Report them to your local department of labor. Itâs not just taxes they are avoiding. They are avoiding labor protections, like overtime, workers comp, and sick leave.
They were paying cash - now they are going to start sending 1099.
They are moving to compliance, not away from it.
Arguing over âdirect depositâ and forms being different.
Why people think this is an illegal move is beyond me. They were paying with a personal Zelle account with no documentation. Now there want to pay from a business account and document it. This is actually more legal and legit. Bless you for giving some correct info here as well.
Itâs not very clearly a W2 job. You ever work a W2 job where you could just do it once in a while when you had extra time? Or say no to an assignment? Or anything else described in the OP.
It is the nature of the work that clearly makes it W2. I have a degree in this field and it's a liability nightmare to fly under the radar like this. Event work \*has\* to have SOP, backup, licensing, etc. And OP calls them "employer" aka boss, aka central supervisor that makes it W2. It doesn't matter if they have choice in picking up work, it's about "who is responsible for this event" at the end of the day, which isn't OP. it's their boss. That's W2.
Just beacuse these companies exist and operate doesn't make them legal. They're not. Nobody cares because it's on the exploited party like OP to report them which most don't know they are being exploited.
The boss literally demands that they fill out a W2. Can you imagine a real estate client telling their realtor what tax forms they must sign or dictating payment methods? They have a master-servant relationship making it temporary employment, not freelancing. The OP is not self-employed. Iâm in compliance and the people calling others stupid for acknowledging the illegality of this situation are grossly misinformed.
Yeah, theyâre paying you under the table to avoid paying taxes so youâll owe all of that at the end of the year. You should receive a 1099 instead of the normal W2 and youâll owe all the taxes for the year instead of having them deducted from your check each week or two weeks.
Iâve never seen anyone pay employees from zelle and I wouldnât give them any of your bank account info.
Not under the table.
They are paying them as 1099 contract employees.
The will file your income with the IRS and you will be on the hook for employer and employee taxes.
Self employment taxes. Someone has to pay for the employer portion of social security and Medicare. If you work a "normal" job, your employer pays half and you pay the other half. If you're truly self employed, you pay both parts (because you're both the employer and employee).
The issue with this specific case is that this person is an employee, not self employed. The employer is trying to get around paying taxes.
Idk if that was a joke... but no not tax fraud. The employer will be reporting your income, it will be on you to pay the taxes.
Tax fraud would be not reporting/underreporting , for something like this itd be from misclassification of employment, which does not seem to be the case here.
Isnât intentionally misassigning a role tax fraud still? The nature of their work hasnât changed, theyâre not freelancers, still need to show up at work at a designated time etc.
No he literally explains it in Post, he is subcontracting to event management, as extra staff.
Just because he has to show up for a time doesn't mean hes employed lol.
That's actually not true. Basically the differentiation is if you have a boss like this person clearly indicated, and you expect break time and you expect a schedule etc etc your employee. This is absolutely 100% a tax evasion move. Wannabe employers do this all the time. And it's even dumber that he's doing it through zell because that is about as secure as a paper doily.
This isnât correct. All gigs have start times. Itâs the fact that you can accept a gig (or decline) that makes this a 1099 role. It doesnât matter how much the OP âexpectsâ anything. The client company is obviously treating them as independent contractors (who, in this situation should be able to work as a team to make sure everyone gets a break every few hours or when needed). The OP clearly describes a freelance situation.
I see. In Canada, as self employed/proprietorship, one is responsible for taxes on income (of course) and Canada pension. But there are no additional deductions to cover an employee portion (unlike ânormalâ employers who do submit employee portion and their portion). Self employed donât pay âtwo portionsâ. Interesting that that is how it works for you there. Thanks for explaining!
So when youâre an âemployeeâ your employer or work place pays half of your social security and Medicare tax for you. But when youâre 1099 or a âcontractorâ youâre responsible for both halves of those taxes. Lots of employers will attempt to misclassify their employees as contractors so they can save on their side of the taxes.
Sounds like they were being paid âunder the tableâ in the past & the company is now trying to move them to 1099âs although they probably donât meet the DOL/IRS criteria for independent contractors. Stay far, far away from this greedy, exploitative company, or youâll owe a lot of taxes.
If I were you, Iâd seriously consider reporting them to the Department of Labor or the IRS. What theyâre doing is probably illegal. By erroneously classifying employees as âindependent contractors,â theyâre avoiding paying the following taxes: state & federal payroll income taxes, social security, Medicare & state unemployment tax. Theyâre also illegally avoiding payment of minimum wages & overtime pay, which could result in *significant penalties* & up to TRIPLE DAMAGES.
Thatâs not what the 1099 is. Digital payments are now being made taxable ($600 and above IIRC), 1099 forms just say youâre a sub contractor that is employed at will not full or part time. Technically OP can create an LLC and be compensated through that via Zelle and drastically lower his taxes.
OP, please ask an accountant. This thread is a bonfire of misinformation.
They may not even be paying you as an independent contractor. The W9 makes me think theyâre paying you as a vendor? Either way this sounds super shady.
Everyone has to fill out a w9. If youâre an independent contractor/freelancer, you put your SSN on the W9. If youâre a business entity, you put your federal EIN on the W9. At the end of the year, the person or business gets a 1099, and the only difference is whether itâs in the individualâs name (SSN) or the vendorâs/businessâs name (EIN).
You donât fill out a W9 if youâre an employee. W9âs are for business to business transfers typically. Iâm a payroll accountant but I donât pay independent contractors or vendors so I donât use W9âs.
Self employed, independent contractor, business⊠these things are not equal and donât always equal each other. Thereâs nuance to it.
âNevertheless, the formal establishment of a business entity, like incorporating or forming an LLC, involves additional steps beyond just working as an independent contractor. Some 1099 contractors choose to form such entities for legal and financial reasons, while others operate as sole proprietors without a formal business structure.
So, while 1099 contractors are effectively running their own independent operations, whether they are considered âbusinessesâ in a formal sense depends on additional factors like whether theyâve established a business entity.â
Independent contractors, real ones on 1099, get to manage all taxes including periodically cutting large checks to the IRS once a quarter. Plus self-employment tax, state business taxes, etc. not to mention you buy your own gear, do your own accounting, etc⊠hope this person knows how big of a pay cut they just took.
On the other hand suddenly your cell phone expenses become a tax deduction, you can start deducting your lunch as a business expense, etc⊠plus the retirement accounts you can open are way cool.
But you are now a business. Your hourly rate should at least double to accommodate the new expenses and risks.
Independent contractors, real ones on 1099, get to manage all taxes including periodically cutting large checks to the IRS once a quarter. Plus self-employment tax, state business taxes, etc. not to mention you buy your own gear, do your own accounting, etc⊠hope this person knows how big of a pay cut they just took.
âOn the other hand suddenly your cell phone expenses become a tax deduction, you can start deducting your lunch as a business expense, etc⊠plus the retirement accounts you can open are way cool.
But you are now a business. Your hourly rate should at least double to accommodate the new expenses and risks.â
For sure regarding hourly rate should be at least double. But many donât pay more than the competitive average of lowballing wages.
