"SHOW ME THE MONEY" VIEWS on HOW to make MONEY GR

[Tyrone Bigguns]

I have a job offer right now that is based on a 1099 so I'm trying to learn the facts. When one factors in the lack of bennies, it isn't a very competitive offer

In the past I worked 1099. If you are aggressive it can work for you..but, it is work.

I deducted quite a bit: Home office, supplies, furniture, cell phone, meals (i had at the minimum 3 business lunches a week...eating with coworkers..of course we were talking biz), office equipment, software, mileage (notebook), car (leasing..deduct it)...bought a car (interest..depreciation), travel (100% for hotel...50% for meals), etc.

[arcilite]

I'm a 1099 worker... it takes someone thats ..... not lazy... to really make it work.

[Partial]

I have a job offer right now that is based on a 1099 so I'm trying to learn the facts. When one factors in the lack of bennies, it isn't a very competitive offer

In the past I worked 1099. If you are aggressive it can work for you..but, it is work.

I deducted quite a bit: Home office, supplies, furniture, cell phone, meals (i had at the minimum 3 business lunches a week...eating with coworkers..of course we were talking biz), office equipment, software, mileage (notebook), car (leasing..deduct it)...bought a car (interest..depreciation), travel (100% for hotel...50% for meals), etc.

Yeah, it sounds like a sweet deal if you're in a position where you have some cash built up and have a big enough network to find work.

If I could get 45 an hour I think I'd do it. Maybe 40.

How much were you paying in health insurance for one person? I don't even have the slightest clue as to how to go about doing that. Would need to do some Googling.

[retailguy]

meals (i had at the minimum 3 business lunches a week...eating with coworkers..of course we were talking biz),

partial, this is an example of what I'm talking about. THIS IS NOT LEGAL. Those that have gone before you have f'ed it up for all of us. This type of meal has been specifically exempted by the IRS because it has been abused so much.

mileage (notebook), car (leasing..deduct it)...bought a car (interest..depreciation)

Here's another example... You can do either, but not both. It should be common sense that you can't both depreciate your auto PLUS claim mileage, but people don't think. You have choice, you can depreciate and take actual expenses, or you can take the mileage deduction, but you CANNOT do both.

I deleted the other stuff but it doesn't mean that I agree with it, I just didn't want to refute everything.

It is more than likely that Tyrone just googled some website and copied the content.

whatever you do, don't listen to what others are doing. It isn't worth it. You need a QUALIFIED tax professional if you do this, not some idiot with a copy of turbo tax.

[HowardRoark]

Page 5 of Obama’s Novaya Ekonomicheskaya Politika….er, um, Budget:

"While middle-class families have been playing by the rules, living up to their responsibilities as neighbors and citizens, those at the commanding heights of our economy have not."

"Prudent investments in education, clean energy, health care and infrastructure were sacrificed for huge tax cuts for the wealthy and well-connected."

"There's nothing wrong with making money, but there is something wrong when we allow the playing field to be tilted so far in the favor of so few. . . It's a legacy of irresponsibility, and it is our duty to change it."

Instead of devising Byzantine tax dodging strategies, you might want to either: 1) practice bending forward and grabbing your ankles, or 2) don’t work so hard.

[Patler]

meals (i had at the minimum 3 business lunches a week...eating with coworkers..of course we were talking biz),

partial, this is an example of what I'm talking about. THIS IS NOT LEGAL. Those that have gone before you have f'ed it up for all of us. This type of meal has been specifically exempted by the IRS because it has been abused so much.

mileage (notebook), car (leasing..deduct it)...bought a car (interest..depreciation)

Here's another example... You can do either, but not both. It should be common sense that you can't both depreciate your auto PLUS claim mileage, but people don't think. You have choice, you can depreciate and take actual expenses, or you can take the mileage deduction, but you CANNOT do both.

I deleted the other stuff but it doesn't mean that I agree with it, I just didn't want to refute everything.

