Author Topic: Contractors/Partners and the IRS  (Read 1601 times)

Pooperman

  • Magnum Stache
  • ******
  • Posts: 2880
  • Age: 34
  • Location: North Carolina
Contractors/Partners and the IRS
« on: December 25, 2016, 06:39:36 AM »
I work with a few people on artistic projects that make a little side cash. Due to the way the money has to be received, I am the one whose bank account it goes to and then it gets distributed to the others from there. What forms do I need to submit to the IRS to make sure the money I've passed along to the others isn't taxed for me but instead for them? I know I need to send them 1099s, but what do I send to the IRS? I've obviously never done this before.

SeattleCPA

  • Handlebar Stache
  • *****
  • Posts: 2369
  • Age: 64
  • Location: Redmond, WA
    • Evergreen Small Business
Re: Contractors/Partners and the IRS
« Reply #1 on: December 26, 2016, 08:21:51 AM »
You need to send them 1099s if they're independent contractors.

If they're really employees, you'd need to send them W-2s (and have done all the payroll accounting right).

Here's a link to the IRS page with more info:

https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee

P.S. Treating them as partners in a partnership is another trick to avoid treating someone like an employee sometimes... But some of this stuff gets to be a little like the trick of not buckling up your seatbelt when you get into a car so you can "save time"... I think you ought to follow the rules... and then complain to your elected representatives if the rules suck.

Pooperman

  • Magnum Stache
  • ******
  • Posts: 2880
  • Age: 34
  • Location: North Carolina
Re: Contractors/Partners and the IRS
« Reply #2 on: December 26, 2016, 09:11:32 AM »
You need to send them 1099s if they're independent contractors.

If they're really employees, you'd need to send them W-2s (and have done all the payroll accounting right).

Here's a link to the IRS page with more info:

https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee

P.S. Treating them as partners in a partnership is another trick to avoid treating someone like an employee sometimes... But some of this stuff gets to be a little like the trick of not buckling up your seatbelt when you get into a car so you can "save time"... I think you ought to follow the rules... and then complain to your elected representatives if the rules suck.

It's definitely a 1099 situation. I'm just wondering wat I send to the IRS to let them know I've passed the taxable income along to someone else.

sokoloff

  • Handlebar Stache
  • *****
  • Posts: 1191
Re: Contractors/Partners and the IRS
« Reply #3 on: December 26, 2016, 04:27:42 PM »
You file a 1099-MISC with the IRS and send a copy to contractor you paid.

I think it's optional if the amount is less than $600 per year.

You then take a deduction on schedule C as an expense against your income on schedule C, line 11 (Contract Labor).
« Last Edit: December 26, 2016, 04:29:54 PM by sokoloff »

Pooperman

  • Magnum Stache
  • ******
  • Posts: 2880
  • Age: 34
  • Location: North Carolina
Re: Contractors/Partners and the IRS
« Reply #4 on: December 26, 2016, 05:30:35 PM »
You file a 1099-MISC with the IRS and send a copy to contractor you paid.

I think it's optional if the amount is less than $600 per year.

You then take a deduction on schedule C as an expense against your income on schedule C, line 11 (Contract Labor).

Awesome, thanks! I understand now :).