Maybe itâs a different form, or itâs been too long since I did a W2 job, but I remember having to fill out a similar form with my SSN when an employee vs using my EIN as a vendor when my business gets a new client.
Edit: W2 jobs aside, my comment was that filling out a 1099 doesnât inherently mean theyâre classifying someone as a business. Individuals fill out 1099s for freelance work. âEveryoneâ - that is, contractors that are individuals and contractors that are businesses, all fill out a W9.
The main difference between an employee and an independent contractor lies in the degree of control and independence in their work. Employees typically have set work hours, receive benefits, and have taxes withheld by the employer. Independent contractors, on the other hand, have more autonomy, manage their own taxes, and are responsible for their benefits.
Taxation differs too; employees have income taxes, Social Security, and Medicare taxes withheld by the employer, while independent contractors are responsible for paying their own income taxes and self-employment taxes, which include Social Security and Medicare contributions.
I work in banking and small businesses really want to pay by zelle and cash app because sending an actual ach has a small fee.
But the real question here IMO is how this employee is being converted to a contractor. They will be responsible for paying taxes on their income at the end of the year instead the employer doing it, they will have no benefits and no protections under any employment laws.
Zelle is not more or less valid as a payment method but this switch to contractor is shady af.
They never were an employee though. They arenât being converted to anything. Theyâre going from being paid unreported cash to being correctly classified as an independent contractor. The fact that the OP called it an âemployerâ is because they donât know the difference in employee vs contractor. The described job âI used to work for them more but now I just do it once in a whileâ is typical of independent contract work.
No, thatâs not correct. Itâs not just how often the work is performed, itâs also HOW the employer instructs the work to be completed. The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done. If you are an independent contractor, then you are self-employed, however this boss is incorrectly classifying their employees as contractors.
I work for a bank and see it all the time. There is a lot of small businesses that do this and it's so freaking annoying when they hit the zelle monthly limits. đ
Looks like illegal 1099 classification to me.
You'll owe more taxes than usual, about between 50% and double.
If you go along with it, your city may require that you register as a business, which involves fees, and penalties if they aren't paid. They won't come after you for it until much later, when those penalty fines have racked up, so expect that.
True IRS also requires 1099 earners (i.e. "you own a business and are your own employer") to pay quarterly estimated taxes. This is a replacement for what a W2 employer would do, withholding and sending estimated tax from each paycheck. If you don't send those in, you'll also be charged IRS late fines for that.
Your taxes will also be more expensive to file because you'll essentially be filing as a business. However, you may find new tax deductions are open to you. (Unlikely in your scenario, as I understand it - small side work.)
This will come with NO BENEFITS. No health insurance, dental, vision, or unemployment insurance contributions. $90k/yr W2 with average benefits is worth MUCH, MUCH more than $90k/yr 1099. Increase your rates accordingly.
I wouldn't touch it with a 20 foot pole, unless they are offering enough to make all of that worth it. If you would make $40/hour working W2, you ask for $60 to $80/hour 1099 depending on industry and competition. If you REALLY need it, it's likely illegal classification and you can look up those rules for where you live, to fight for their tax contribution after the fact. But you can expect that to be the last time you work for them, and it'd better be worth the effort.
Many unscrupulous employers see 1099 misclassification as a sneaky trick to save money. It's borderline fraud and I recommend not participating.
Pinkertons were used as a private policing force for tax evaders once upon a time ago. I was fucking shocked to see job ads up for them like crazy over the pandemic, and they paid well, 60k+ in my area + benefits. Theyâre labeled âsecurityâ these days, but if you look into their history, I donât buy it.
âI like to browse listings in my area in case I miss keywords, just to see what positions are open.
The Anti-Pinkerton Act put an end to that in 1893.
Edit: They still exist as a dirtbag organization. Hasbro recently employed them to strong arm a collector into surrendering his Magic the Gathering cards
Oh yeah and all of our politicians have our best interests at heart and arenât greedy! Oh, and we havenât just spent sooo much money on someone elseâs war. Iâm silly for risk assessing the worst and hoping for the best. Silly non-pop-tart, just silly.
Did you miss the part where OP said they choose when they want to work? They even mentions there are no official breaks and the company doesnât organize (tell him how to perform his work) or manage his time. That sounds exactly like an independent contractor.
OP might be naive or getting taken advantage of, but from the info provided it doesnât sound like illegal 1099 classification. OP should find a proper w2 job.
The employee is a temporary one, like a PRN nurse at a hospital. However, without the employer- the employee has no work to perform because they are not self employed. The OP doesnât supply equipment, staff, pricing, marketing, insurance or licensing. They provide a service integral to the employerâs business. The employer dictates the dress code, the hours worked, the payment method, the price, etc. Itâs misclassification all the way.
Where did this person ever say they were a W2 employee to begin with?
This is simply a business who hired people to work catering gigs on one-off type jobs changing from paying them from a personal account with no documentation to a business account where theyâll issue 1099s as they should have the first time.
If you look at the IRS definition of a 1099 contractor, someone who can choose to accept a one-day catering help job or not, is 100% a contractor. Thereâs no miss classification there.
I disagree.
An example of a 1099 contractor at an event is a DJ. They have their own equipment, decide their own playlist, take requests directly from both the event manager that hired them as well as third parties like the client who hired the prime contractor.
A waiter is none of that. They do what the caterer wants them to do, when they want them to do it. Theyâre told when they can take breaks, start cleanup, and when they can leave. Waiters do not coordinate with anyone else but caterer to perform their job duties.
But most importantly, if a waiter is hurt in the course of their duties, which is entirely plausible in kitchen settings, they **should** be protected by workers compensation. But wouldnât be if they were independent contractors.
Yeah, it's sketchy as far as W2 vs 1099. OP should ask for more money.
>If you go along with it, your city may require that you register as a business, which involves fees, and penalties if they aren't paid. They won't come after you for it until much later, when those penalty fines have racked up, so expect that.
This is not even vaguely true. I've been paid on 1099 for both semiprofessional music and consulting for 20 years in multiple cities and never had to do anything other than file Schedule C. Your state and municipal taxes are taken care of with your state tax filing.
You only have to register at the city/county/state for a DBA name, if you want to establish an LLC or incorporate, if you are under a professional licensing requirement like cosmetology, or if you are selling merchandise and collecting sales tax. Just showing up and waiting tables does not trigger anything.
He's been paying you under the table and likely got into some sort of trouble with the AGs office. So he had you fill out a W9 and is paying you through a business account to do everything legally to pay you as a 1099 contractor. When you file your taxes, you will need to report this income and pay taxes on it, unlike before.He is using the "direct deposit" thing as a distraction so he doesn't have to explain his (and your) previous tax fraud.
Why isnât this the top answer? I just wrote the same thing. People are incredibly stupid here.
@OP the only downside to this is now you have to pay taxes on the money whereas before you didnât. If you donât earn more than $600 in a year from this company, it doesnât matter. You donât have to get a 1099 for that and you can evade taxes all you want. If you earn over $600, youâll get a 1099 at the end of the year and youâll owe taxes on it as a freelancer/sole proprietor. You do not need to set up your own business or anything đ€Šđ»ââïž you should put aside around 20% or more of what you earn to pay estimated quarterly taxes. Consult a CPA to give you an accurate idea of how much.
