ECON Are you a 1099 Contractor? Read this update from the IRS

[20Gauge]

There is no link as this came by private email from the IRS. In general, 1099 contractors who do work work for companies are now under tighter restrictions starting next year. What has changed is in the past, you had to actually meet several criteria before you could be considered an employee, other wise you were a 1099 contractor.

Now, if the company has the "right" to exercise certain criteria, you are now an employee. This is a MAJOR change from before.

For example, if a company has the "right" to control your behavior ( meaning how you do the work ) you ARE AN EMPLOYEE. Before you had to have actual instructions from the contracting company.

This means we now know a bit better how those 87,000 agents will be used. They will go over the 1099s issued and those received to target companies that they will audit and then penalize / force to hire and pay payroll tax penalties, etc. This will be a huge source of revenue for the US Treasury.

BE AWARE !!!!!


Worker Classification 101: employee or independent contractor

A business might pay an independent contractor and an employee for the same or similar work, but there are key legal differences between the two. It is critical for business owners to correctly determine whether the people providing services are employees or independent contractors.

Here's some information to help business owners avoid problems that can result from misclassifying workers.

An employee is generally considered anyone who performs services, if the business can control what will be done and how it will be done. What matters is that the business has the right to control the details of how the worker's services are performed. Independent contractors are normally people in an independent trade, business or profession in which they offer their services to the public.

Independent contractor vs. employee

Whether a worker is an independent contractor, or an employee depends on the relationship between the worker and the business. Generally, there are three categories to consider.

• Behavioral control − Does the company control or have the right to control what the worker does and how the worker does the job?
• Financial control − Does the business direct or control the financial and business aspects of the worker's job. Are the business aspects of the worker's job controlled by the payer? Things like how the worker is paid, are expenses reimbursed, who provides tools/supplies, etc.
• Relationship of the parties − Are there written contracts or employee type benefits such as pension plan, insurance, vacation pay? Will the relationship continue and is the work performed a key aspect of the business?

 

[20Gauge]

You can argue semantics on this one, but it is a major shift and will effectively bring California type restrictions for 1099 workers to the entire nation.

 

[West]

Muse, for those that don't know....

As once a employer, for every dollar you give a employee, another dollar at the vary least goes to the many mandated payroll liabilities. Plus compliance cost.

In the building trades it can be as much as $2-3 dollars goes to the mandated payroll liabilities when the employee only gets a dollar!

So you see the push for this sort of thing/tax/regulation.

 

[Meemur]

Thanks for letting us know! Something else to worry about, but forewarned is forearmed.

I'll attend one of the free seminars and make sure I'm understanding. This crap directly impacts me, unfortunately. The employer of one of my jobs hires mostly 1099 workers to avoid other tax implications. They will shutter their doors rather than comply with this BS.

 

[20Gauge]

Muse, for those that don't know....

As once a employer, for every dollar you give a employee, another dollar at the vary least goes to the many mandated payroll liabilities. Plus compliance cost.

In the building trades it can be as much as $2-3 dollars goes to the mandated payroll liabilities when the employee only gets a dollar!

So you see the push for this sort of thing/tax/regulation.

Very much so. Also, if they tag employers, they are more likely to get the cash than from individuals who have deductions and a 1099.

Example:

Employee gets paid $ 10k, there is about $1500 in SS and medicare paid
1099 gets paid $ 10k, but there is $5k in deductions, so SS and medicare paid is only $750.

They are eliminating the deductions by forcing people onto the company's payroll. Also, it puts more people on Obamacare. Another plus in their mind.

 

[20Gauge]

Thanks for letting us know! Something else to worry about, but forewarned is forearmed.

I'll attend one of the free seminars and make sure I'm understanding. This crap directly impacts me, unfortunately. The employer of one of my jobs hires mostly 1099 workers to avoid other tax implications. They will shutter their doors rather than comply with this BS.

Sorry to hear that one. Yes, that is also part of the intent of this plan. It is easier to control several large companies than thousands of small companies (1099 )

 

[phloydius]

Wow. That is a huge change. Thank you for the information. Ugh.

 

[20Gauge]

Wow. That is a huge change. Thank you for the information. Ugh.

Yes. moving from actually doing something to the "right" to do something is major

 

[Wildwood]

What difference does it make if an employer pays in all the taxes, etc. or the independent contractor? The IRS is still going to get their share. The government wants to eliminate self employment. They can't have people being too independent.

