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Posted by on October 19, 2006, 4:21 pm
I'm having a major renovation done and am contracting it out myself.
Are the subs more or less on the honor system to report the income
derived from my project or should I report via 1099-misc or some other
form.? If that's a possibility and I decide to do so, will they all
run away, far away.
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Posted by clintonG on October 19, 2006, 5:38 pm
You give a 1099 form to each sub-contractor, pay them, record what you paid
them and they are responsible for paying their own taxes.
Be aware however that the IRS has a test of 20 items to determine if the
subs are really independent or not and can make you pay it all anyway plus
penalties. You should contact an IRS office and ask them which form
documents the procedure to follow.
<%= Clinton Gallagher
NET csgallagher AT metromilwaukee.com
URL http://clintongallagher.metromilwaukee.com/
MAP 43°2'17"N 88°2'37"W : 43°2'17"N 88°2'37"W
> I'm having a major renovation done and am contracting it out myself.
>
> Are the subs more or less on the honor system to report the income
> derived from my project or should I report via 1099-misc or some other
> form.? If that's a possibility and I decide to do so, will they all
> run away, far away.
>
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Posted by SteveF on October 20, 2006, 7:32 pm
> You give a 1099 form to each sub-contractor, pay them, record what you
> paid them and they are responsible for paying their own taxes.
>
> Be aware however that the IRS has a test of 20 items to determine if the
> subs are really independent or not and can make you pay it all anyway plus
> penalties. You should contact an IRS office and ask them which form
> documents the procedure to follow.
>
The IRS issue of employees versus contractors came about because of people
like me who used to have my own software development corporation. My
projects were sometimes very long term, 2 1/2 years in one case. I worked
at the customer's offices, according to their hours, needed their permission
to take time off, used their equipment, worked as directed by their
management. Not really any different from an employee except no benefits
and easier to cut loose when the work load eased up.
Someone being GC for one project will be lucky if their contractors return
their phone calls, show up when expected and get the job done is a timely
manner. Definitely won't be any confusion with the IRS.
Steve.
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Posted by Fran Bragg on October 19, 2006, 5:45 pm
> I'm having a major renovation done and am contracting it out myself.
>
> Are the subs more or less on the honor system to report the income
> derived from my project or should I report via 1099-misc or some other
> form.? If that's a possibility and I decide to do so, will they all
> run away, far away.
If the subs are incorporated, you are under no obligation to 1099 them. If
they are not, then technically you should issue a 1099. Whether or not you
inform them of this at the start of the project is up to you.
Fran
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Posted by Kickstart on October 19, 2006, 7:28 pm
> If the subs are incorporated, you are under no obligation to 1099 them.
> If they are not, then technically you should issue a 1099. Whether or
> not you inform them of this at the start of the project is up to you.
>
> Fran
>
how do you do that without the proper paperwork ?
And what if they get hurt on the job while you are paying them ? they can
claim to be employees.
Collect on your insurance, sue you for workers comp and you may have to
finish building a home for them to live in.
Maybe there's more to this contractor shit than you think
kickstart
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