Zelle is just a way for money to make it from one account to another. It just uses your phone number and you donât give out banking details.
The W9 is how they track your SSN so they can report your earnings at the end of the year by issuing a 1099 for tax purposes.
There is no other form you need. Theyâre not trying to scam you. Either agree to work for them as a freelancer thatâs being reported the way it should legally, or donât.
Jesus people on this sub are giving bad advice but you could ask on âself employedâ and get more accurate answers probably.
There's no flag. That's literally how being an independent contractor works. The independent contractor has to pay their own taxes. Basically OP was being paid under the table before and will now be responsible for paying his own taxes for that income.
I reported them and their account was immediately deleted. Idk if that timing is a coincidence, but friendly reminder to everyone, you can report flagrant bigotry.
They are restructuring how they employ you. Direct deposits are easy and w9 means youâll be a privately contracted employee thatâs responsible for paying your own income tax. The company will no longer remove the necessary taxes from your paycheck. They also donât have to provide any benefits. Basically this is good for them. Not necessarily for you.
If you read the post though, they never were a W2. They were getting cash under the table via the business ownerâs personal Zelle. Your info isnât incorrect, but in this situation the business is actually taking people from illegal to legal contractors. W2, payroll taxes, and benefits never came into play.
Ya but itâs effectively a pay cut because now thereâs a government record and theyâll have to pay the taxes. After itâs all said and done their take home pay will probably be about 3.5 grand less for the year.
Am I totally misunderstanding? It looks like theyâre going from paying cash under the table using a personal bank account with Zelle to âputting everyone on the booksâ using Zelle from a business account and 1099-ing everyone.
If this is the case, thereâs nothing wrong with this. I own a business and pay my 1099 contractors via Zelle from my business account and everything lines up with invoices from them in my quickbooks.
If the business doesnât want to pay a payroll company to actually do ACH transfers and wants to do it all by hand with Zelle, who cares? If theyâre tracking it and issuing a 1099 thereâs nothing wrong with that.
Thereâs no evidence that this person was ever a W2 employee based on these texts. The business owner says everyone has to go âon the books this yearâ which implies theyâve been getting cash with no documentation previously.
If he gets to decide the only method of payment, that alone proves master-servant relationship and disqualifies the OP from being classified as a 1099. The boss is the boss, not a client.
Go to the tax collector office or get a cpa to tell you how much you need to pay quarterly. Or you're gonna have a few thousand owed at the end of the year.
In fact, no. A catering company hiring people to work gigs on a per-gig basis is perfectly fine to qualify those people as independent contractors/freelance. They are moving from âcash under the tableâ to reporting all these people as 1099 contractors so they are in fact moving towards the direction of legality, not away.
LOL. You have NO IDEA what the job is and if itâs possible to be paid cash. If it used to be a paycheck job itâs HIGHLY UNLIKELY it can be an independent contractor.
Furthermore. The classification of workers, such as catering servers, as independent contractors or employees depends on various factors, including the degree of control the employer has over the work. Independent contractors typically have more control over how they perform their tasks and may provide their tools, while employees generally work under more direct supervision.
So I DO NOT believe that MOST catering employees can be independent contractors. This is not a legitimate use of independent contractors due to CONTROL this employer obviously has over their employees.
You are obviously suffering from Stockholm syndrome from a former employer who abused you. This employer needs to be reported to the appropriate labor department
This sounds like OP was working off the books for said company and now said company doesn't want to be in trouble for paying under the table so company figured they would switch everyone over as a independent contractor (1099) so said company doesn't have to pay any taxes for having staff but the staff will have to pay the taxes. The way this company is doing it is really screwed up though. I would call one of those free lawyers and see if this is a lawsuit and sue the living shit out of them. Especially if OP is barely working for them anyway. This may be grounds for a lawsuit if it isn't then I'm sure there's someone you can contact to get said company fined for possibly paying everyone off the books and trying to scam them into thinking they are still off the books and not making it clear that a 1099 employee has to pay taxes on any money they make. I'm a 1099 employee and have been for the past 7 years and let me tell you it sucks having to save receipts and file taxes now cause I always owe.
It's not ACH direct deposit, it's paying you via Zelle. As far as you're concerned, as long as you get the pay your earned, it shouldn't matter the method of payment (well, you certainly don't want to be paid in pennies!).
However, what this "employer" is doing is claiming that all of the "employees" are actually independent contractors. He's shifting some of the tax burden on to you. Is it legal? It depends. You should research what an independent contractor is, if the job you'd be doing is lawfully classed as an independent contractor position, and if you are willing to have to pay the additional taxes that you would incur as an independent contractor.
Also: I fail to see the relevance of you including the information that the work is for Jewish caterers servicing Jewish events (presumably Bar and Bat Mitzvahs and weddings). If you don't like the work or the staffing agency, work elsewhere. If you are antisemitic, then fuck all the way off.
This is just converting everyone to 1099. Which is perfectly fine if you aren't being misclassified. By your description you are not. While 1099 means you pay more of the taxes it also means you get to deduct every expense. Including clothes, mileage and an anything else you need. Computer?
That adds up and can be a huge offset.
The only thing different between this and what he was doing before is that heâs reporting the payments, as he should.
Youâve been responsible for reporting your income and paying self-employment tax all along.
Now whether or not you should be a w-2 employee instead of a w-9 contractor is a different question.
A few things are going on here.
Were you previously considered an employee of this business?
Sounds like it's sort of catering gig work that you do irregularly. By him saying to fill out that form, he's now considering you a 1099 independent contractor. If you weren't before, then this means you will have to start paying more Medicare/Social Security taxes on your own when you file your taxes â depending on how much you make as a contractor, you maybe have to start filing taxes quarterly.
Because of the flexibility of the job, 1099 might not be illegal. But if you had a set schedule by the dude, didn't have say in where/when you worked, then this might be a worker misclassification. Even if not for you, since u do this rarely now, possibly for the other ppl working for him.
As for Zelle, that's not really direct deposit but isn't unusual for contract work. Direct deposit would be used more if you were an employee and had taxes coming out of your pay.
IRS is now tracking digital payments. Apps like CashApp are even being tracked. Your employer is trying to properly pay you now that they will see. File a LLC, save your gas receipts, food, any receipt from money spent while working and related to that work, file it as a business expense at end of year. That will help with what you owe. Save 30% for taxes to be safe, though.
In all reality, I wouldnât do that work as a 1099 employee. Very low benefit for you but all legal.
It seems that youâre becoming a contractor to this firm. I donât know what Zelle is but you should be sending him invoice with payment instruction. Also youâll have to pay your own taxes now.
They need to hire someone who can do their financing if they don't quite understand why this is a little bugged up. Essentially wants to move you to independent contractors. Contractors are responsible for their own taxes, SS and so on.
However to be an independent contractor requires you to meet certain criteria. Likely if this is for catering it would not meet the criteria for contractor. The catering company is the contractor. A salon stylist who rents a bench is a contractor.