 

[Red Baron]

Oh, and we all voted for this, right?

 

[Samuel Adams]

Semantics.




*chuckle*




This isn’t a revenue gimmick.


It’s a new and improved political weapon.



Bend over further….kiss the ring with greater enthusiasm….



Or beat the rush and grow a pair while you still can.

 

[phloydius]

What difference does it make if an employer pays in all the taxes, etc. or the independent contractor? The IRS is still going to get their share. The government wants to eliminate self employment. They can't have people being too independent.

Deductions.
HR/Legal Compliance.
Insurance.
Overhead.

 

[Samuel Adams]

Oh, and we all voted for this, right?

Sure you all did (sarc)


How do you “feel” about the uses to which your hard-earned are currently ear-marked ?


Take courage from James Madison, if you dare.

“

1. Because we hold it for a fundamental and undeniable truth, "that Religion or the duty which we owe to our Creator and the manner of discharging it, can be directed only by reason and conviction, not by force or violence." [Virginia Declaration of Rights, art. 16] The Religion then of every man must be left to the conviction and conscience of every man; and it is the right of every man to exercise it as these may dictate. This right is in its nature an unalienable right. It is unalienable, because the opinions of men, depending only on the evidence contemplated by their own minds cannot follow the dictates of other men: It is unalienable also, because what is here a right towards men, is a duty towards the Creator. It is the duty of every man to render to the Creator such homage and such only as he believes to be acceptable to him. This duty is precedent, both in order of time and in degree of obligation, to the claims of Civil Society. Before any man can be considered as a member of Civil Society, he must be considered as a subject of the Governour of the Universe: And if a member of Civil Society, who enters into any subordinate Association, must always do it with a reservation of his duty to the General Authority; much more must every man who becomes a member of any particular Civil Society, do it with a saving of his allegiance to the Universal Sovereign. We maintain therefore that in matters of Religion, no mans right is abridged by the institution of Civil Society and that Religion is wholly exempt from its cognizance. True it is, that no other rule exists, by which any question which may divide a Society, can be ultimately determined, but the will of the majority; but it is also true that the majority may trespass on the rights of the minority.

2. Because if Religion be exempt from the authority of the Society at large, still less can it be subject to that of the Legislative Body. The latter are but the creatures and vicegerents of the former. Their jurisdiction is both derivative and limited: it is limited with regard to the co-ordinate departments, more necessarily is it limited with regard to the constituents. The preservation of a free Government requires not merely, that the metes and bounds which separate each department of power be invariably maintained; but more especially that neither of them be suffered to overleap the great Barrier which defends the rights of the people. The Rulers who are guilty of such an encroachment, exceed the commission from which they derive their authority, and are Tyrants. The People who submit to it are governed by laws made neither by themselves nor by an authority derived from them, and are slaves”

 

[Raggedyman]

Here is BUT ONE of the “new charges” those 87,000 new IRS agents are going to be tasked with.

 

[Wildwood]

Deductions.
HR/Legal Compliance.
Insurance.
Overhead.

Eliminating the independent contractor's deductions will be the biggest advantage for the IRS. The rest will be paid by one party or the other.

 

[BUBBAHOTEPT]

You can argue semantics on this one, but it is a major shift and will effectively bring California type restrictions for 1099 workers to the entire nation.

You can all image how so many of us feel about all the Biden voters/2020 Quislings. May God have mercy on our souls...FJB
BTW, while this doesn’t effect me personally, but for the grace of God go I….

 

[coalcracker]

How many of these “employees” will be required to take future vaccines in order to continue working as well?

CONTROL is what tyrants crave.

 

[20Gauge]

What difference does it make if an employer pays in all the taxes, etc. or the independent contractor? The IRS is still going to get their share. The government wants to eliminate self employment. They can't have people being too independent.

No they won't.

If an employee, they can get more per dollar paid. Self-employed can deduct expenses, which lowers the revenue the IRS collect. So it is better for people to be paid as an employee. At least for the IRS

 

[20Gauge]

Oh, and we all voted for this, right?

Actually it was 1st mentioned about 18 months ago that the DOL would be adjusting "rules" for 1099 workers. The IRS then enforces those rules.

 

[20Gauge]

Here is BUT ONE of the “new charges” those 87,000 new IRS agents are going to be tasked with.

True, but it is a MAJOR one at that. Millions are 1099 workers.

 

[Meemur]

Take courage from James Madison, if you dare.

