

I am going to join a company as subcontractor for a monthly salary of $1800. The company is in USA. I am in India. I will be handling the software projects they give to me. Do I need to do a 1099 with the company? And how much amount I have to pay monthly?

Thanks in advance.

With regards,

Suvi Joseph

sourappleblowpop
Post 25

david321, you should be able to use those payments as business write-offs. ask your accountant where they should be utilized as deductions.

david321
Post 24

I sent out 1099 misc forms to several people that I paid over $600 during 2007. I turned in copies to the feds and the state. Do I need to enter these people that got 1099's from me anywhere in my return?

anon10175
Post 23

my husband is a 1099 employee (satellite contractor) but due to increase of work, he had to get a helper. I definitely want to put this in our expenses, do we give the helper a 1099? Do you necessarily need a federal tax id, or will his SS# be his tax id number?

anon9847
Post 22

I am working for a company that might be defrauding homeowners who are in foreclosure. They offer "loss mitigation" counseling to homeowners who are financially distressed because they are unable to make their mortgage payments and are in foreclosure or home is designated for an auction sale. This company pays its people under 1099 independent contractor a minimal hourly wage and promised commission, yet they require us to be in the office 8 hrs. per day to answer incoming phone calls from a mailer response. There is nothing "independent" about this job. Are they violating IRS rules for 1099 vs W-2 employees? Sure seems like it to me. They are also holding back one weeks paycheck (I worked 80 hrs in two weeks) and only paying me 40 hrs and not the 80 I worked as a 1099 contractor. Can they do this? The whole situation seems so contradictory to the definition of a 1099 contractor. Also, the company is made up of 3 different companies, like a trail. I noticed that the various companies appeared on various agreements in the document packet they send to homeowners to get their money. Need your help.

pavan
Post 21

I am a 1099 contractor with $56000 as base. How do you calculate a 1099 base salary? Is it divided by 52 weeks or by 12 months?

bigmetal
Post 20

i can't understand why your company should report the reimbursements for the ball gowns and tuxes on your 1099...you have to pay taxes on that amount! it's not "income." i'd definitely talk to the HR or payroll person and sort that out! i just received a 1099 in the mail for freelancing work i do as a writer, and it's nearly twice the amount i made last year. i've already called payroll, and nobody has returned my call. should i just efile with the correct amount or wait for them to send a corrected one?

anon7886
Post 19

I am a 1099 contractor and a company that I worked for required me to purchase items such as ball gowns and tuxes for models to wear and then reimbursed me for the amount when I turned in receipts. They are now trying to place these reimbursement amounts under my income in a 1099 form. Does this make any sense?

aero320
Post 18

I was employed by a company for 4 1/2 years as Sales and Marketing Manager for one of the divisions. My compensation was based on a base salary and a commission (% of each machine sold in the division). About three years ago, the owner of the business changed the compensation plan by paying the commission from another company and filing a 1099 for that income. At the end of the year, I received a W-2 for the base salary from company and them a 1099 for the commissions that were paid. The 1099 was from another company that was also owned by the same person. As a result, we had to make quarterly tax payments to the IRS (which we did). It has come to my attention that this practice (paying employees with 1099) is against IRS rules and that the employer may be liable for the taxes that he failed to pay. The total amount of commission that was paid on 1099 during the period of employment was nearly $800,000. Does anyone know the law?

Aero320

anon6748
Post 17

Hi. I have no idea how this 1099 stuff worked until recently. My husband and I got married in July 07. He has been working at his current job for about 3 years now under a 1099. Sad to say, he has not done anything with paying taxes. He only makes 325 a month so he figured that it wouldn't hurt him because he doesn't make very much. Now that we are married, I'm getting ready to file taxes and losing sleep at night because of the uncertainty of what will happen now that we will be filing together. Can you please help me understand what might happen to my tax return!! I normally get a few thousand back and am scared that they might take it from me because my husband has not paid for the past few years. Thank you so much for your time!!

Jessica

sweethome
Post 16

My employer offer me a job as a plumber's helper and I went to work for him. I found out that he was not paying my taxes. he refused to pay workmen comp and He then told me that he wanted me to pay my own taxes and he was going to 1099 me. I am not an independent contractor - I have worked at least 1000 hr this year and now I have to come up with my tax money. is there anything I can do?

olittlewood
Post 14

jim and lori,

your nanny probably had no idea that she'd be responsible for paying that extra tax at the end of the year. hopefully you were paying her a wage that took that savings for you (you'd have to be paying your share of the tax, as well as her share) into account. you can't necessarily expect to pay her less, and then have her shoulder the burden of your savings. always discuss these details upfront with "employees" or independent contractors ahead of time to avoid these uncomfortable surprises!

the IRS has a 20 point checklist you can refer to to establish if your nanny is indeed an independent contractor. one rule of thumb that i've heard is that the more control you have an exercise over the person makes you more likely an employer, and her an employee versus a 1099 contractor. be sure that you do your research, contract a tax attorney or a CPA.

anon5919
Post 13

What about withholding garnishments/child support payments?

anon5819
Post 12

Hi, we have a nanny who we believed was handling her own taxes, but recently informed us that she is claiming all her wages and expects us to pay all the taxes from when she started or give her a huge raise to cover the taxes she failed to take out. Is she considered an independent contractor? Who's responsiblility is it to withhold and report to the IRS? Do we need to do a 1099 with her? Thanks for the help.

Jim & Lori

Robertb
Post 11

Is a real estate agent in California considered an independent contractor. As a Broker of a real estate independent contractor, do I have to withhold from a commission in order to satisfy a Wage Garnishment?

arilandau
Post 10

Hi

I had signed a non compete with my boss back in 2001 as a sales rep/employee (that's what it says in the contact. But i always worked on a 1099 and i had no insurance paid, or any tax withheld from me.is this contract in place? i was never an employee as it states in the contract.

anon3845
Post 9

If an independent contractor is an LLC, are they given a 1099?

alecfinet
Post 8

I am resident(physically and fiscally) in Europe and I am about to contract with a US company that wants to issue a 1099 form for me. how does it work regarding taxes?

anon1271
Post 6

I want to open another small biz. Can I hire employees as 1099 works? Do they need a TIN #? What beneifts me more as an employer, 1099?

anon1126
Post 5

My US employer asks me for a TIN nr in order to fill in the 1099 form. I am a foreign freelance individual residing and working in Europe. How do I get a TIN nr without filing a US tax return?

aam1206
Post 4

Is a licensed real estate agent considered an independent contractor? If so, do all of the business expense deductions apply?

steveb
Post 2

What paperwork do I need from a 1099 contractor before I can issue them work?

anon163
Post 1

I received both copies of my 1099 from my employer by mistake. Where do I send the IRS copy?????

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