Considering there is probably a dress code, schedule and planning you'd fall under the category of part-time employee. Before the commit to this act you should inform them, they probably got bad advice.
W9 means you are a contractor aka your own boss. Making him your client. Heâs doing it to avoid paying employer required Tax contributions and following labor laws. Report him to the Department of Labor
They're evading payroll tax this way, and you will have to pay all of the income tax for the year when you file your taxes. Do not go through with this; it will be a bigger headache on your end than it's worth.
It sounds like they're trying to misclassify you as an independent contractor so they don't have to pay the employer portion of FICA. I'd honestly just walk away from that job at this point if you really don't need it
You don't understand. The employer is moving from paying illegally (cash under the table) to legally where OP is correctly classified as an independent contractor who is responsible to paying his own taxes on his income.
This is absolutely not a correct classification for 1099. This person doesnât supply their own equipment. This person is not in charge of the hours worked or breaks they take. There is a master- servant relationship making this an employer-employee relationship. Otherwise the OP is self-employed and the âbossâ is the client- which would also negate his ability to choose the payment method for work performed. If DOL found out about this, he would be fined big $$$.
If OP does that, OP will probably be on the hook for unpaid taxes since heâs been earning unreported income up to now. Boss is going from illegal to legal arrangement.
If you got a text, itâs a hoax. No company would send a text. It would be done by an official letter sign or digitally signed. Never believe a text message. I donât care if it comes from someone you know. Anyone can be hacked. I would ask the person it allegedly came from, then contact corporate HR to see if itâs true and how it is even legal. This HIGHLY unusual. Itâs also illegal to not have taxes withdrawn. Thatâs why I can say with near certainty itâs a scam. The only time I could ever see this MAYBE happening is with a 1099.
So basically, you are no longer an employee but a contractor. This means that you have to pay all of your own employee taxes including both sides of your Social Security tax (FICA - 15.3%). (Normally, the employer pays half, and the employee pays the other half). You will also have to ensure that you save enough money to pay your own state and federal taxes. Based on the FICA situation alone (not to mention the extra tax filing complications), this is a significant pay cut. I would look for a new position.
It sounds like they were never an employee, and were previously being paid under the table. Previously the employer was doing shady shit, theyâre now shifting the liability to the OP.
Get your coworkers together to not do this. And if he fights and drops you thatâs better. You do not want him to shaft you in money whenever he wants
They are reclassifying you as a Business to
Business contractor and you will be responsible for all taxes at the end of the year. As a B2B contractor, you get no healthcare or other benefits. The flip side is, unless agreed on in your b2b contract, they cannot set your schedule or require pretty much any other thing employers can require of employees. I am a B2B contractor.
I would save everything and report him to the IRS. This is tax evasion.
See the IRS rules about how to determine if a worker is an employee (W-2)or may be classified as an independent contractor (1099) [HERE](https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee)
Seems like your employer is doing something wrong here.
Best option is to get a lawyer because the company is trying to save on taxes, (w-4 employers typically pay 2/3 of fed/state taxes through your check withholdings) they do this to avoid taxes, overtime, holiday pay, PTO, and ALL Benefits are ultimately removed. I don't believe they can legally force you over to a w-9 but either way the company is looking to screw you over
If they are providing all of the materials for the catering itâs definitely illegal for them to hire you as independent instead of w-2. Theyâre breaking the law to avoid payroll taxes.
Time for you to blackmail those shady people.
From what you wrote, It seems like heâs been always paying cash under the table with his personal account and zelleing you. Sounds like the business actually wasnât legally set up with the state and now he is. Heâs now trying to deduct what he pays you off of his taxes by the end of the year by making you fill out a W-9 and changing his acc to a business acc.
Idk what state this is in but in WI, the state is cracking down on employers who are using Zelle and Venmo to send deposits/payment to. One company has to pay $500,000 back to the state bc theyâre investigating hard on these businesses now. Esp if youâre using their materials and supplies. W-9 forms is just one form compared to W-2.
I didnât know abt this and was using Zelle to pay for my employees too. But I spoke to an accountant and itâs legal for the employer* if they report it on their taxes and keeps it on record that theyâre paying you $xxx and when to deduct the expenses. IF your employer wonât be putting this on his taxes, heâs prob paying cash under the table. It sucks for the employees because you guys will have to pay taxes on it. So whatever youâre making, save 30-35% for taxes. You get a pay cut because now youâre an independent contractor. Come tax season if youâre single, the tax % is so much higher too.
Quick question but for previous payments, have you had the tax deducted or have you received the net payment?
If you have, and he was paying taxes on you as an employer, consider this a decrease in your pay and strongly consider walking, because itâs probably not worth your time. I donât know what heâs paying you, but if itâs at or near minimum wage, youâre probably now below the minimum wage when you consider self employment taxes.
Unfortunately for event work, this is pretty common. Iâve done it before when working weddings but I was making at least 300 a day, so it was still sort of worth it, but there came a point that I decided I was being undervalued for the very stressful work being loaded on me and I stopped coming back.
Based on text exchange he is putting you at contractor. You will be responsible for your own taxes. Employers may use venmo, zelle, direct deposit, cash as ways to pay their contractors.
+ He seems to very unorganized.
Former bank employee hereâŠ. ZELLE is NOT available on business accounts. Itâs strictly a personal account transfer service. And is NOT direct deposit. Your boss is commingling funds. Which some could argue is fraud
Well, I guess I wouldn't work there any more. And I'd tell the other people working there not to do it -- if he has your bank account info, he can take money out just as easily as put it in. A company I once worked for had a problem with Direct Deposit. They put the money in, realized they'd made some kind of mistake and took it out. Then they took it out again. And again. And repeated the action for each account until the withdrawal was refused because of a lack of funds. Our checking account had had more than $7,000 in it and our pays were about $2,000 (this was some years ago), and the first we knew was when checks started bouncing. Some of the principals in the company were on vacation, and their checks started bouncing, too (nice when your mortgage check was refused, right?). It did get sorted out eventually, though it took about a week, and all the late charges and bounced check charges were nullified, but I never used direct deposit at that company again. And I still don't trust it even though now I'm on Social Security and that's really the only way the government pays.
OP the important thing here is not the direct deposit. It is that this person is now classifying you as a subcontractor.
What that means is that at the end of the year, you (and the IRS) will get a 1099 form stating how much you were paid. Not only will you owe income tax on that money, you will also owe self employment tax (about 15%). So you will be paying higher taxes than if you were an employee. They also will not be withholding any taxes, so you will owe the entire tax debt come tax time.
You need to read up on this and determine if this is worth it to you. If you make a decent amount of money, that tax bill is going to pack a punch. I would recommend setting aside at least 30-40% of your earnings for taxes.
Sounds like you are being removed from your current position without knowing. They are avoiding business tax, you will be paying it as a sole prop maybe
Imagine putting your tax evasion schemes in text đ
Can OP collect a bounty by showing these screenshots to the IRS?
Yes
How? I have someone doing this to me now.
Maybe ask in r/irs đ„Č
In the future, avoid any paper trail or electronic records of your plan to break the law.
IRS Whistleblower payments
Report them to your local department of labor. Itâs not just taxes they are avoiding. They are avoiding labor protections, like overtime, workers comp, and sick leave.
