The Swamp

So my work gave everybody a form to sign to switch from W2 employees to 1099 contractors. Now obviously I know why they are doing it, how shady and probably not all that legal it is, yada yada. I just want to be informed when I decide what I'm going to do here.

If anyone is familiar with the changes:

- How difficult are my taxes going to be?

- They are going to pay me my current salary AFTER TAX, and told me I can "write off miles and meals and etc..." and it should leave me with no tax liability. I don't believe it. Contract will 1099 me for 2 months, so I'll exceed the $5000 in deductables from the EZ form. Is this somewhat realistic or as crazy and tax-fraudulent as it sounds?

- They'll pay health insurance. From the contract: "current health insurance benefits will be paid in full at the first of each month". I don't know if that means they'll continue to pay them or pay that money to me and I'm responsible for it now.

- What are the consequences? Clearly they want to do this to be able to fire people more easily. But it might be worthwhile for me to sign it and take one lump sum rather than go on shitty Florida unemployment.

All advice is appreciated. It's either sign it or don't and dare them to lay me off (not sure if they would or wouldn't).

Super bad for your personal taxes - you have to take out now for full measure of Social Security. Are they gonna pay you more to make up the difference? Otherwise, this is a decided pay cut.

Definitely need to talk to a local tax expert, or HDO, about the ramifications.

This sounds fraudulent as hell. If they tell you when and where to work, you're an employee.

To expand on what TB said, if you're a 1099 employee, you have to pay a 15.3% self-employment tax - in addition to your regular income tax. The self-employment tax replaces the Social Security/Medicare taxes you and your employer each paid on on your wages.

Fuck Ronald Reagan and the whole Republican ethos.

You should unionize.

Talk to AB about a job with his firm. Coal is king again, baby!

govmentchedda wrote: ↑Fri Feb 02, 2018 11:53 am Definitely need to talk to a local tax expert, or HDO, about the ramifications.

I messaged HDO but doesn't look like he's around much these days

Steve of phpBB wrote: ↑Fri Feb 02, 2018 11:56 am This sounds fraudulent as hell. If they tell you when and where to work, you're an employee.

To expand on what TB said, if you're a 1099 employee, you have to pay a 15.3% self-employment tax - in addition to your regular income tax. The self-employment tax replaces the Social Security/Medicare taxes you and your employer each paid on on your wages.

Fuck Ronald Reagan and the whole Republican ethos.

I'm considering actually acting like an independent contractor if I sign it but also considering not signing it out of principle.

Gunpowder wrote: ↑Fri Feb 02, 2018 12:01 pm

Steve of phpBB wrote: ↑Fri Feb 02, 2018 11:56 am This sounds fraudulent as hell. If they tell you when and where to work, you're an employee.

To expand on what TB said, if you're a 1099 employee, you have to pay a 15.3% self-employment tax - in addition to your regular income tax. The self-employment tax replaces the Social Security/Medicare taxes you and your employer each paid on on your wages.

Fuck Ronald Reagan and the whole Republican ethos.

I'm considering actually acting like an independent contractor if I sign it but also considering not signing it out of principle.

Whether you sign it or not, you should lay low for a while and then talk to a lawyer about filing a whistleblower ("qui tam") claim

My wife had to go through this when we moved to CO in 2013. Full disclosure I use an accountant to file our taxes b/c I'm always paranoid about forgetting or missing something. It costs me $150-$250 but it's worth the peace of mind to me.

To answer your first question about taxes its not much more difficult when it comes to completing/filing...there is one or two additional forms, depending on if you itemize your deductions (which you will probably want to consider). There are broader issues that you will probably want to take into account, though. You pointed out the first one already...that this is basically shady AF.

You will have to make quarterly estimated payments to the IRS throughout the year since you no longer have your employer sending in the withholdings from your paycheck. You will also be responsible for paying what used to be the employer share of Social Security and Medicare...so instead of the 7.65% that comes out of your paycheck now you're on the hook for the full 15.3%...this is in addition to your regular income tax.

If I am understanding you correctly, the 1099 pay they will be giving you is equal to what your current take-home pay is? If so, that is a blatant ripoff. My wife's company pays here a higher hourly rate than she got as a W-2 employee since they are no longer paying their share of her FICA tax, benefits, etc. I doubt you can get your tax liability to zero but i guess it depends on what you can write off as expenses. We deduct home office expenses...the actual square footage of our home office space plus internet, cell phone costs, etc.

As far as the health insurance, I'm not sure how they're pulling that off. If they have their own group plan that you are currently a part of I don't see how they can keep that but still claim you are not a W-2 employee. Setting that aside, I would assume that you are responsible to pay whatever the total premium is and they will be reimbursing you.

