But I'm pretty sure I've had 1099 jobs since the I-9 rules went into effect; does I-9 only apply to W-2 employment, or was somebody being sloppy?
I think I-9 only pertains to W-2, since, legally, 1099 is not for "employment", but for work of a one-off basis. But maybe it's is required and people (including me) are being sloppy.
In any case, whether technically required or not, do people fill out an I-9 when hiring day labor for odd jobs? (And if not, are they courting Big Trouble by not doing so, or a minor "tsk tsk you shouldn'a done that" when they fail to create paper for an employee who works for one day and is paid in cash?)
Hooboy. This is a bit complicated.
Short answer: Person-to-person odd jobs? No. In fact, most people neglect to file a 1099, which is pretty much the definition of working "under the table". Note, that if the IRS finds out that you, say, had a nanny and failed to file a 1099 for them, They Will Make You Very, Very Unhappy. However, when you call a temp agency and ask them to send a laborer? Yes, you'd better believe the temp agency filed the I-9. I speak from considerable experience.
Long answer:
First, it's important to understand the categories and why they exist. W-2 and 1099-Misc are not supposed to be freely interchangeable. From the government's standpoint, there's two sorts of labor:
what people colloquially call "a job", meaning an on-going relationship with an employer (whether wage or salary) and
one-off projects done on a "non-employee" basis.
From the government's standpoint, the difference is that W-2 is for "jobs" and 1099-Misc is for the selling of services. From the government's stand point, 1099-Misc work is not something you're "hired" by a "boss" to do, it something you're "selling" to the "customer".
That is why I am under the impression that an I-9 is not required for 1099-Misc work.
HOWEVER, the government guards the parameters of 1099-Misc work VERY jealously. Note, that the form of "government" we are now discussing is not INS -- which is, comparatively, a pussycat -- but the IRS.
If the IRS thinks you're using a 1099-Misc when you're supposed to be using a W-2, the IRS will Ruin Your Day. This is not a slap on the wrist, this is Big Fucking Trouble And Let's Do A Complete Audit For Other Tax Irregularities While We're At It.
And they've started cracking down especially hard over the last 10 years.
The reason that the IRS cares so much is that employers are legally required to withhold income for income tax as well as pay taxes on an employee basis. Customers are not required to withhold payment for the income tax of their vendors. So some clever employers said, "Hey, let's declare our employees to be 'independent contractors', put them on 1099s, and save ourselve some money!" The IRS was Not Amused.
So, how does someone paying for labor tell if they're an employer or a customer?
So, while you can dodge an I-9 by working on a 1099-misc basis, there is a completely non-I-9-related reason why doing so Courts Big Trouble for the employer, and that's the IRS' tight control on what gets classified as 1099-misc work.
For which reason, many employers are loathe to use a 1099 at all -- they don't want the headache. They'd rather use W-2 laborers, even for short term work, and prefer to go through a temp agency even despite the temp agency premium.
Still with me?
So, if you want to dodge needing an ID, you can do it if you are really-honest-to-goodness self-employed and a sole-proprietor of your business (am unclear if this trick can be pulled off with a joint venture or if you incorporate.)
(However, for all this, I believe you still need a SSN to file your taxes at all, interestingly enough.)
Re: Getting a Job (the I-9)
I think I-9 only pertains to W-2, since, legally, 1099 is not for "employment", but for work of a one-off basis. But maybe it's is required and people (including me) are being sloppy.
In any case, whether technically required or not, do people fill out an I-9 when hiring day labor for odd jobs? (And if not, are they courting Big Trouble by not doing so, or a minor "tsk tsk you shouldn'a done that" when they fail to create paper for an employee who works for one day and is paid in cash?)
Hooboy. This is a bit complicated.
Short answer: Person-to-person odd jobs? No. In fact, most people neglect to file a 1099, which is pretty much the definition of working "under the table". Note, that if the IRS finds out that you, say, had a nanny and failed to file a 1099 for them, They Will Make You Very, Very Unhappy. However, when you call a temp agency and ask them to send a laborer? Yes, you'd better believe the temp agency filed the I-9. I speak from considerable experience.
Long answer:
First, it's important to understand the categories and why they exist. W-2 and 1099-Misc are not supposed to be freely interchangeable. From the government's standpoint, there's two sorts of labor:
- what people colloquially call "a job", meaning an on-going relationship with an employer (whether wage or salary) and
- one-off projects done on a "non-employee" basis.
From the government's standpoint, the difference is that W-2 is for "jobs" and 1099-Misc is for the selling of services. From the government's stand point, 1099-Misc work is not something you're "hired" by a "boss" to do, it something you're "selling" to the "customer".That is why I am under the impression that an I-9 is not required for 1099-Misc work.
HOWEVER, the government guards the parameters of 1099-Misc work VERY jealously. Note, that the form of "government" we are now discussing is not INS -- which is, comparatively, a pussycat -- but the IRS.
If the IRS thinks you're using a 1099-Misc when you're supposed to be using a W-2, the IRS will Ruin Your Day. This is not a slap on the wrist, this is Big Fucking Trouble And Let's Do A Complete Audit For Other Tax Irregularities While We're At It.
And they've started cracking down especially hard over the last 10 years.
The reason that the IRS cares so much is that employers are legally required to withhold income for income tax as well as pay taxes on an employee basis. Customers are not required to withhold payment for the income tax of their vendors. So some clever employers said, "Hey, let's declare our employees to be 'independent contractors', put them on 1099s, and save ourselve some money!" The IRS was Not Amused.
So, how does someone paying for labor tell if they're an employer or a customer?
The IRS is glad you asked. See http://www.irs.gov/faqs/faq12-2.html
For a more readable summary of the 20 point list of considerations, check out http://www.topechelon.com/recruiters/contracting/20point.htm
So, while you can dodge an I-9 by working on a 1099-misc basis, there is a completely non-I-9-related reason why doing so Courts Big Trouble for the employer, and that's the IRS' tight control on what gets classified as 1099-misc work.
For which reason, many employers are loathe to use a 1099 at all -- they don't want the headache. They'd rather use W-2 laborers, even for short term work, and prefer to go through a temp agency even despite the temp agency premium.
Still with me?
So, if you want to dodge needing an ID, you can do it if you are really-honest-to-goodness self-employed and a sole-proprietor of your business (am unclear if this trick can be pulled off with a joint venture or if you incorporate.)
(However, for all this, I believe you still need a SSN to file your taxes at all, interestingly enough.)
So that's the IRS. Now on to the INS.
[continued]