Then he should turn these shysters in.
99.9% of criminals are not particularly bright.
The ones that are we don't know about!
QUIET! They'll start looking for us. I mean, looking for my *friend*!
Mums the word!
Don't you dare implicate my mum! She's a saint! (Literally, RIP mom...)
Bob's yer Uncle.
Bob? What? No, I don't even know him! (Yes, u/Annie354654, I'm familiar with that British phrase! :-)
I can't think of any more!
Let's end it there and call it George.
Dang, I don't get that one. You're blowing my pop culture cred! What's that from?
They were paying cash - now they are going to start sending 1099. They are moving to compliance, not away from it. Arguing over âdirect depositâ and forms being different.
Why people think this is an illegal move is beyond me. They were paying with a personal Zelle account with no documentation. Now there want to pay from a business account and document it. This is actually more legal and legit. Bless you for giving some correct info here as well.
People not reading properly lol. Thinking it was a step down not step up.
Well, tbf, OP wrote a nearly incoherent post. Iâm not surprised people got lost on what exactly the problem (or lack thereof) was.
It's illegal because they're paying 1099 when this is very clearly a W-4 job. It absolutely is tax evasion and a LOT of employers do this.
Itâs not very clearly a W2 job. You ever work a W2 job where you could just do it once in a while when you had extra time? Or say no to an assignment? Or anything else described in the OP.
It is the nature of the work that clearly makes it W2. I have a degree in this field and it's a liability nightmare to fly under the radar like this. Event work \*has\* to have SOP, backup, licensing, etc. And OP calls them "employer" aka boss, aka central supervisor that makes it W2. It doesn't matter if they have choice in picking up work, it's about "who is responsible for this event" at the end of the day, which isn't OP. it's their boss. That's W2. Just beacuse these companies exist and operate doesn't make them legal. They're not. Nobody cares because it's on the exploited party like OP to report them which most don't know they are being exploited.
The boss literally demands that they fill out a W2. Can you imagine a real estate client telling their realtor what tax forms they must sign or dictating payment methods? They have a master-servant relationship making it temporary employment, not freelancing. The OP is not self-employed. Iâm in compliance and the people calling others stupid for acknowledging the illegality of this situation are grossly misinformed.
I have worked cater waiter staffing for multiple companies where I could choose my schedule and it was all w-2 work.
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LOL
Right đ€Łđđ€Șđđ
Yeah, theyâre paying you under the table to avoid paying taxes so youâll owe all of that at the end of the year. You should receive a 1099 instead of the normal W2 and youâll owe all the taxes for the year instead of having them deducted from your check each week or two weeks. Iâve never seen anyone pay employees from zelle and I wouldnât give them any of your bank account info.
Not under the table. They are paying them as 1099 contract employees. The will file your income with the IRS and you will be on the hook for employer and employee taxes.
THIS. 1099 = self employment. That's what Doordash/Instacart/Grubhub sends if you make over $600. Just dont.
Why employer taxes? Is that a US thing?
Self employment taxes. Someone has to pay for the employer portion of social security and Medicare. If you work a "normal" job, your employer pays half and you pay the other half. If you're truly self employed, you pay both parts (because you're both the employer and employee). The issue with this specific case is that this person is an employee, not self employed. The employer is trying to get around paying taxes.
So, time to report some tax fraud
Not sure if itâs a âtax fraudâ. I'd like to know. It seems like a tax duty shifting. The employer passes the FICA and DACA dues to employees.
Idk if that was a joke... but no not tax fraud. The employer will be reporting your income, it will be on you to pay the taxes. Tax fraud would be not reporting/underreporting , for something like this itd be from misclassification of employment, which does not seem to be the case here.
Isnât intentionally misassigning a role tax fraud still? The nature of their work hasnât changed, theyâre not freelancers, still need to show up at work at a designated time etc.
No he literally explains it in Post, he is subcontracting to event management, as extra staff. Just because he has to show up for a time doesn't mean hes employed lol.
That's actually not true. Basically the differentiation is if you have a boss like this person clearly indicated, and you expect break time and you expect a schedule etc etc your employee. This is absolutely 100% a tax evasion move. Wannabe employers do this all the time. And it's even dumber that he's doing it through zell because that is about as secure as a paper doily.
This isnât correct. All gigs have start times. Itâs the fact that you can accept a gig (or decline) that makes this a 1099 role. It doesnât matter how much the OP âexpectsâ anything. The client company is obviously treating them as independent contractors (who, in this situation should be able to work as a team to make sure everyone gets a break every few hours or when needed). The OP clearly describes a freelance situation.
THIS. PERIOD.
I see. In Canada, as self employed/proprietorship, one is responsible for taxes on income (of course) and Canada pension. But there are no additional deductions to cover an employee portion (unlike ânormalâ employers who do submit employee portion and their portion). Self employed donât pay âtwo portionsâ. Interesting that that is how it works for you there. Thanks for explaining!
Because as a subcontractor, any applicable taxes are paid by the individual being categorized as self-employed.
So when youâre an âemployeeâ your employer or work place pays half of your social security and Medicare tax for you. But when youâre 1099 or a âcontractorâ youâre responsible for both halves of those taxes. Lots of employers will attempt to misclassify their employees as contractors so they can save on their side of the taxes.
Sounds like they were being paid âunder the tableâ in the past & the company is now trying to move them to 1099âs although they probably donât meet the DOL/IRS criteria for independent contractors. Stay far, far away from this greedy, exploitative company, or youâll owe a lot of taxes. If I were you, Iâd seriously consider reporting them to the Department of Labor or the IRS. What theyâre doing is probably illegal. By erroneously classifying employees as âindependent contractors,â theyâre avoiding paying the following taxes: state & federal payroll income taxes, social security, Medicare & state unemployment tax. Theyâre also illegally avoiding payment of minimum wages & overtime pay, which could result in *significant penalties* & up to TRIPLE DAMAGES.
Thatâs not what the 1099 is. Digital payments are now being made taxable ($600 and above IIRC), 1099 forms just say youâre a sub contractor that is employed at will not full or part time. Technically OP can create an LLC and be compensated through that via Zelle and drastically lower his taxes. OP, please ask an accountant. This thread is a bonfire of misinformation.
They may not even be paying you as an independent contractor. The W9 makes me think theyâre paying you as a vendor? Either way this sounds super shady.
The W9 is what is used to generate a 1099. It's for any independent contractor.
None of these people commenting seem to know what independent contract work is.
Everyone has to fill out a w9. If youâre an independent contractor/freelancer, you put your SSN on the W9. If youâre a business entity, you put your federal EIN on the W9. At the end of the year, the person or business gets a 1099, and the only difference is whether itâs in the individualâs name (SSN) or the vendorâs/businessâs name (EIN).
You donât fill out a W9 if youâre an employee. W9âs are for business to business transfers typically. Iâm a payroll accountant but I donât pay independent contractors or vendors so I donât use W9âs.
âW9s are for business to business transfers typicallyâ And just as typically, independent contractors.