It is more than likely that Tyrone just googled some website and copied the content.

whatever you do, don't listen to what others are doing. It isn't worth it. You need a QUALIFIED tax professional if you do this, not some idiot with a copy of turbo tax.

Partial;
Retail is right. Deductions for meals, entertainment etc. have changed a lot in recent years and are not even close to what the uninformed think they are. Even when you travel, there are limits on what you can do with meal expenses.

Home office? - Not that easy to deduct any more. It must be used exclusively and regularly for business operations. If the area has a dual use, both business and personal, it is not deductible. What you get to deduct, generally a percentage of expenses, taxes etc. based on square footage of the office area to the overall square footage of the home is very small. I know many independent contractors (1099ers) who gave up their home office deductions because they either no longer qualified because of the dual use aspect, or the deduction was so small as to not be worth it. Home office expenses have been an IRS target for audits.

Mileage expenses? - Be prepared to document at the time of travel your odometer reading at the start and the end of the trip and the business purpose of the trip. A contemporaneous record is essential.

If you are considering this, go to the IRS website and get some of their Publications on business expenses, home office expenses, etc. They are not that difficult to read and understand. Unlike the IRS tax forms and instructions, their Publications are usually short and to the point, with lots of examples. You need to have an understanding of it even if you use a tax professional.

I highly recommend using a person who does taxes full time, not just one of the seasonal temps that so many "tax services" use. You may only need them once a year, but it is better to develop a relationship with someone who will understand your business operation.

[retailguy]

Patler -

well said.

Partial, you can do this if you really want to. But don't kid yourself, you will pay taxes. You'll have valid expenses, but you'll run into a lot of people who'll offer you advice, and that advice will probably be wrong.

Many people think that self employed workers get "all the benefits", but they come at a cost. documentation is one, time is another, and increased scrutiny from the IRS is a third.

Don't use anything except a trusted tax professional or the IRS to get advice from, and Patler is right. If you spend some time on the IRS website, you'll find the ruling you need.

Biggest issues that I see for you right now, is, lack of benefits. Insurance is important, but you're young and can afford private high deductible policies with an HSA. 401k match hurts, as well as no retirement plan. no paid vacation or sick time when you work on a 1099 either.

Also, you are gaining experience working for someone else, without the "resume" benefit. If later, you decide to go to work for someone else, they won't value your "independent contractor" work in the same way as if you were on the payroll. that's not a decision not to work on a 1099, but be prepared to "start at the bottom" if you switch to a w-2 based job in a few years.

Even with all my experience, having "self employment" lines on a resume was another thing to overcome. I did it, and do quite well, but in no way was my experience as valued as it should have been.

[GrnBay007]

Biggest issues that I see for you right now, is, lack of benefits. Insurance is important, but you're young and can afford private high deductible policies with an HSA. 401k match hurts, as well as no retirement plan. no paid vacation or sick time when you work on a 1099 either.

Just curious. I've been at the same job a long time so not so sure what's out there anymore in terms of benefits. Do many jobs even offer a retirement plan anymore?

[Patler]

Biggest issues that I see for you right now, is, lack of benefits. Insurance is important, but you're young and can afford private high deductible policies with an HSA. 401k match hurts, as well as no retirement plan. no paid vacation or sick time when you work on a 1099 either.

Just curious. I've been at the same job a long time so not so sure what's out there anymore in terms of benefits. Do many jobs even offer a retirement plan anymore?

There are fewer and fewer with the conventional old retirement plans that old guys like me think of. It seems most now use some sort of transferable plan, like a 401k or the like, with some combination of fixed contributions, matching contributions and/or profit sharing contributions paid into it by the employer. Eligibility periods and vesting periods are much lower than old type retirement plans had, but most have direct employee contributions making up a large portion of it and that always goes with you.

[Partial]

I'm not looking to cheat the IRS or see the big benefits. That's why I asked, as it seemed pretty similiar to regular employment when all was said and done. Since I'm in a big apartment and only have a bedroom, I can't deduct it.


