"Wayne Brasch" <waynebrasch[at]stowetel.com> wrote:
- quote -

By being paid in this manner (as an independent contractor)
you are responsible for all your expenses, are not eligible
for employee benefits or unemployment compensation. You are
also not eligible for Workmen's Compensation if injured on
the job. You can ask the IRS to evaluate the situation by
filing form SS-8 with the IRS.

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"Wayne Brasch" <waynebrasch[at]stowetel.com> wrote:
- quote -

Note they are also likely avoiding paying for workers
compensation insurance and health insurance. Which can
leave you in pretty bad shape if he were injured on the job.
Sometimes you have to do what you have to do to earn a
living. But you don't want to dig yourselves into a tax
liability you can't dig back out of either.

Unemployment. They likely aren't paying it. This is the
easiest venue to get the state to go after them if he
becomes unemployed. And he should apply for it if he is out
of work, but he may have a problem collecting.

Always, it is better to have good benefits than it is to
have a good case.

Jo

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- quote -

I doubt he will get any form, but that doesnt free him from
the obligation to pay taxes. The majority of construction
jobs in the SW US are "off the books" filled by people
without tax ID numbers.

An off-the-books job probably lacks workmans comp, health
insurance, unemployment benefits, social security retirement
and disability, etc. Both employers and employees like
saving up to 50% expenses by being of-the-books, until
something bad happens.

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"RLC" <marknbeck[at]access4less.net> wrote:

- quote -

The way you describe the way your husband is being paid
means that after the end of 2003, his employer will probably
give him a Form 1099-MISC. This form implies to IRS that
your husband is, in fact, self-employed. That means in
addition to income tax on the amount of his earnings, he
will be subjected to the self-employment tax at the rate of
15.3%. This employer is paying your husband in this manner
to avoid their responsibility to deduct payroll taxes from
his pay. They are also saving themselves money by them not
having to pay Federal and State Unemployment taxes on him.

The way you described how he works with them indicates that
IRS would probably deem him to be an employee and the
company the employer. You should insist that taxes be
properly withheld by the employer so you and your husband
will not have to deal with the problems related to a
self-employed person who is not really self-employed.

Wayne Brasch, CPA, M. S. Taxation

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I need help with a new scenario in my life. My questions
may seem insignifcant to those with tax knowledge, however,
I would appreciate you advice:

My husband recently got a new job. He works for a
construction company as a supervisor and is paid a weekly
salary of $750 plus a monthly truck allowance of $400. His
employer withholds nothing from his weekly paychecks. Can
you tell me what I should be doing in terms of tax payments?
Unemployment insurance? Social Security? And about the
truck allowance; will it be added into his yearly earnings
and should we be using the money to invest in his personal
truck....keeping up with expenses. I think I could better
understand his situation if he was self employed but he is
not. He goes to the jobs they direct him to and uses their
rental equipment to perform the job.

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