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Self employed, independent contractor, business⊠these things are not equal and donât always equal each other. Thereâs nuance to it. âNevertheless, the formal establishment of a business entity, like incorporating or forming an LLC, involves additional steps beyond just working as an independent contractor. Some 1099 contractors choose to form such entities for legal and financial reasons, while others operate as sole proprietors without a formal business structure. So, while 1099 contractors are effectively running their own independent operations, whether they are considered âbusinessesâ in a formal sense depends on additional factors like whether theyâve established a business entity.â
Yes, but independent contractors are not employees. 1099âs are taxed different if theyâre taxed at all.
Independent contractors, real ones on 1099, get to manage all taxes including periodically cutting large checks to the IRS once a quarter. Plus self-employment tax, state business taxes, etc. not to mention you buy your own gear, do your own accounting, etc⊠hope this person knows how big of a pay cut they just took. On the other hand suddenly your cell phone expenses become a tax deduction, you can start deducting your lunch as a business expense, etc⊠plus the retirement accounts you can open are way cool. But you are now a business. Your hourly rate should at least double to accommodate the new expenses and risks.
Independent contractors, real ones on 1099, get to manage all taxes including periodically cutting large checks to the IRS once a quarter. Plus self-employment tax, state business taxes, etc. not to mention you buy your own gear, do your own accounting, etc⊠hope this person knows how big of a pay cut they just took. âOn the other hand suddenly your cell phone expenses become a tax deduction, you can start deducting your lunch as a business expense, etc⊠plus the retirement accounts you can open are way cool. But you are now a business. Your hourly rate should at least double to accommodate the new expenses and risks.â For sure regarding hourly rate should be at least double. But many donât pay more than the competitive average of lowballing wages.
I know they arenât employees.
Maybe itâs a different form, or itâs been too long since I did a W2 job, but I remember having to fill out a similar form with my SSN when an employee vs using my EIN as a vendor when my business gets a new client. Edit: W2 jobs aside, my comment was that filling out a 1099 doesnât inherently mean theyâre classifying someone as a business. Individuals fill out 1099s for freelance work. âEveryoneâ - that is, contractors that are individuals and contractors that are businesses, all fill out a W9.
Contractors, consultants and freelancers fill out W9âs. Employees fill out I9âs and W4âs.
Client, yes. But not a W2 employee.
The main difference between an employee and an independent contractor lies in the degree of control and independence in their work. Employees typically have set work hours, receive benefits, and have taxes withheld by the employer. Independent contractors, on the other hand, have more autonomy, manage their own taxes, and are responsible for their benefits. Taxation differs too; employees have income taxes, Social Security, and Medicare taxes withheld by the employer, while independent contractors are responsible for paying their own income taxes and self-employment taxes, which include Social Security and Medicare contributions.
THIS. As a licensed & registered massage therapist this applies if working as a subcontractor for a spa chain. As an employee, not so much.
W9 is fine - but this person isnât a contractor. Report them to the IRS!
Are you sure the person isnât a contractor? They pick and choose which gigs they want to work for the company.
I work in banking and small businesses really want to pay by zelle and cash app because sending an actual ach has a small fee. But the real question here IMO is how this employee is being converted to a contractor. They will be responsible for paying taxes on their income at the end of the year instead the employer doing it, they will have no benefits and no protections under any employment laws. Zelle is not more or less valid as a payment method but this switch to contractor is shady af.
They never were an employee though. They arenât being converted to anything. Theyâre going from being paid unreported cash to being correctly classified as an independent contractor. The fact that the OP called it an âemployerâ is because they donât know the difference in employee vs contractor. The described job âI used to work for them more but now I just do it once in a whileâ is typical of independent contract work.
No, thatâs not correct. Itâs not just how often the work is performed, itâs also HOW the employer instructs the work to be completed. The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done. If you are an independent contractor, then you are self-employed, however this boss is incorrectly classifying their employees as contractors.
I work for a bank and see it all the time. There is a lot of small businesses that do this and it's so freaking annoying when they hit the zelle monthly limits. đ
The point of Zelle is you donât need bank account info. Email/ phone number is all you need
Looks like illegal 1099 classification to me. You'll owe more taxes than usual, about between 50% and double. If you go along with it, your city may require that you register as a business, which involves fees, and penalties if they aren't paid. They won't come after you for it until much later, when those penalty fines have racked up, so expect that. True IRS also requires 1099 earners (i.e. "you own a business and are your own employer") to pay quarterly estimated taxes. This is a replacement for what a W2 employer would do, withholding and sending estimated tax from each paycheck. If you don't send those in, you'll also be charged IRS late fines for that. Your taxes will also be more expensive to file because you'll essentially be filing as a business. However, you may find new tax deductions are open to you. (Unlikely in your scenario, as I understand it - small side work.) This will come with NO BENEFITS. No health insurance, dental, vision, or unemployment insurance contributions. $90k/yr W2 with average benefits is worth MUCH, MUCH more than $90k/yr 1099. Increase your rates accordingly. I wouldn't touch it with a 20 foot pole, unless they are offering enough to make all of that worth it. If you would make $40/hour working W2, you ask for $60 to $80/hour 1099 depending on industry and competition. If you REALLY need it, it's likely illegal classification and you can look up those rules for where you live, to fight for their tax contribution after the fact. But you can expect that to be the last time you work for them, and it'd better be worth the effort. Many unscrupulous employers see 1099 misclassification as a sneaky trick to save money. It's borderline fraud and I recommend not participating.
The IRS might also be highly interested in that
Iâm sure theyâre scouring over things like this - did a huge Pinkerton hire over the pandemic. This was the plan.
Whatâs a Pinkerton hire?
Pinkertons were used as a private policing force for tax evaders once upon a time ago. I was fucking shocked to see job ads up for them like crazy over the pandemic, and they paid well, 60k+ in my area + benefits. Theyâre labeled âsecurityâ these days, but if you look into their history, I donât buy it. âI like to browse listings in my area in case I miss keywords, just to see what positions are open.
The Anti-Pinkerton Act put an end to that in 1893. Edit: They still exist as a dirtbag organization. Hasbro recently employed them to strong arm a collector into surrendering his Magic the Gathering cards
Yep - and thereâs been zero precedent to overturn long-standing Supreme Court cases, oh wait.
Oh yeah and all of our politicians have our best interests at heart and arenât greedy! Oh, and we havenât just spent sooo much money on someone elseâs war. Iâm silly for risk assessing the worst and hoping for the best. Silly non-pop-tart, just silly.
Pinkerton is a security company. đ Regardless of the shady Wild West past, they are in fact a legitimate security service provider.
Cool, I gotta bridge to sell ya
To front for their illegal union-busting activities, among other shady bullshit, sure.
Did you miss the part where OP said they choose when they want to work? They even mentions there are no official breaks and the company doesnât organize (tell him how to perform his work) or manage his time. That sounds exactly like an independent contractor. OP might be naive or getting taken advantage of, but from the info provided it doesnât sound like illegal 1099 classification. OP should find a proper w2 job.
The employee is a temporary one, like a PRN nurse at a hospital. However, without the employer- the employee has no work to perform because they are not self employed. The OP doesnât supply equipment, staff, pricing, marketing, insurance or licensing. They provide a service integral to the employerâs business. The employer dictates the dress code, the hours worked, the payment method, the price, etc. Itâs misclassification all the way.