Feel free to PM me if you want to get into more specifics.

I imagine the ramifications of not signing will depend completely on what percentage of the workforce refuses and very little on how much they like you.

Gunpowder wrote: ↑Fri Feb 02, 2018 12:00 pm

govmentchedda wrote: ↑Fri Feb 02, 2018 11:53 am Definitely need to talk to a local tax expert, or HDO, about the ramifications.

I messaged HDO but doesn't look like he's around much these days

He pops in. I saw him last weekend. Want me to shoot him a text and ask him to answer you?

GoodKarma wrote: ↑Fri Feb 02, 2018 12:06 pm ... Setting that aside, I would assume that you are responsible to pay whatever the total premium is and they will be reimbursing you. ...

If you pay the premium and then get reimbursed by someone you are contracting with as a 1099er, isn't the reimbursement treated as income? (We've dealt with issues like that at my firm.)

Steve of phpBB wrote: ↑Fri Feb 02, 2018 12:12 pm

GoodKarma wrote: ↑Fri Feb 02, 2018 12:06 pm ... Setting that aside, I would assume that you are responsible to pay whatever the total premium is and they will be reimbursing you. ...

If you pay the premium and then get reimbursed by someone you are contracting with as a 1099er, isn't the reimbursement treated as income? (We've dealt with issues like that at my firm.)

It most definitely is...although depending on the situation, the cost of the premium could be deducted so in theory it could be a wash.

Write off as much as possible. Anything that could even be considered for work use. Self-employment tax bends you over.

From the contract: "current health insurance benefits will be paid in full at the first of each month". I don't know if that means they'll continue to pay them or pay that money to me and I'm responsible for it now.

If they are just giving you money and telling you to find your own plan, you will undoubtedly pay more and get less. Especially if you care a lot about keeping your same doctor(s). I ran into this when my Cobra ran out from my former job and I had to go find my own insurance. It sucks donkey balls.

sancarlos wrote: ↑Fri Feb 02, 2018 12:38 pm

From the contract: "current health insurance benefits will be paid in full at the first of each month". I don't know if that means they'll continue to pay them or pay that money to me and I'm responsible for it now.

If they are just giving you money and telling you to find your own plan, you will undoubtedly pay more and get less. Especially if you care a lot about keeping your same doctor(s). I ran into this when my Cobra ran out from my former job and I had to go find my own insurance. It sucks donkey balls.

I'm not actually sure what they are doing. It would obviously need to be clarified.

BSF21 wrote: ↑Fri Feb 02, 2018 12:11 pm

Gunpowder wrote: ↑Fri Feb 02, 2018 12:00 pm

govmentchedda wrote: ↑Fri Feb 02, 2018 11:53 am Definitely need to talk to a local tax expert, or HDO, about the ramifications.

I messaged HDO but doesn't look like he's around much these days

He pops in. I saw him last weekend. Want me to shoot him a text and ask him to answer you?

Would appreciate it.

sancarlos wrote: ↑Fri Feb 02, 2018 12:38 pmI ran into this when my Cobra ran out from my former job and I had to go find my own insurance. It sucks donkey balls.

SC, just curious, when was that? Was that after the exchanges kicked in? It seems to me that the differences between employer-furnished insurance and insurance on the individual market are not that significant anymore. But that could just reflect my geographical area.

P.D.X. wrote: ↑Fri Feb 02, 2018 12:34 pm Write off as much as possible. Anything that could even be considered for work use. Self-employment tax bends you over.

That's my question, basically - those that do work at home, how much are you able to write off? If it gets the taxes minimized, I'd consider it.

My main reason for not signing it wouldn't be all this (though it would obviously weigh into the decision), but to not enable employers to continue to do shady shit like this. Even though in our case it was brought on by financial issues, not somebody jerking off to Ayn Rand posters. If we closed up within the next few months I wouldn't be surprised.

Steve of phpBB wrote: ↑Fri Feb 02, 2018 12:54 pm

sancarlos wrote: ↑Fri Feb 02, 2018 12:38 pmI ran into this when my Cobra ran out from my former job and I had to go find my own insurance. It sucks donkey balls.

SC, just curious, when was that? Was that after the exchanges kicked in? It seems to me that the differences between employer-furnished insurance and insurance on the individual market are not that significant anymore. But that could just reflect my geographical area.

