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question about taxes and a 1099-misc

Discussion in 'Members' Lounge' started by chestercheeto48, Oct 16, 2006.

  1. chestercheeto48

    chestercheeto48 Senior Member VIP

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    I recently did some side construction work with a guy that I know that was supposed to be cash. I think that he is trying to screw me over and I know that someone on here is an accountant that could probably help. I will try to keep this simple. Myself and two other guys agreed to help a fourth guy install some cabinets over a weekend for a grand in cash for the three of us. The fourth guy (who set it up) would take a larger cut. The deal doesn't go quite right and the company now sends the set-up guy a W-9. He then informs the rest of us that he is simply going to take 30 percent of off what he would originally pay us to cover his ass at tax time. The question that I have is this = Am I getting screwed or is 30 percent a fair estimate? The guy that set this up is already getting twice what me and the other two guys are so I want to make sure what I get is fair.I hope that this made sense and any input would be helpful.
     
  2. Smarnash

    Smarnash Banned

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    What state are you in?

    22-25% -ish is what I would withold in Cali.


    (let's see if I can say this with a straight face...)

    Now I am assuming you plan on reporting that cash?



    On the other hand.....if he has to pay taxes on the original amount.....then do you think he is going to report you as a sub?

    The taxes should be split equally.....with him paying the biggest part because he is taking the biggest share.
     
    Last edited: Oct 16, 2006
  3. chestercheeto48

    chestercheeto48 Senior Member VIP

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    I live in wisconsin. I am trying to talk the guy into letting me send in my own w-9 and have the company directly cut me a check for my share. I would rather pay the taxes out of my share than let him rip me off.
     
  4. E-Man

    E-Man No idea what I'm saying

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    Was he receptive? In general a company does not have to issue a 1099 to you if the earnings are less then $600.

    As an independent contractor (assuming you utilize the long form) you are able to deduct certain expenses incurred while performing the service which can further reduce your taxable income.

    Although I'm not a tax advisor/accountant, I have had a similar situation to yours in my past. Of course YMMV.
     
  5. chestercheeto48

    chestercheeto48 Senior Member VIP

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    I agree that the taxes should be split evenly as I wouldn't report it and it will go on his return. The question that I have is if 30 percent is a good rule of thumb to go by. I talked to him and I guess it is too late to send in my own form as he already has the check in hand. I guess that this is a live and learn moment, the bright side is that I still made more for those couple days than I would have at regular wage.
     
  6. pissedoffsol

    pissedoffsol RETIRED

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    1099's DO NOT get taxes withheld from them at ALL. if he's holding them, he's screwing you. It is YOUR responsibility to pay taxes on it on your own.

    i get 1099's from google everyyear, so i know a thinkg about them :)
     
  7. get_nick

    get_nick These snozzberries taste like snozzberries... VIP

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    wrong forum. b should move this to SavingsTalk.com
     
  8. Smarnash

    Smarnash Banned

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    Would love to see a cross-board mod that allows for it with only one click of the button.
     
  9. reckedracing

    reckedracing TTIWWOP VIP

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    the main problem here is that the company he's getting paid from is now going to report this income to the IRS
    so this guy needs to report it on his taxes
    30% is a pretty average amount to be withheld
    i think the lowest IRS rate is 15%-ish
    and if you make any decent income your tax rate goes up
    then you need to include the state rate
    and remember 1099 = self employment income so he's getting hit for both the workers and employers share ie: Self Employment tax

    i think its bullshit that he's taking it out of your pocket when he's already making 2x what you are
    but 30% would be considered normal...
    you don't need to report this income unless this company gets your SSN and issues you the check...
     
  10. chestercheeto48

    chestercheeto48 Senior Member VIP

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    thanks recked...I thought that you were the tax guru around here. I guess I will just wait to see what happens and go from there. I also think that it is crap that he is taking it out on us because the job didn't go as he said it would. Like I said before live and learn.
     
  11. pissedoffsol

    pissedoffsol RETIRED

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    if you're getting a 1099, he has your social already.....
     
  12. reckedracing

    reckedracing TTIWWOP VIP

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    i don't think chester is getting the 1099
    i think the 4th guy that received the w-9 is getting it
     
  13. chestercheeto48

    chestercheeto48 Senior Member VIP

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    Yes that is correct the 4th guy is getting it and it will be on his tax return.
     
  14. pissedoffsol

    pissedoffsol RETIRED

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    so he's paying 4 of you on 1 1099?

    then the other 3 of you should give the 4th guy the 30%, not the owner.
     
  15. chestercheeto48

    chestercheeto48 Senior Member VIP

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    Um yes he is receiving the 1099 because he received the check cut in his name. He is then paying us. I don't necessisarily think that it is fair that we just let him keep 30 percent of our check - tax return unseen. He is already pulling down twice what we each recieved for setting up the job. All of the set up that he did was done on company time. I honestly think that he should pay us the agreed upon wages since he did not follow up or make sure the deal went off like he said. At the very least I would agree to let him keep some money off my share but
    I want to see the paperwork and the math to make sure he didn't screw any of us.

    My original solution was to just file my own w-9 and have the company we did the work for cut me a seperate check for my share then I could receive my own 1099 and take care of it on my own taxes at the end of the year, but the check has already been cut to the guy and he has already cashed the check.
     
    Last edited: Oct 17, 2006
  16. E-Man

    E-Man No idea what I'm saying

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    Why wouldn't the recipient of the 1099 claim deductions for the contract labor he incurred on his Schedule C? Of course the onus is on him to issue a 1099 to you if he paid you more than $600. By doing it this way there is no need to "charge" you for the taxes he will have incurred.

    I believe that you are responsible for reporting income whether or not you are issued a 1099. No statute of limitations on fraud.......



    Again, I'd recommend getting a tax preparer's opinion on this.

    Best regards,

    E
     
  17. reckedracing

    reckedracing TTIWWOP VIP

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    contract labor could require 1099's to be issued
    he'd be fucked if he got audited
    and then it would come back to bite chester in the ass in the long run

    technically you are responsible to claim the income, but cash = no paper trail

    you're not gonna see any paperwork until after december 31st
    so he wants to pay you 200 instead of 300?
    chances are he will have expenses etc to offset any income but you aren't gonna see that until he files yearly taxes, and if you asked to see his tax return he will prob tell you to go fuck yourself... i would
    lol

    there isn't much you can do in your situation, but he should man up and keep the money from his share instead of taking 100 a piece out of your pocket
     
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