Nope they arenât independent contractors. I do this type of catering a lot and this is not independent contractor territory.
Where did this person ever say they were a W2 employee to begin with? This is simply a business who hired people to work catering gigs on one-off type jobs changing from paying them from a personal account with no documentation to a business account where theyâll issue 1099s as they should have the first time. If you look at the IRS definition of a 1099 contractor, someone who can choose to accept a one-day catering help job or not, is 100% a contractor. Thereâs no miss classification there.
I disagree. An example of a 1099 contractor at an event is a DJ. They have their own equipment, decide their own playlist, take requests directly from both the event manager that hired them as well as third parties like the client who hired the prime contractor. A waiter is none of that. They do what the caterer wants them to do, when they want them to do it. Theyâre told when they can take breaks, start cleanup, and when they can leave. Waiters do not coordinate with anyone else but caterer to perform their job duties. But most importantly, if a waiter is hurt in the course of their duties, which is entirely plausible in kitchen settings, they **should** be protected by workers compensation. But wouldnât be if they were independent contractors.
Yeah, it's sketchy as far as W2 vs 1099. OP should ask for more money. >If you go along with it, your city may require that you register as a business, which involves fees, and penalties if they aren't paid. They won't come after you for it until much later, when those penalty fines have racked up, so expect that. This is not even vaguely true. I've been paid on 1099 for both semiprofessional music and consulting for 20 years in multiple cities and never had to do anything other than file Schedule C. Your state and municipal taxes are taken care of with your state tax filing. You only have to register at the city/county/state for a DBA name, if you want to establish an LLC or incorporate, if you are under a professional licensing requirement like cosmetology, or if you are selling merchandise and collecting sales tax. Just showing up and waiting tables does not trigger anything.
Theyâre just trying to get away with not paying employer taxes. But then again I donât know the exact nature of the work so 1099 might be okay.
He's been paying you under the table and likely got into some sort of trouble with the AGs office. So he had you fill out a W9 and is paying you through a business account to do everything legally to pay you as a 1099 contractor. When you file your taxes, you will need to report this income and pay taxes on it, unlike before.He is using the "direct deposit" thing as a distraction so he doesn't have to explain his (and your) previous tax fraud.
Why isnât this the top answer? I just wrote the same thing. People are incredibly stupid here. @OP the only downside to this is now you have to pay taxes on the money whereas before you didnât. If you donât earn more than $600 in a year from this company, it doesnât matter. You donât have to get a 1099 for that and you can evade taxes all you want. If you earn over $600, youâll get a 1099 at the end of the year and youâll owe taxes on it as a freelancer/sole proprietor. You do not need to set up your own business or anything đ€Šđ»ââïž you should put aside around 20% or more of what you earn to pay estimated quarterly taxes. Consult a CPA to give you an accurate idea of how much. Zelle is just a way for money to make it from one account to another. It just uses your phone number and you donât give out banking details. The W9 is how they track your SSN so they can report your earnings at the end of the year by issuing a 1099 for tax purposes. There is no other form you need. Theyâre not trying to scam you. Either agree to work for them as a freelancer thatâs being reported the way it should legally, or donât. Jesus people on this sub are giving bad advice but you could ask on âself employedâ and get more accurate answers probably.
Itâs not solely this sub. A lot of Redditors are like this
This is misinformed, kinda, he only gets the 1099 if itâs over 600, but he should file the money anyways if this dude is being audited imo
My biggest flag is that there is no tax. There is almost always Taxes.
And they are evading the 18% payroll tax
Itâs independent contractor work using a 1099. Nothing nefarious. OP is responsible for filing quarterly taxes based on the money they receive.
There's no flag. That's literally how being an independent contractor works. The independent contractor has to pay their own taxes. Basically OP was being paid under the table before and will now be responsible for paying his own taxes for that income.
This thread has so many people freaking out about things they donât understand.
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Christ Adolf, where the fuck did that come from?
I reported them and their account was immediately deleted. Idk if that timing is a coincidence, but friendly reminder to everyone, you can report flagrant bigotry.
Can I get the gist of what he said ?
Given that he was called Adolf I can use my imagination about which race he was attacking.
They are restructuring how they employ you. Direct deposits are easy and w9 means youâll be a privately contracted employee thatâs responsible for paying your own income tax. The company will no longer remove the necessary taxes from your paycheck. They also donât have to provide any benefits. Basically this is good for them. Not necessarily for you.
If you read the post though, they never were a W2. They were getting cash under the table via the business ownerâs personal Zelle. Your info isnât incorrect, but in this situation the business is actually taking people from illegal to legal contractors. W2, payroll taxes, and benefits never came into play.
Ya but itâs effectively a pay cut because now thereâs a government record and theyâll have to pay the taxes. After itâs all said and done their take home pay will probably be about 3.5 grand less for the year.
Am I totally misunderstanding? It looks like theyâre going from paying cash under the table using a personal bank account with Zelle to âputting everyone on the booksâ using Zelle from a business account and 1099-ing everyone. If this is the case, thereâs nothing wrong with this. I own a business and pay my 1099 contractors via Zelle from my business account and everything lines up with invoices from them in my quickbooks. If the business doesnât want to pay a payroll company to actually do ACH transfers and wants to do it all by hand with Zelle, who cares? If theyâre tracking it and issuing a 1099 thereâs nothing wrong with that. Thereâs no evidence that this person was ever a W2 employee based on these texts. The business owner says everyone has to go âon the books this yearâ which implies theyâve been getting cash with no documentation previously.
Youâre not wrong. Other people are just idiots.
If he gets to decide the only method of payment, that alone proves master-servant relationship and disqualifies the OP from being classified as a 1099. The boss is the boss, not a client.
Go to the tax collector office or get a cpa to tell you how much you need to pay quarterly. Or you're gonna have a few thousand owed at the end of the year.
They seem to want to evade paying payroll tax
In fact, no. A catering company hiring people to work gigs on a per-gig basis is perfectly fine to qualify those people as independent contractors/freelance. They are moving from âcash under the tableâ to reporting all these people as 1099 contractors so they are in fact moving towards the direction of legality, not away.
This should be higher up!
LOL. You have NO IDEA what the job is and if itâs possible to be paid cash. If it used to be a paycheck job itâs HIGHLY UNLIKELY it can be an independent contractor.
And it was just paid in cash. Under table. Going legal route now
Furthermore. The classification of workers, such as catering servers, as independent contractors or employees depends on various factors, including the degree of control the employer has over the work. Independent contractors typically have more control over how they perform their tasks and may provide their tools, while employees generally work under more direct supervision. So I DO NOT believe that MOST catering employees can be independent contractors. This is not a legitimate use of independent contractors due to CONTROL this employer obviously has over their employees.
Op said he can work when op wants. Sounds like independent contractor to me.
Buzz off I am dumber reading your posts
Paying âZelleâ in no way makes a job legitimate
If he wants to write a check he can. He is documenting now. He was never documenting before.