My Cobra ran out in November, 2017. So, I went with the exchange (Covered California) for the month of December last year, and it was two hundred dollars more through the exchange for the month, for slightly lesser coverage (Healthnet's "Silver" package). But, then I had to go into open enrollment for 2018 and it got a lot worse. Because our doctors' medical clinic opted out of Covered California. And, my wife was insistent that she keep her same doctors. And they only accept company plans, with one exception. Which means that we have to contract directly through their sole insurance option (Healthnet). So now we pay one hundred per month more per month than we did on Cobra, for their "Bronze" package, which is decidedly worse - really just major medical - meaning I pay everything out of pocket, until we get up to substantial deductibles. (By choosing the lesser package, I pay lower monthly premiums and am effectively making a bet that we will stay relatively healthy - but in any case it will be a lot more than I used to pay).

Sounds like you should take advantage of your newfound freedom to set your own work schedule and start interviewing.

Here are the bills/costs we deduct:

cell phone
internet
transportation (car mileage, etc)
utilities - electric, gas, etc. - as a % based on the home office calculation below
home office space - this works as a % of your total living space square footage. My house is 2600 sq ft; my wife's office 130 sq ft so we can deduct 5% of our housing cost.

Basically, you can deduct anything you can tie to a work-related expense. Should you deduct your groceries for lunch you make at home? Probably not. But if you're traveling for work and eat dinner at the hotel then that is probably a different story.*

*I'm not a tax accountant or attorney so I'm not authorized to give any sort of tax advice

Rex wrote: ↑Fri Feb 02, 2018 1:14 pm Sounds like you should take advantage of your newfound freedom to set your own work schedule and start interviewing.

Ha ha. Yeah. I could go into a long story about it to explain my unique situation. I'm probably retired now. And, that's fine.

You can write off whatever you want. Just a matter of your audit risk appetite. Just look up "business expense" in Google. From my experience it's mostly all deductible, just that some of the documentation requirements are onerous. And you only get 50% of food and liquor. Practically the trick is to write off as much of your personal expenses (phone internet etc) as you can so you come out ahead.

Just spoke with HDO. I'm definitely not signing this at this rate but if they want to pay me more, I'll think about it.

The way I work now they can argue that I am an independent contractor and it might fly. The other guys, not a chance but I don't know if that all applies if you sign it away.

HaulCitgo wrote: ↑Fri Feb 02, 2018 1:20 pm You can write off whatever you want. Just a matter of your audit risk appetite. Just look up "business expense" in Google. From my experience it's mostly all deductible, just that some of the documentation requirements are onerous. And you only get 50% of food and liquor. Practically the trick is to write off as much of your personal expenses (phone internet etc) as you can so you come out ahead.

Yeah, I decided that it's not worth the risk and the work to possibly commit tax fraud just to at best break even.

Don't try to write off a portion of your rent/mortgage for a home office. I've been told that is a huge red flag for an audit.

I've done it in the past when I was a full-time at home worker but we actually had the dedicated office space. And because the condo itself was so small, that ended up being like a 15% write-off of all utility costs.

(Just reread. I didn't mess with writing off mortgage principal and interest was already in there.)

Gunpowder wrote: ↑Fri Feb 02, 2018 1:21 pm Just spoke with HDO. I'm definitely not signing this at this rate but if they want to pay me more, I'll think about it.

The way I work now they can argue that I am an independent contractor and it might fly. The other guys, not a chance but I don't know if that all applies if you sign it away.

The best part about talking to HDO on the phone is that you feel like not only do you not know a thing about taxes but also that you know nothing about anything. And I mean that in a good way. He sounds so WISE.

sancarlos wrote: ↑Fri Feb 02, 2018 1:12 pm

Steve of phpBB wrote: ↑Fri Feb 02, 2018 12:54 pm

sancarlos wrote: ↑Fri Feb 02, 2018 12:38 pmI ran into this when my Cobra ran out from my former job and I had to go find my own insurance. It sucks donkey balls.

SC, just curious, when was that? Was that after the exchanges kicked in? It seems to me that the differences between employer-furnished insurance and insurance on the individual market are not that significant anymore. But that could just reflect my geographical area.

My Cobra ran out in November, 2017. So, I went with the exchange (Covered California) for the month of December last year, and it was two hundred dollars more through the exchange for the month, for slightly lesser coverage (Healthnet's "Silver" package). But, then I had to go into open enrollment for 2018 and it got a lot worse. Because our doctors' medical clinic opted out of Covered California. And, my wife was insistent that she keep her same doctors. And they only accept company plans, with one exception. Which means that we have to contract directly through their sole insurance option (Healthnet). So now we pay one hundred per month more per month than we did on Cobra, for their "Bronze" package, which is decidedly worse - really just major medical - meaning I pay everything out of pocket, until we get up to substantial deductibles. (By choosing the lesser package, I pay lower monthly premiums and am effectively making a bet that we will stay relatively healthy - but in any case it will be a lot more than I used to pay).

