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QUESTION: Hello-

My boyfriend received a 1099MISC for helping out with my uncle's tree business as a groundman 1-2 times a week. His regular job is a bartender at a restaurant 4-5 days a week.

My boyfriend drives from our house to my uncles house, where he picks up my uncle's truck to take to the job sites (because him and the guy who climbs and trims the trees need the truck and trailer for all of the tools, clean up, etc.)

My uncle, a teacher during the day, then drives my boyfriends car to and from his school each day. My boyfriend picks up his car at the end of the day when he drops the truck off.


My question is, being an independent contractor, is it possible to claim ANY of this mileage, since his car is being driven to pick up another vehicle and my uncle is driving his car during the day?

Also, does he have to claim the 1099 as working as an independent contractor? Or can we say that it is not related to his normal line of work? I believe that he doesn't fall under the independent contractor rules (he is told when to show up, is paid a flat rate per day, doesn't use his own supplies or gear, he is not paid by the person getting tree work done- the check is written to my uncle and then my uncle pays him,etc.), but do not want to start problems with the family. The self employment tax with hardly any possible "independent contractor" deductions, since he doesn't incur many of his own expenses have really hurt us!

ANSWER: Jessica:

Your instincts are correct.  He is NOT an independent contractor.  He may NOT deduct mileage for driving to work at the uncles place of business.

In every respect he is an EMPLOYEE of your uncle.  The reason your uncle is not reporting him as an employee he does not want to file the necessary tax form and pay his fair share of the REQUIRED taxes.

With the new filing requirement the IRS is slowly eliminating this pocket of scoff law business.  Your boyfriend is in a delima should he correctly file the proper paper work with the IRS to change the 1099 to a W-2 so he can report the earnings or will he put this information on a schedule C so he can report the income as an independent contractor.  If in the future the IRS catches the error.  If the catch the error after the schedule C is filed it not longer is an error it is an intentional act to avoid reporting his wages.

As a tax professional I would refuse to file this return any other way than as W-2 wages.

John

---------- FOLLOW-UP ----------

QUESTION: Thank you!

We plan on talking to him. If we WERE to file the 1099MISC on a schedule C, with no deductions, do WE risk personally getting in trouble?

Answer
Jessica:

Yes, your boyfriend could get into trouble.  It only depends if the IRS either audits your boyfriends return or your uncle's return.

You do realize that your boyfriends must file his own return and you must file your own return.  You can not file a joint return and neither can be head of household.

John

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John L. Tidwell

Expertise

Unemployment tax law both state and federal; determination of employer employee relationship; the usual 20 commonlaw factors for making that determination; and what makes me a liable employer.

Experience

Over 20 years of field audit experience with a state agency

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none

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Education/Credentials
Degree in Accounting from Falls Business College

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