Re:From idea to replacing full-time salary in 4 months
by tptacek on Monday April 16, 2012 @09:27AM
(#3847229)
Both sides are probably happy because the cleaning workers probably aren't paying taxes at all.
If they were, they would be extremely unhappy with this arrangement, because 1099 employees pay both halves of FICA ("self-employment tax").
One possible way this pans out: eventually, he ends up with a worker who gets a notice of imputed liability from the IRS; that notice threatens to put the worker into bankruptcy, and so he calls an IRS help-line or his state labor board or an attorney. The IRS reclassifies all his employees and now threatens him with bankruptcy.
If they were, they would be extremely unhappy with this arrangement, because 1099 employees pay both halves of FICA ("self-employment tax").
One possible way this pans out: eventually, he ends up with a worker who gets a notice of imputed liability from the IRS; that notice threatens to put the worker into bankruptcy, and so he calls an IRS help-line or his state labor board or an attorney. The IRS reclassifies all his employees and now threatens him with bankruptcy.