Yeah, that seems to be the main drawback - with narrower networks, if you want to keep a certain doctor your options are limited.

That sucks.

P.D.X. wrote: ↑Fri Feb 02, 2018 12:34 pm Write off as much as possible. Anything that could even be considered for work use. Self-employment tax bends you over.

I'm self employed, and work out of my house.

That $3k front door we just installed sure seems like a write off.

A_B wrote: ↑Fri Feb 02, 2018 1:32 pm

Gunpowder wrote: ↑Fri Feb 02, 2018 1:21 pm Just spoke with HDO. I'm definitely not signing this at this rate but if they want to pay me more, I'll think about it.

The way I work now they can argue that I am an independent contractor and it might fly. The other guys, not a chance but I don't know if that all applies if you sign it away.

The best part about talking to HDO on the phone is that you feel like not only do you not know a thing about taxes but also that you know nothing about anything. And I mean that in a good way. He sounds so WISE.

Talked to him some years ago too. Wise man indeed.

sancarlos wrote: ↑Fri Feb 02, 2018 1:22 pm Don't try to write off a portion of your rent/mortgage for a home office. I've been told that is a huge red flag for an audit.

Every accountant I've talked too has been nervous about this. Basically I've been told not to unless you have a dedicated room (i.e., with a door) that can be shown to only be used for work purposes.

mister d wrote: ↑Fri Feb 02, 2018 1:26 pm I've done it in the past when I was a full-time at home worker but we actually had the dedicated office space. And because the condo itself was so small, that ended up being like a 15% write-off of all utility costs.

(Just reread. I didn't mess with writing off mortgage principal and interest was already in there.)

I actually do have a home office. I work from here 4 days a week and would do so 5 days a week if I sign that form.

If I'm 1099-ed, I can't collect unemployment if/when they close up shop, but here's what I'd be giving up:

In Florida, your weekly benefit amount is calculated by dividing your total earnings for the highest paid quarter of the base period by 26, up to a current maximum of $275 per week. You can receive benefits for anywhere between 12 to 23 weeks, depending on Florida's current unemployment rate.

That will really help people to get back on their feet.

A_B wrote: ↑Fri Feb 02, 2018 1:32 pm

Gunpowder wrote: ↑Fri Feb 02, 2018 1:21 pm Just spoke with HDO. I'm definitely not signing this at this rate but if they want to pay me more, I'll think about it.

The way I work now they can argue that I am an independent contractor and it might fly. The other guys, not a chance but I don't know if that all applies if you sign it away.

The best part about talking to HDO on the phone is that you feel like not only do you not know a thing about taxes but also that you know nothing about anything. And I mean that in a good way. He sounds so WISE.

It was actually just like talking with Doc Howard.

P.D.X. wrote: ↑Fri Feb 02, 2018 2:17 pm

sancarlos wrote: ↑Fri Feb 02, 2018 1:22 pm Don't try to write off a portion of your rent/mortgage for a home office. I've been told that is a huge red flag for an audit.

Every accountant I've talked too has been nervous about this. Basically I've been told not to unless you have a dedicated room (i.e., with a door) that can be shown to only be used for work purposes.

And even then you can pretty much only (successfully) write it off if you're a contractor, self-employed or similar.

I have a dedicated office space in my house because I work remotely, but I can't write off anything despite having a "home office".

Of course in GPJ's case, he should be able to (if he chooses to take the offer).

If you are interested, here a link to Dept of Labor's criteria for determining if you can be classified as a contractor:

https://www.dol.gov/whd/regs/compliance/whdfs13.htm

Unless they are changing the nature of your job responsibilities, I doubt they can correctly classify you as a contractor. If you do go that route and sign, you are not waiving your rights to bring a claim of misclassification, even if the agreement says you waive that right. You should also look into forming an LLC or Corp, and get paid through that entity. You will almost always have tax savings through an LLC or Corp., and it's a very minimal expense.

Fuck Kranepool, LLC is available.

bfj wrote: ↑Fri Feb 02, 2018 4:55 pm Fuck Kranepool, LLC is available.

That really would be a pretty awesome name to give to your employer for where you want your money sent. Really anything in that kind of vein would be awesome:

Definitely Not A Child Porn Business, LLC
Plutonium Importers, LLC
CIA Front, LLC