contract 1099 v employee w-2?

Question

i thought that i had a "job" being "hired" by a lawyer. the other lawyers (not part of the firm but renting space in the office) were paying my "employer" for hrs of the wk I did work for them regardless of whether on not i did work those hrs for them. they need to be able to "expense" the cost. i think that i was an "employee" vs a "contract" however regardless of my tax situation (which does not look good) i want the other 2 lawyers to be able to decuct their costs

Answer 1

An employee is someone who performs services for another and is under the direction of the one they work for. This usually includes being told what work to do, how to do it, where to do it, and how much will be paid for it.

If you have control over price, you're independant. If you have a license, or if you have other clients doing the same work, you're a business.

The following examples indicate an employer/employee relationship:

1) Receiving oral or written instructions
2) Receiving oral or written reports on work's status
3) Having a continuous relationship, like a regular work schedual
4) No control over the place of work
5) No risk of profit or loss, no income fluctuations
6) Regular payment, eiher hourly, weekly, monthly, etc.
7) Specified hours of work, like from 8 to noon daily
8) No power to delegate work to others
9) Lack of independance to work for other firms or for the general public

Not all of them need to apply to you. If it sounds like you're an employee, you probably are. If your intent was to apply for work and depend on it for income, you're likely an employee. Even if you skipped the application and interview process, you can still be an employee simply because you never had an intent to start a business. The real decider, though, is how much control you have over your work.

If they're trying to pay you cash, and you're an employee, they're breaking the law and can be reprimanded by the Bar Association for tax evasion. They're responsible to pay social security, federal unemployment, state unemployment and workers' compensation.

How they decide about deductions for services is none of your business. If they paid you directly, they'll take the deductions regardless of what the others say or do. They'll either take it as labor or as property maintenance. If they didn't pay, they have no grounds for a deduction.

Answer 2

First, the easy one. The other two lawyers can deduct what they pay for your services because they are paying a third party for doing work. It is a regular business expense.

Harder to determine is whether you are contract or employee because you have given no information about what you do. Although it is much more complicated than this, one big test the IRS looks at is how much control the employer has over you and your work. Does he tell you what needs to be done and lets you determine how to best do it, or does he have control over how and when you work. I would say that his loaning you out to these other lawyers and accepting payment from them is pretty huge in favor of you being an employee, not contract. If you were contract, they would pay you directly.