Discussion:Schedule C owner leased employee
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Discussion Forum Index --> Tax Questions --> Schedule C owner leased employee
| 25 June 2008 | |
| Two new clients this week alone. Both are Schedule C clients. Self employed for tax purposes but they are on the "leased employees" payroll system. Payroll company is giving them weekly payroll checks for "wages" to meet requirements for worker's compensation. Told them both (not related companies) to take self off payroll....
Question....if Schedule C (first new client) gets W-2 wages and Sch C earnings for the last 3 years...they paid in enough and even more most likely for being an employee....any way to have leasing agency amend w-2's for wages that should not be wages in the first place? Tax returns are incorrect....taking 2106 as an employee, etc. Second Schedule C....nothing to suppose taking a wage but he inherited the business from his father who passed away. Father made up numbers as he went along and son was an employee. Now son wants to run it "by the rules" but yet, he is still a "leased employee" but is the only owner. 2 in ONE WEEK!! In fact, both today only!! They don't want to hear that they are not covered by worker's compensation as employees since they pay a W/C premium by being "leased"...but of course for tax purposes are not employees by any sense of the word.... What to do now? | |
| 25 June 2008 | |
| Is the the same payroll company with a sales pitch for a questionable strategy to accomplish ... what? Workers comp? A sole prop. isn't going to sue themseleves if they're hurt on the job. Does Hawaii W.C. cover sole props? -- Larry Hess, CPA | Albuquerque, NM | Talk to me | |
Kmikeburns (talk|edits) said: | 25 June 2008 |
| Wow
One thing you may want to do is to research the leasing company and make sure that withholding taxes have actually been paid to the respective agencies. A company that is giving that kind of advice is questionable and I know first hand that the IRS will hold the business responsible. | |
Southparkcpa (talk|edits) said: | 26 June 2008 |
| My approach would be one of 2 choices. In both cases I would get a retainer of say $500 up front. In neither case would I amend the W2's . I recognize some people on this borad will disagree.
1) Do NOT engage them as you believe they are party to the error and simply do not care about compliance. As such they will be poor clients from all accounts. 2) Just move forward, recognize that in the big picture they paid about the same amount of tax as if it were correctly on a schedule C (possibly even more). I would get them to sign off on this and indemnify you. Then do it correctly from here on in. I have been on many audits and my gut tells me that the IRS wouldn't care as long as you fixed it when you encountered it and you can show that any adjustment would be near zero. | |
