- quote -

That's more-or-less true with respect to FICA taxes
(although "employee"-paid expenses are deducted if
self-employed, but not if an employee)

State and Federal unemployment taxes (although Federal taxes
are almost always limited to $56 per worker), workers comp
insurance. and, at least in California, state disability
"insurance" are seperate issues.

Department of labor overtime regulations may also be
implicated.

--
This account is subject to a persistent MS Blaster and SWEN
attack. I think I've got the problem resolved, but, if you
E-mail me and it bounces, a second try might work. However,
please reply in newsgroup.

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- quote -

You are hung up on the letter of the law vs the spirit of
the law: if the tax gets paid then that complies with the
spirit of the law. If the employee pays both halves of the
tax, then he won't go to prison. Neither one is likely to go
to prison in any case, but if the tax is UNDER-paid, someone
will probably have to pay it.

If the employee doesn't want to pay it and reports it as you
recommend--which would be OK from a tax point of view--then
he risks getting fired. That is his choice, but if he pays
the entire tax, he has done nothing wrong! It is not a
crime to overpay your tax!

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- quote -

That's called being an informant for the Boston branch of the FBI....

--
David M. Woods, EA
Boston, MA 02109

Postings here are general information only and not to be
relied upon as advice.

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- quote -

Too bad. No one wants to pay taxes, but that doesn't mean
that such a tax isn't due....

- quote -

It's not a question of "wanting." THERE IS NO DISCRETION
HERE. THERE IS NO CHOICE HERE. There is only one way to do
this that is compliant with the law. Now, if both the
employer and employee want to agree on EVADING the tax,
that's their problem, but don't come crying to me when
they're both in prison.

- quote -

And you consider a job for a criminal enterprise as
"gainful" employment?

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"D. Stussy" <kd6lvw[at]bde-arc.ampr.org> wrote:
- quote -

"KNOWING IT WAS TAXABLE??? Knowledge does not equal
control. The employer probably did not want to pay the
matching social security.

If the employee wants to risk getting fired, he can do as
you say. Another, safer, procedure might be to arrange to
reimburse his employer for all social security, unemployment
tax and workman comp ins plus any penalties for late payment
and request the employer pay them.

Of course there may be other jobs available if the ecomnomy
improves.

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Shagnasty wrote:
- quote -

No, he doesn't have the choice you say he has. "Choice 1"
is clearly wrong. "Choice 2" is also wrong, but since the
amount was omitted from the W-2, it is the employer's error.
That is not cause for the employee to omit it as well,
knowing that it was taxable when received. "Choice 3" is
the only correct avenue for the employee.

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"D. Stussy" <kd6lvw[at]bde-arc.ampr.org> wrote:
- quote -

You have three choices:
1. Report it as self employment tax. That way you can't be
accused of non-payment of tax. This will tend to protect
your employer from scrutiny.

2. Omit it and take the risk that the IRS may find it,
possibly by auditing your employer. Since neither of you
paid the tax, your empoyer will face the heat on the Soc Sec
portion but it won't be caused by anything you did. You
will still owe tax and penalty on the Income tax portion if
they catch it.

3. Report it as wages and only pay the employee half of the
social security tax. This way your employer will face the
music from the IRS and will probably fire you for being a
stool pidgeon.

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Ignateous Laughing wrote:

- quote -

No, because it's not from self-employment.

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- quote -

Assuming these "expenses" are not business related but
actually just more "compensation", I would have to say yes.
If I wasn't planning on staying with that employer much
longer, I would attach an explanation as to why only HALF
the SE tax is being paid!

Mike Lewis, CPA

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"Ignateous Laughing" <ib_laughing[at]myself.com> writes:

- quote -

Not unless the employee is conducting a trade or business.
Embezzlement comes to mind.

Phil Marti
Topeka, KS

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"Ignateous Laughing" <ib_laughing[at]myself.com> writes:

- quote -

These payments are included in your W-2 wages, subject to
employment tax withholding, and are not self-employment income.
Your employer should correct prior 941's to report the proper
information. The employer would pay the proper amounts and
you would return to the employer your share of employment
taxes.

"Jack" - John H. Fisher - TaxService[at]aol.com
Philadelphia, Pa - Atlantic City, NJ - West Wildwood, NJ
My Newsgroups & Boards at: http://members.aol.com/TaxService/index.html

Where Ignorance is bliss, 'tis folly to be wise!=

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If an employer pays an employees personal expenses
(utilities, insurance, etc.), and does not include the
amounts paid as compensation on a W-2 form, if the employee
wants to include the amounts paid as income on the tax
return, would said income be subject to self-employment tax?

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