Would I have to take taxes out? I heard that I can even have my 4yr daughter work. How does this work? I really don't want to get into the taking of taxes out of their money but I know it'sa write off to be able to have them to paint or do some lawn cutting but I don't want to get into any tax problems. What do you guys do it?
It is not your responsibility to take out taxes for them unless you are trying to hire your own children and pay them. Then, you have employment taxes, FICA, etc. to deal with. It is the responsibility of these type of contractors to report their earnings to the IRS - dependent on their personal situation. Why don't you create an invoice and pay for the work? If you are audited, present the invoice and let the IRS worry about finding them....
they invoice you weekly/daily/whatever (even if you have to type it up and supply it to them and have them just fill in the dates/times, etc) and you pay them with a check. this is then a deduction on your tax return as they are subcontractors. if you pay them more than $600 you issue a 1099 at year end.
the IRS site should help you steer clear of having them declared employees but for mowing & some odd painting or clean up you should have no problems.
I think you have been given some advice here on how to take the deduction, however I see something I would put above the tax implications.
It is called Workmens Compensation, meaning if one of these folks gets hurt on the job, then you best have insurance to cover this. Your tax implications will be minor compared to what happens if you hire someone and they or you do not have workmens comp and they are injured on your job.
Just one more darn thing to think about when hiring someone. In todays world what happens to the young person who cuts lawns in the neighborhood only to find out if he should get hurt he can sue the person whose lawn he is cutting.
why can't they write an invoice?
Invoice
due on receipt
10 hrs mm/dd/yy
5 hrs mm/dd2/yy
At $10/hr, total due is $150.
Thank you,
Your pleb
You do have to look out for employment tax, state and fed as well as liability and workers comp (maybe in your state)
How do you pay them? Carefully.
Lots of employment law issues. In particular if they are under 16. Also watch out that they are not doing something considered a dangerous.
You have some of the same issues if you higher someone 18 or older to do work for you. Employment law and withholding tax. Work site safety, etc.
John
[addsig]
Would I have to take taxes out? I heard that I can even have my 4yr daughter work. How does this work? I really don't want to get into the taking of taxes out of their money but I know it'sa write off to be able to have them to paint or do some lawn cutting but I don't want to get into any tax problems. What do you guys do it?
quinn
It is not your responsibility to take out taxes for them unless you are trying to hire your own children and pay them. Then, you have employment taxes, FICA, etc. to deal with. It is the responsibility of these type of contractors to report their earnings to the IRS - dependent on their personal situation. Why don't you create an invoice and pay for the work? If you are audited, present the invoice and let the IRS worry about finding them....
they invoice you weekly/daily/whatever (even if you have to type it up and supply it to them and have them just fill in the dates/times, etc) and you pay them with a check. this is then a deduction on your tax return as they are subcontractors. if you pay them more than $600 you issue a 1099 at year end.
the IRS site should help you steer clear of having them declared employees but for mowing & some odd painting or clean up you should have no problems.
quinn,
I think you have been given some advice here on how to take the deduction, however I see something I would put above the tax implications.
It is called Workmens Compensation, meaning if one of these folks gets hurt on the job, then you best have insurance to cover this. Your tax implications will be minor compared to what happens if you hire someone and they or you do not have workmens comp and they are injured on your job.
Just one more darn thing to think about when hiring someone. In todays world what happens to the young person who cuts lawns in the neighborhood only to find out if he should get hurt he can sue the person whose lawn he is cutting.
John $Cash$ Locke