[Patriarch]

One of my friends and I both did work for a client as freelancers recently. My friend has a full-time job, I'm solely a freelancer. He has to fill out a 1099 form for our client, but could get fired from his main gig. He wants me to fill it out instead.

Is there any way I can get fucked here? Thanks for the help.

[CleanSlate]

Why would he get fired from his main gig for filling out a 1099?

[Tokyo Joe]

Sweet Pea: Although not a certified public accountant, I have had a great deal of experience as both a recipient and a provider of IRS Form 1099-MISC, which among other purposes is used for "independent contractors" such as you and your friend who did some freelance work. As of 2015, if any entity pays someone $600 or more during a tax year, that payer is obligated by law to provide a copy of 1099-MISC to the recipient (by Jan 31 of the following year) and a copy to the IRS (by Feb 28 or 29 of the following year). Of course the recipient of the 1099-MISC must report this income on his filing to the IRS for that year and it becomes part of his gross income on which the tax he owes is based.

Now, it goes without saying that I would never instruct someone to contravene the laws of the United States; the following story is a work of pure fiction.

***
On and off throughout 2015, Mr. Sweet Pea (SP) and his associate Wing Man (WM) work in and around Minnesota and Wisconsin as talent scouts for BBW porn actresses on behalf of Bigbootylvr Productions LLC (BP). They split this weighty undertaking evenly, earning a total of $6000 from BP, which they split 50/50, pocketing $3000 each. Come December, BP is preparing to issue one or more 1099-MISCs for $6000, and requests from the SP/WM duumvirate the necessary information (full name, address, social security number, etc.) to complete the 1099 form(s).

While SP works full-time as a freelance porn talent scout for a number of production companies, WM is in fact a full-time employee of Dash Global Enterprises LLC (DG), an outfit run out of a basement somewhere in the Upper Midwest that competes with BP in the plus-plus-plus-size porn industry. Here's the rub: WM has signed a no-compete agreement with DG, forbidding him to work for other porn companies. WM, not realizing that the IRS is a general relativistic Black Hole -- i.e. once his tax returns are submitted and cross the event horizon into IRS, they will never be seen by anyone outside the event horizon ever again -- and that therefore he has no need to worry about DG discovering his moonlighting for BP, asks his buddy SP to claim that he, SP, alone completed 100% of the scouting work for BP and to provide his, SP's, information to BP for the 1099-MISC showing $6000 of income paid to SP. Being a good friend and wanting to put WM's baseless worries to rest, SP agrees and provides the needed info to BP.

In January SP receives a copy of the 1099-MISC from BP, and includes the $6000 as part of his income on the Form 1040 he files on April 15. It was a red-letter year for SP, who brought home the richly larded bacon, big-time, grossing a total of $100,000. After all deductions, exclusions, expenses et al., SP owes the IRS $18,000 in taxes -- his effective tax rate is 18%.

However, his marginal tax rate -- that is, the rate paid on the last dollar he earned -- was 28%. Although he only pocketed $3000 from BP, because he duly reported $6000 in income from BP (and $3000 of this indeed represented his marginal income, as he would not have "earned" it at all if WM had claimed this amount as his own, as he rightly should have done), SP must pay an extra $840 in income tax to the IRS on income he did not in fact receive. He has been fucked by WM.

Fortunately WM is not a dick and understands the situation when SP explains it to him. The next time they meet, WM brings over as a gift a signed copy of Donald Trump's new book Crippled America. SP is touched by this kindness, but still feels his old buddy WM owes him more than a $25 hard-cover book, as fine as it is.

This feeling rankles, until SP reaches Chapter 3 and finds nine crisp new hundred-dollar bills tucked between the pages. All is right with the world. Trump wins the coming election and radically alters the U.S. Tax Code, rendering these considerations for SP and WM moot in 2018.

[Harvey Specter]

(12-03-2015 08:56 PM)Sweet Pea Wrote:  

One of my friends and I both did work for a client as freelancers recently. My friend has a full-time job, I'm solely a freelancer. He has to fill out a 1099 form for our client, but could get fired from his main gig. He wants me to fill it out instead.

Is there any way I can get fucked here? Thanks for the help.

Yes. Do not do this.

[Off The Reservation]

It doesnt matter your "friends" excuse.

