Re: Agencies & Self-empl tax

Subject: Re: Agencies & Self-empl tax
From: David Demyan <concord -at- IX -dot- NETCOM -dot- COM>
Date: Tue, 2 May 1995 11:01:48 -0700

Ron Miller wrote, discussing the withholding of taxes from contract technical
writers salaries:

>It depends on the agency. With some you work W2 and the agency treats you as
>though you were a regular employee. Many, however, provide a 1099 at the end
>of the year, and you are responsible for all taxes.

WARNING: 1099 REPORTING IS DANGEROUS AND SHOULD BE AVOIDED FOR CONTRACT
TECHNICAL WORKERS!

In the late 1980's, the tax code was revised to make 1099 reporting of income
for contract technical workers more difficult to justify. Seems some
enterprising
souls were getting paid without taxes withheld (1099), then just somehow forgot
to treat this as self-employed income and did not pay their fair share of taxes.

Congress cracked down on this perceived loophole by requiring contract workers
who wanted income treated this way to be true consultants; they had to answer
satisfactorily 20 questions about their work status that would prove
they were truly independent. For most contract technical writing assignments,
I believe it would be impossible to get favorable treatment.

IMHO, the only safe way (to avoid an audit) is to use W2 withholding with a
reputable contract firm that properly withholds and pays your taxes.

Dave Demyan *** Mendem Concord, Inc.
(908) 753-8500 *** One Mountain Blvd.
concord -at- ix -dot- netcom -dot- com *** Warren, NJ 07059
FAX: (908) 754-8224


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