Is this Situation 1099 or W-2?

Discussion in 'Senior Insurance Forum' started by somarco, Aug 8, 2017.

  1. chasejordan1
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    chasejordan1 Well-Known Member

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    What state? If CA then 100% W-2. It is really based on the state because the state is the only one that will audit them. It is 1099 till the "employee" complains to someone or the employer gets caught.
     
  2. Bevo
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    Bevo Well-Known Member

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    In this case it's W-2 all day long until the cows come home. But at this point the GA has already taken that much from them, why stop now and pay part of their taxes for them?

    And there are probably too many agencies out here doing that to even count.
     
  3. adjusterjack
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    adjusterjack Well-Known Member

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    Last edited: Aug 8, 2017
  4. VolAgent
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    VolAgent Well-Known Member

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    Yep.

    Although it always doesn't go well for the 1099 either. I don't know if they ever backed down on this, but at one time the IRS would also send all the new W-2 employees a tax bill. They would go back and disallow all those Schedule C deductions since they were no longer sole-proprietors, but W-2 employees. If they had made any money, it generally caused a large tax bill.
     
  5. somarco
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    somarco Well-Known Member

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    DOL audits are increasing and many times it is the DOL that will uncover and address the issue.

    The Other Audits for Employers - Barbara Weltman

    https://www.datamaticsinc.com/the-l...mployee-misclassification-by-the-irs-and-dol/

    And yes, Kirby is right on the possible tax audit of the former 1099 employee. Should get a refund on SE taxes but could owe more income taxes once the business write offs are denied.

    I had a client several years ago that was trying to qualify for a DI policy. Gross income just shy of $300k. Net after business expenses $20k.

    He drove a bread truck for a local bakery, delivering to grocery and convenience stores. Actually BOUGHT the bread at wholesale then marked up and sold to stores. Packages were pre-priced for retail. His truck. His gas. His maintenance. His inventory.

    I don't know why he didn't get a regular job. Required him to get up at oh-dark-thirty and deliver. Back home in time to take the kids to school.
     
  6. xrac
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    xrac Well-Known Member

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    My thought is because of the industry they can get away with calling it a 1099 if they so chooose.
     
    Last edited: Aug 9, 2017
  7. roygbiv
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    roygbiv Member

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    IRS code outlines a list of questions that would determine a W-2 agent. That said, if you signed a contract with the GA, it's possible that you are a 1099. Read the contract. If no contract, then follow the IRS questions to determine your W-2. I know some GA's have solicitors working in their office. As a Solicitor, you're still a 1099 but all your commissions and any renewals are assigned to the GA.
     
  8. VolAgent
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    VolAgent Well-Known Member

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    Contract does not trump law. In every situation I am aware of, there was a contract stating the people were 1099. However the DOL and IRS ruled otherwise and that is what matters.

    Many contracts literally are not worth the paper they are written on. But they do scare people and stop a lot of lawsuits.
     
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