DO NOT

[Off The Reservation]

(12-03-2015 11:02 PM)Tokyo Joe Wrote:  

Sweet Pea: Although not a certified public accountant, I have had a great deal of experience as both a recipient and a provider of IRS Form 1099-MISC, which among other purposes is used for "independent contractors" such as you and your friend who did some freelance work. As of 2015, if any entity pays someone $600 or more during a tax year, that payer is obligated by law to provide a copy of 1099-MISC to the recipient (by Jan 31 of the following year) and a copy to the IRS (by Feb 28 or 29 of the following year). Of course the recipient of the 1099-MISC must report this income on his filing to the IRS for that year and it becomes part of his gross income on which the tax he owes is based.

Now, it goes without saying that I would never instruct someone to contravene the laws of the United States; the following story is a work of pure fiction.

***
On and off throughout 2015, Mr. Sweet Pea (SP) and his associate Wing Man (WM) work in and around Minnesota and Wisconsin as talent scouts for BBW porn actresses on behalf of Bigbootylvr Productions LLC (BP). They split this weighty undertaking evenly, earning a total of $6000 from BP, which they split 50/50, pocketing $3000 each. Come December, BP is preparing to issue one or more 1099-MISCs for $6000, and requests from the SP/WM duumvirate the necessary information (full name, address, social security number, etc.) to complete the 1099 form(s).

While SP works full-time as a freelance porn talent scout for a number of production companies, WM is in fact a full-time employee of Dash Global Enterprises LLC (DG), an outfit run out of a basement somewhere in the Upper Midwest that competes with BP in the plus-plus-plus-size porn industry. Here's the rub: WM has signed a no-compete agreement with DG, forbidding him to work for other porn companies. WM, not realizing that the IRS is a general relativistic Black Hole -- i.e. once his tax returns are submitted and cross the event horizon into IRS, they will never be seen by anyone outside the event horizon ever again -- and that therefore he has no need to worry about DG discovering his moonlighting for BP, asks his buddy SP to claim that he, SP, alone completed 100% of the scouting work for BP and to provide his, SP's, information to BP for the 1099-MISC showing $6000 of income paid to SP. Being a good friend and wanting to put WM's baseless worries to rest, SP agrees and provides the needed info to BP.

In January SP receives a copy of the 1099-MISC from BP, and includes the $6000 as part of his income on the Form 1040 he files on April 15. It was a red-letter year for SP, who brought home the richly larded bacon, big-time, grossing a total of $100,000. After all deductions, exclusions, expenses et al., SP owes the IRS $18,000 in taxes -- his effective tax rate is 18%.

However, his marginal tax rate -- that is, the rate paid on the last dollar he earned -- was 28%. Although he only pocketed $3000 from BP, because he duly reported $6000 in income from BP (and $3000 of this indeed represented his marginal income, as he would not have "earned" it at all if WM had claimed this amount as his own, as he rightly should have done), SP must pay an extra $840 in income tax to the IRS on income he did not in fact receive. He has been fucked by WM.

Fortunately WM is not a dick and understands the situation when SP explains it to him. The next time they meet, WM brings over as a gift a signed copy of Donald Trump's new book Crippled America. SP is touched by this kindness, but still feels his old buddy WM owes him more than a $25 hard-cover book, as fine as it is.

This feeling rankles, until SP reaches Chapter 3 and finds nine crisp new hundred-dollar bills tucked between the pages. All is right with the world. Trump wins the coming election and radically alters the U.S. Tax Code, rendering these considerations for SP and WM moot in 2018.

I am laughing so hard there are people nearby wondering what the fuck is wtong with that guy.

[worldwidetraveler]

(12-03-2015 08:56 PM)Sweet Pea Wrote:  

One of my friends and I both did work for a client as freelancers recently. My friend has a full-time job, I'm solely a freelancer. He has to fill out a 1099 form for our client, but could get fired from his main gig. He wants me to fill it out instead.

Is there any way I can get fucked here? Thanks for the help.

How would his main gig know about the 1099? I never heard of employers seeing their employees taxes.

[Patriarch]

Thanks for the responses (especially Tokyo Joe, holy shit). I told him I wasn't doing it.

[Off The Reservation]

(12-05-2015 01:38 AM)Sweet Pea Wrote:  

Thanks for the responses (especially Tokyo Joe, holy shit). I told him I wasn't doing it.

smart man

[Cruisen_Chubby]

(12-03-2015 11:02 PM)Tokyo Joe Wrote:  

Sweet Pea: Although not a certified public accountant, I have had a great deal of experience as both a recipient and a provider of IRS Form 1099-MISC, which among other purposes is used for "independent contractors" such as you and your friend who did some freelance work. As of 2015, if any entity pays someone $600 or more during a tax year, that payer is obligated by law to provide a copy of 1099-MISC to the recipient (by Jan 31 of the following year) and a copy to the IRS (by Feb 28 or 29 of the following year). Of course the recipient of the 1099-MISC must report this income on his filing to the IRS for that year and it becomes part of his gross income on which the tax he owes is based.

