Section 530

Forum|Forum|6 years ago
May 2, 2020
7 replies
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A friend and I have a conflict in answers and wonder if anyone would share their thoughts...

A taxpayer says they are a Statutory Employee paid by form 1099 MISC and they pay FICA taxes on form 4137 and they have never requested an SS8 (Taxpayer "traveling sales")

What is your thought on how to report 1099 income and SECA and FICA Taxes?

Hope this is enough information and Thanks in advance.

ProSeries Professional

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IRonMaN

Level 15

But if they really are a statutory employee, their earnings would be reported on a W-2, not a 1099.

Form 4137 is for tips - I assume the taxpayer isn't just working for tips. 😕😕

Slava Ukraini!

T

TaxGuyBill

Level 15

Possibility #1: They are Self Employed. Report on Schedule C. This is how the business that is paying him is treating him.

Possibility #2: He is a Statutory Employee. A SS-8 should be filed, and he pays FICA on Form 8919. Schedule C would report any expenses. But "traveling sales" doesn't necessarily mean he is a Statutory Employee. And DON'T let the client TELL you that he is. If you think the 1099-MISC is wrong, then YOU need to make that determination.

Possibility #3: He is a 'regular' employee. A SS-8 should be filed, and he pays FICA on Form 8919.

https://www.irs.gov/businesses/small-businesses-self-employed/statutory-employees

Form 4137 is absolutely wrong.

BobKamman

Level 15

Many people cheat on their taxes, and not all of them are caught. When he's in a car accident on his way to call on a customer and is paralyzed for life, he'll wish he had workers compensation. If he makes it to the customer and catches a virus while there, he'll wish he had employer health insurance.

qbteachmt

Level 15

"A taxpayer says they are a Statutory Employee paid by form 1099 MISC and they pay FICA taxes on form 4137 and they have never requested an SS8 (Taxpayer "traveling sales")"

Clearly bad guidance.

"What is your thought on how to report 1099 income and SECA and FICA Taxes?"

They would not pay Both, though.

You didn't explain what they sell, how they sell, etc.

https://www.investopedia.com/terms/s/statutory-employee.asp

And the qualification statements are here:

https://www.irs.gov/businesses/small-businesses-self-employed/statutory-employees

And here's a 2012 ruling:

"Eighth Circuit holds that independent sales representative is contractor despite 27 year engagement with company"

https://www.lexology.com/library/detail.aspx?g=8d39326e-6a7d-4e9a-9c40-dc42647e4410

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