The point is if I can get him to go up in income, it will be a pretty good opportunity. It's going to be for one legit company, and in all likelyhood, the 1099 payment would only be for the first few months while everything gets set up. I'd be employee two. The guy running things has run successful businesses in the past, though, so I trust that we'd at the very least have jobs for 6 months.

Unless there is a lot more cash, the job isn't at all appealing since you don't really have any protection if you get laid off, etc. However, like I said, if I can 40-45 dollars an hour, thats 80-90k. That's about 20 thousand more than I could see any w-2 job matching, and even with health insurance and the extra 7.5 % in taxes, it is like a nice chunk of money more, which will go a long way towards establishing a nest egg.

[Patler]

I'm not looking to cheat the IRS or see the big benefits. That's why I asked, as it seemed pretty similiar to regular employment when all was said and done. Since I'm in a big apartment and only have a bedroom, I can't deduct it.


The point is if I can get him to go up in income, it will be a pretty good opportunity. It's going to be for one legit company, and in all likelyhood, the 1099 payment would only be for the first few months while everything gets set up. I'd be employee two. The guy running things has run successful businesses in the past, though, so I trust that we'd at the very least have jobs for 6 months.

Unless there is a lot more cash, the job isn't at all appealing since you don't really have any protection if you get laid off, etc. However, like I said, if I can 40-45 dollars an hour, thats 80-90k. That's about 20 thousand more than I could see any w-2 job matching, and even with health insurance and the extra 7.5 % in taxes, it is like a nice chunk of money more, which will go a long way towards establishing a nest egg.

There is another issue that comes up, and that is whether the job even meets the definition for an independent contractor. There is a list of something like 11 criteria that must be met. The biggest and simplest one that many 1099ers don't meet is independent control over their work time (when they work) and projects (what they work on that day). Companies used to hire rafts of people as independent contractors, but specified their work schedules, told them where to work, what to work on, etc. just like with an employee. The IRS considers many of those to be employees, even if they are paid on 1099s.

Again, you can get the definition from the IRS website, and decide if the job will really meet the definition or not.

[retailguy]

I'm not looking to cheat the IRS or see the big benefits. That's why I asked, .

sorry partial, I owe you an apology. I see/hear words like "loophole", and then read things like "it's a business meal, b/c we talk about biz", it hits my "hot" button. that's my issue, not yours, and I apologize.

Working with those clients who thought they were smarter than the IRS, and that their "interpretation" had validity just because they thought of it was frustrating. While those clients were lucrative for me, because the IRS had their nuts in a vise (usually), they were a pain in the ass to deal with.

Partial, just be careful in what you ask for, if you make the hourly rate too high, it would be cheaper for them to hire you. The reality is, it isn't that expensive to hire someone, it gets expensive with the benefits, etc. He's probably not going to "save" as much as he thinks. If he doesn't want to pay state unemployment, or file the appropriate paperwork, then what else doesn't he want to do legitimately?

My worry is that this guy is just trying to save a few $'s at your expense. When you sit down with him, ask him what he "thinks" he's saving by not hiring you as an employee. The answer to that question will give you an idea of what the goal really is. If there is a legitimate reason, then when you both put your concerns on the table you'll work it out.

Otherwise, you bear the risk, and if it doesn't work, you have no unemployment benefits to fall back on, or, if his relationship with you is improper, then you've got to fight the unemployment folks to get benefits. It isn't a good place to be in especially if your only motivation is a few extra bucks.

Improper 1099 worker relationships happen all the time, and Patler has given you the basic tests. He probably doesn't qualify, but even then it is still done all the time. If it is short term, and in conjunction with a new business, it may escape scrutiny, however, know the rules to protect yourself.

[Bretsky]

could take the job while spending all your spare time looking for a better job

Long term............not a good gig IMO

[Partial]

He shot down my updated figures. Probably not going to go that route as it doesn't seem to be financially beneficial.

[GrnBay007]

He shot down my updated figures. Probably not going to go that route as it doesn't seem to be financially beneficial.

Are you completely done with school now?