Now, it goes without saying that I would never instruct someone to contravene the laws of the United States; the following story is a work of pure fiction.

***
On and off throughout 2015, Mr. Sweet Pea (SP) and his associate Wing Man (WM) work in and around Minnesota and Wisconsin as talent scouts for BBW porn actresses on behalf of Bigbootylvr Productions LLC (BP). They split this weighty undertaking evenly, earning a total of $6000 from BP, which they split 50/50, pocketing $3000 each. Come December, BP is preparing to issue one or more 1099-MISCs for $6000, and requests from the SP/WM duumvirate the necessary information (full name, address, social security number, etc.) to complete the 1099 form(s).

While SP works full-time as a freelance porn talent scout for a number of production companies, WM is in fact a full-time employee of Dash Global Enterprises LLC (DG), an outfit run out of a basement somewhere in the Upper Midwest that competes with BP in the plus-plus-plus-size porn industry. Here's the rub: WM has signed a no-compete agreement with DG, forbidding him to work for other porn companies. WM, not realizing that the IRS is a general relativistic Black Hole -- i.e. once his tax returns are submitted and cross the event horizon into IRS, they will never be seen by anyone outside the event horizon ever again -- and that therefore he has no need to worry about DG discovering his moonlighting for BP, asks his buddy SP to claim that he, SP, alone completed 100% of the scouting work for BP and to provide his, SP's, information to BP for the 1099-MISC showing $6000 of income paid to SP. Being a good friend and wanting to put WM's baseless worries to rest, SP agrees and provides the needed info to BP.

In January SP receives a copy of the 1099-MISC from BP, and includes the $6000 as part of his income on the Form 1040 he files on April 15. It was a red-letter year for SP, who brought home the richly larded bacon, big-time, grossing a total of $100,000. After all deductions, exclusions, expenses et al., SP owes the IRS $18,000 in taxes -- his effective tax rate is 18%.

However, his marginal tax rate -- that is, the rate paid on the last dollar he earned -- was 28%. Although he only pocketed $3000 from BP, because he duly reported $6000 in income from BP (and $3000 of this indeed represented his marginal income, as he would not have "earned" it at all if WM had claimed this amount as his own, as he rightly should have done), SP must pay an extra $840 in income tax to the IRS on income he did not in fact receive. He has been fucked by WM.

Actually, he gets fucked even worse than originally quoted. You see, when you receive a 1099-MISC, most of the time, you are considered to be self employed. Because of this, you are subject not only to income tax on your self employment earnings but also to self employment taxes (social security, Medicare) aka FICA., which is an additional 15.3% --- so let us recalculate the cumulate fucking the SP will receive....

The additional $3,000 paid to SP (on behalf of WM) would be subject to 28% marginal tax rate + 15.3% S/E taxes which equals 43.3%. ($3,000 x .433 = $1,299) --- yes, the fucking would equate to almost $1,300. Of course this is without factoring in expenses to reduce the revenue received such as mileage necessary to scope out the land whales on the beach or god forbid business meals of which to feed these human garbage disposals. Could also include the cell phone bills or excess data used to receive XXL titty pics, but now we're just arguing semantics.

Fortunately WM is not a dick and understands the situation when SP explains it to him. The next time they meet, WM brings over as a gift a signed copy of Donald Trump's new book Crippled America. SP is touched by this kindness, but still feels his old buddy WM owes him more than a $25 hard-cover book, as fine as it is.

This feeling rankles, until SP reaches Chapter 3 and finds nine crisp new hundred-dollar bills tucked between the pages. All is right with the world. Trump wins the coming election and radically alters the U.S. Tax Code, rendering these considerations for SP and WM moot in 2018.

As mentioned above, the IRS is a dark hole of information. What goes in does not come out... Unless you are the DEA, CIA, DOJ, or the individual himself requesting transcripts. Unless your buddy's employer is a charming sociopath who gets a very lax revenue agent on the phone (after waiting the requisite 2 hours on hold on the IRS phone line), there is really no way his employer could find out about his fatty dabbling enterprise.

Because of the nature of the above mentioned business-- we could call this strategy "the back door" to claiming 1099-MISC income.

If you really wanted to help your friend and but his baseless worries at ease, you could receive the 1099-MISC for the full amount of $6,000. you could then subtract expenses like those mentioned above but with one caveat. You could THEN 1099-MISC your buddy under "contract labor" for the $3,000 he was originally liable for. This way, the 1099 would come from you, under the heading SP contracting; therefore he is now officially a contractor for YOU instead of bigbootylover productions -- avoiding his non-compete.