Madison was a wealthy slave owner. I'm Jane Six-pack, working an ill-paying "main job," a crappy part-time position, and various seasonal jobs as I have the strength so I'll have some money in "retirement," such as that will be (HA!)

I do not take any government assistance what-so-ever, and I'm doing my best to keep it that way.

 

[Meemur]

True, but it is a MAJOR one at that. Millions are 1099 workers.

Tens of millions. Making us 1099 workers rather than salaried employees has been a huge boon for small companies. It's the way a number of them are operating. I probably would too, if I went that way.

I don't fault them. I do blame the government for making it so hard to get ahead in 2022.

 

[20Gauge]

Tens of millions. Making us 1099 workers rather than salaried employees has been a huge boon for small companies. It's the way a number of them are operating. I probably would too, if I went that way.

I don't fault them. I do blame the government for making it so hard to get ahead in 2022.

Part of the political spectrum views this as a major hole in the IRS collection process. They ( correctly or not ) believe that trillions are not being collected due to this "flaw".

The problem is what you are saying, many of the smaller business have made a living on this and would go out of business otherwise. Right or wrong is not for me to say, I am only interested in staying ahead of any issues.

 

[West]

Very much so. Also, if they tag employers, they are more likely to get the cash than from individuals who have deductions and a 1099.

Example:

Employee gets paid $ 10k, there is about $1500 in SS and medicare paid
1099 gets paid $ 10k, but there is $5k in deductions, so SS and medicare paid is only $750.

They are eliminating the deductions by forcing people onto the company's payroll. Also, it puts more people on Obamacare. Another plus in their mind.

You didn't mention, and I'm just adding for lurkers...

Workers comp, Unemployment insurance, state health insurances, mandated general payroll liabilities, and other payroll liabilities that the employers have to pay.

Including compliance.

 

[Buick Electra]

Thank you 20Gauge....I think.

 

[Cardinal]

Financial control − Does the business direct or control the financial and business aspects of the worker's job. Are the business aspects of the worker's job controlled by the payer? Things like how the worker is paid, are expenses reimbursed, who provides tools/supplies, etc

This may be the "out" for many, both companies and workers.

 

[Samuel Adams]

Madison was a wealthy slave owner. I'm Jane Six-pack, working an ill-paying "main job," a crappy part-time position, and various seasonal jobs as I have the strength so I'll have some money in "retirement," such as that will be (HA!)

I do not take any government assistance what-so-ever, and I'm doing my best to keep it that way.

None of that detracts from Madison’s words, taken at face value.

“We” are funding the destruction of the immediate country, and our progeny….which is anything future America.

Are we doing so, contrary to conscience, consequences be damned ?

There is a place to start, for any who care to take any step to implement change.

 

[hiwall]

And soon they will control everything and everybody.
Remove cash from the nation and their control is total.

 

[West]

None of that detracts from Madison’s words, taken at face value.

“

Are we doing so, contrary to conscience, consequences be damned ?

There is a place to start, for any who care to take any step to implement change.

Excellent point.

Just add, perhaps to make it clearer...

Meemur, said that she's still working for some kind of retirement. Probably meaning she's saving in the PMs or cash or as most do for enough credits that they can collect S.S.

People if you die before you can collect it goes back to the state. SS. Is the biggest scam ever.

Not nocking anyone for getting at least what they paid into the system but that's out right thievery.

"We” are funding the destruction of the immediate country, and our progeny….which is anything future America."

Nicely said.

 

[Wildwood]

No they won't.

If an employee, they can get more per dollar paid. Self-employed can deduct expenses, which lowers the revenue the IRS collect. So it is better for people to be paid as an employee. At least for the IRS

That's what I said in post #15.

 

[20Gauge]

This may be the "out" for many, both companies and workers.

Nope! My understand, ( subject to change ) is that if you meet 1 or 2, then you are dead. Three is if there is no determination from 1 or 2

 

[kyrsyan]

Honestly, it's more a warning for the companies that have been using 1099 contractors in bulk. Most people who have not done gig work do not realize that there are restrictions like these.
I currently do gig work as a transcriber. But I must agree to their pricing, their time restrictions, and use their software every step of the way. I must also meet all of their guidelines, which are not industry standards. It used to be that you could use your own software and audio editors, but that is no longer allowed.
The new job I start this week was supposed to be 1099. But the person employing me decided to change it to employee because I would have to use their platforms and programs completely. They don't care when I work as long as X things are completed within a 24 hour period and as long as it matches industry standards/guidelines for how it is supposed to be done. But she wants to be sure that she doesn't get caught on the wrong side of those guidelines. Tbh, I'm glad. Because it will make tax time a whole lot less headache for me.
But a lot of things are about to get tossed up. I wonder how it will work out across the board. Because there are a lot of industries that have been going more and more to 1099.