At the end of the day, this is all irrelevant though.

[roberto]

Holy shit, we in the UK have it so lax compared with you in the USA when it comes to matters of self employment. This '1099 after more than $600 a year' business, is that for private clients too? Say someone you fitted a kitchen for worth 2k?

[PapayaTapper]

If you are working as a freelancer you should be incorporated anyway...for numerous reasons including the tax & liability benefits

[Cruisen_Chubby]

(12-07-2015 01:53 PM)roberto Wrote:  

Holy shit, we in the UK have it so lax compared with you in the USA when it comes to matters of self employment. This '1099 after more than $600 a year' business, is that for private clients too? Say someone you fitted a kitchen for worth 2k?

Issuing someone a 1099 for contract labor is essentially like having a receipt to prove a purchase (in case of an audit).

With the form 1099, people would be saying that paid thousands of dollars for contract labor that never happened, just for the write-off and there would be no "paper trail".

The issuance of 1099's is one of the lesser retarded aspects of the American tax code.

[roberto]

(12-07-2015 02:29 PM)Cruisen_Chubby Wrote:  

(12-07-2015 01:53 PM)roberto Wrote:  

Holy shit, we in the UK have it so lax compared with you in the USA when it comes to matters of self employment. This '1099 after more than $600 a year' business, is that for private clients too? Say someone you fitted a kitchen for worth 2k?

Issuing someone a 1099 for contract labor is essentially like having a receipt to prove a purchase (in case of an audit).

With the form 1099, people would be saying that paid thousands of dollars for contract labor that never happened, just for the write-off and there would be no "paper trail".

The issuance of 1099's is one of the lesser retarded aspects of the American tax code.

Sorry, I may have worded my post slightly misleadingly. To put it another way, is a householder obligated to file details of personal spending with local handymen of over $600 a year? Over here the obligation is on the handyman to declare what he has earnt; of course what tends to happen is that the customer pays in cash and the handyman doesn't declare it.

[Cruisen_Chubby]

(12-07-2015 02:41 PM)roberto Wrote:  

(12-07-2015 02:29 PM)Cruisen_Chubby Wrote:  

(12-07-2015 01:53 PM)roberto Wrote:  

Holy shit, we in the UK have it so lax compared with you in the USA when it comes to matters of self employment. This '1099 after more than $600 a year' business, is that for private clients too? Say someone you fitted a kitchen for worth 2k?

Issuing someone a 1099 for contract labor is essentially like having a receipt to prove a purchase (in case of an audit).

With the form 1099, people would be saying that paid thousands of dollars for contract labor that never happened, just for the write-off and there would be no "paper trail".

The issuance of 1099's is one of the lesser retarded aspects of the American tax code.

Sorry, I may have worded my post slightly misleadingly. To put it another way, is a householder obligated to file details of personal spending with local handymen of over $600 a year? Over here the obligation is on the handyman to declare what he has earnt; of course what tends to happen is that the customer pays in cash and the handyman doesn't declare it.

The responsibility is on the handyman to report the income.

Let's say you hired a guy to redo your kitchen for $5,000 worth of labor. Being that it is a personal expense and not tax deductible, you would NOT issue him a 1099. If you paid him in cash, chances are he wouldn't claim the income although he is legally liable to do so, but whether he claims the income or not is no skin off your back as it's a non deductible expense for you.

However -- Let's say you paid this same handyman $5,000 to come into your office (you're self employed) to tile the bathroom and do some light repairs to the exterior. NOW this is a legitimate business expense as it benefits your business and is tax deductible.

You would then issue the handyman a 1099 for $5,000 just to cover your ass in terms of an audit. You would write this 5,000 off as contract labor or repairs on your business tax return. Where is the proof? Here's the 1099. Now the burder is on the handyman to claim the income.

Think of a 1099 as a baton in one of those 4 x 100 meter relays-- the baton being the tax bill.

[PapayaTapper]

(12-07-2015 02:41 PM)roberto Wrote:  

Sorry, I may have worded my post slightly misleadingly. To put it another way, is a householder obligated to file details of personal spending with local handymen of over $600 a year? Over here the obligation is on the handyman to declare what he has earnt; of course what tends to happen is that the customer pays in cash and the handyman doesn't declare it.

Technically yes you are supposed to file a form 1099 for anyone you pay as an individual $600 or more in a given year. If it's for something that isn't tax deductible, like a gardener for example then there's really no point for you to (but the gardener is supposed to report it anyway).