 

[20Gauge]

Honestly, it's more a warning for the companies that have been using 1099 contractors in bulk. Most people who have not done gig work do not realize that there are restrictions like these.
I currently do gig work as a transcriber. But I must agree to their pricing, their time restrictions, and use their software every step of the way. I must also meet all of their guidelines, which are not industry standards. It used to be that you could use your own software and audio editors, but that is no longer allowed.
The new job I start this week was supposed to be 1099. But the person employing me decided to change it to employee because I would have to use their platforms and programs completely. They don't care when I work as long as X things are completed within a 24 hour period and as long as it matches industry standards/guidelines for how it is supposed to be done. But she wants to be sure that she doesn't get caught on the wrong side of those guidelines. Tbh, I'm glad. Because it will make tax time a whole lot less headache for me.
But a lot of things are about to get tossed up. I wonder how it will work out across the board. Because there are a lot of industries that have been going more and more to 1099.

2 part implication going forward:

1) Audits of large numbers of small companies regarding their 1099 subs
2) Audits or corrections for large numbers of 1099 subs who don't pay quarterly and must redo their returns due to changes in #1 as the feds will make them change it and refile.

 

[kyrsyan]

2 part implication going forward:

1) Audits of large numbers of small companies regarding their 1099 subs
2) Audits or corrections for large numbers of 1099 subs who don't pay quarterly and must redo their returns due to changes in #1 as the feds will make them change it and refile.

I am always cautious of #2. But I historically don't have to pay in taxes for Federal. That was, or used to be, cause to not have to file quarterly. And now, hopefully, it's not something I will have to worry about anymore.

But I do have a self-employed friend that might need a heads up since she typically makes enough to have to pay in taxes if she's not careful.

 

[20Gauge]

I am always cautious of #2. But I historically don't have to pay in taxes for Federal. That was, or used to be, cause to not have to file quarterly. And now, hopefully, it's not something I will have to worry about anymore.

But I do have a self-employed friend that might need a heads up since she typically makes enough to have to pay in taxes if she's not careful.

In your case it may be a case of Company being told to refile 1099s as W2s and you having to refile your personal taxes without the deductions. Meaning you would then owe instead of receiving.....

That refiling bit is the part I really worry about. In my rough estimate, it would be worth $250+ billion in revenue each year.....

A lot of people would drop off Earned income credits, etc.

 

[Babs]

No they won't.

If an employee, they can get more per dollar paid. Self-employed can deduct expenses, which lowers the revenue the IRS collect. So it is better for people to be paid as an employee. At least for the IRS

Well, wouldn't the burden for those expenses fall on the employer then? Then the employer takes the deductions?

 

[20Gauge]

Well, wouldn't the burden for those expenses fall on the employer then? Then the employer takes the deductions?

Nope!

That is the beauty of what they are doing.

They eliminated the un-reimbursed employee expenses.....

 

[20Gauge]

You didn't mention, and I'm just adding for lurkers...

Workers comp, Unemployment insurance, state health insurances, mandated general payroll liabilities, and other payroll liabilities that the employers have to pay.

Including compliance.

Yes, you are very correct. This varies state from state so I tried to keep it on the Fed level only.

 

[kyrsyan]

In your case it may be a case of Company being told to refile 1099s as W2s and you having to refile your personal taxes without the deductions. Meaning you would then owe instead of receiving.....

That refiling bit is the part I really worry about. In my rough estimate, it would be worth $250+ billion in revenue each year.....

A lot of people would drop off Earned income credits, etc.

My experience with this in past, again in past, is that the company gets hit for not withholding appropriately, and has to pay in what they should have had to pay in originally. Regardless, if it happens, I will deal with it. But with the transcribing job, I have almost no deductions so the difference shouldn't be too much.
But I'll keep fingers crossed.
Where I really see it hurting is gig jobs, and newspaper jobs. If I understand correctly, it may hurt in the trucking industry as well.

 

[Babs]

Nope!

That is the beauty of what they are doing.

They eliminated the un-reimbursed employee expenses.....

I missed that part. Bastards.