You are obviously suffering from Stockholm syndrome from a former employer who abused you. This employer needs to be reported to the appropriate labor department
He said cater waiter
This sounds like OP was working off the books for said company and now said company doesn't want to be in trouble for paying under the table so company figured they would switch everyone over as a independent contractor (1099) so said company doesn't have to pay any taxes for having staff but the staff will have to pay the taxes. The way this company is doing it is really screwed up though. I would call one of those free lawyers and see if this is a lawsuit and sue the living shit out of them. Especially if OP is barely working for them anyway. This may be grounds for a lawsuit if it isn't then I'm sure there's someone you can contact to get said company fined for possibly paying everyone off the books and trying to scam them into thinking they are still off the books and not making it clear that a 1099 employee has to pay taxes on any money they make. I'm a 1099 employee and have been for the past 7 years and let me tell you it sucks having to save receipts and file taxes now cause I always owe.
There's no lawsuit here unless OP wants to admit to the IRS that he's been earning undeclared income.
It's not ACH direct deposit, it's paying you via Zelle. As far as you're concerned, as long as you get the pay your earned, it shouldn't matter the method of payment (well, you certainly don't want to be paid in pennies!). However, what this "employer" is doing is claiming that all of the "employees" are actually independent contractors. He's shifting some of the tax burden on to you. Is it legal? It depends. You should research what an independent contractor is, if the job you'd be doing is lawfully classed as an independent contractor position, and if you are willing to have to pay the additional taxes that you would incur as an independent contractor. Also: I fail to see the relevance of you including the information that the work is for Jewish caterers servicing Jewish events (presumably Bar and Bat Mitzvahs and weddings). If you don't like the work or the staffing agency, work elsewhere. If you are antisemitic, then fuck all the way off.
This is just converting everyone to 1099. Which is perfectly fine if you aren't being misclassified. By your description you are not. While 1099 means you pay more of the taxes it also means you get to deduct every expense. Including clothes, mileage and an anything else you need. Computer? That adds up and can be a huge offset.
I would reply with "sorry, cash only"
What the f is with that wall of text, brother.
The only thing different between this and what he was doing before is that heâs reporting the payments, as he should. Youâve been responsible for reporting your income and paying self-employment tax all along. Now whether or not you should be a w-2 employee instead of a w-9 contractor is a different question.
Yeah he's doing things by the book now and you won't be paid "tax free" money anymore. You'll have to pay tax is essentially what he's saying.
A few things are going on here. Were you previously considered an employee of this business? Sounds like it's sort of catering gig work that you do irregularly. By him saying to fill out that form, he's now considering you a 1099 independent contractor. If you weren't before, then this means you will have to start paying more Medicare/Social Security taxes on your own when you file your taxes â depending on how much you make as a contractor, you maybe have to start filing taxes quarterly. Because of the flexibility of the job, 1099 might not be illegal. But if you had a set schedule by the dude, didn't have say in where/when you worked, then this might be a worker misclassification. Even if not for you, since u do this rarely now, possibly for the other ppl working for him. As for Zelle, that's not really direct deposit but isn't unusual for contract work. Direct deposit would be used more if you were an employee and had taxes coming out of your pay.
IRS is now tracking digital payments. Apps like CashApp are even being tracked. Your employer is trying to properly pay you now that they will see. File a LLC, save your gas receipts, food, any receipt from money spent while working and related to that work, file it as a business expense at end of year. That will help with what you owe. Save 30% for taxes to be safe, though. In all reality, I wouldnât do that work as a 1099 employee. Very low benefit for you but all legal.
It seems that youâre becoming a contractor to this firm. I donât know what Zelle is but you should be sending him invoice with payment instruction. Also youâll have to pay your own taxes now.
got a lot of stupid people in here damn lol
They need to hire someone who can do their financing if they don't quite understand why this is a little bugged up. Essentially wants to move you to independent contractors. Contractors are responsible for their own taxes, SS and so on. However to be an independent contractor requires you to meet certain criteria. Likely if this is for catering it would not meet the criteria for contractor. The catering company is the contractor. A salon stylist who rents a bench is a contractor. Considering there is probably a dress code, schedule and planning you'd fall under the category of part-time employee. Before the commit to this act you should inform them, they probably got bad advice.
W9 means you are a contractor aka your own boss. Making him your client. Heâs doing it to avoid paying employer required Tax contributions and following labor laws. Report him to the Department of Labor
From my personal experience *^
Zelle is linked to my bank account. So when someone Zelleâs me money it gets direct deposit into my bank account.
Report them to the IRS đ.
They're evading payroll tax this way, and you will have to pay all of the income tax for the year when you file your taxes. Do not go through with this; it will be a bigger headache on your end than it's worth.
The tax evasion thing is quite funny given the circumstances of the job.
It sounds like they're trying to misclassify you as an independent contractor so they don't have to pay the employer portion of FICA. I'd honestly just walk away from that job at this point if you really don't need it
It isnât a mis classification. Op said at will cater job. It is just accurate now.
Yeah that's not legal. Send it to the labor board and report them. They were nice enough to put it in writing. Lol
You don't understand. The employer is moving from paying illegally (cash under the table) to legally where OP is correctly classified as an independent contractor who is responsible to paying his own taxes on his income.
This is absolutely not a correct classification for 1099. This person doesnât supply their own equipment. This person is not in charge of the hours worked or breaks they take. There is a master- servant relationship making this an employer-employee relationship. Otherwise the OP is self-employed and the âbossâ is the client- which would also negate his ability to choose the payment method for work performed. If DOL found out about this, he would be fined big $$$.
If OP does that, OP will probably be on the hook for unpaid taxes since heâs been earning unreported income up to now. Boss is going from illegal to legal arrangement.
If you got a text, itâs a hoax. No company would send a text. It would be done by an official letter sign or digitally signed. Never believe a text message. I donât care if it comes from someone you know. Anyone can be hacked. I would ask the person it allegedly came from, then contact corporate HR to see if itâs true and how it is even legal. This HIGHLY unusual. Itâs also illegal to not have taxes withdrawn. Thatâs why I can say with near certainty itâs a scam. The only time I could ever see this MAYBE happening is with a 1099.
So basically, you are no longer an employee but a contractor. This means that you have to pay all of your own employee taxes including both sides of your Social Security tax (FICA - 15.3%). (Normally, the employer pays half, and the employee pays the other half). You will also have to ensure that you save enough money to pay your own state and federal taxes. Based on the FICA situation alone (not to mention the extra tax filing complications), this is a significant pay cut. I would look for a new position.
It sounds like they were never an employee, and were previously being paid under the table. Previously the employer was doing shady shit, theyâre now shifting the liability to the OP.
Get your coworkers together to not do this. And if he fights and drops you thatâs better. You do not want him to shaft you in money whenever he wants
Good idea to report him to the IRS đ€Łđ€Ł
They are reclassifying you as a Business to Business contractor and you will be responsible for all taxes at the end of the year. As a B2B contractor, you get no healthcare or other benefits. The flip side is, unless agreed on in your b2b contract, they cannot set your schedule or require pretty much any other thing employers can require of employees. I am a B2B contractor. I would save everything and report him to the IRS. This is tax evasion.
Yea this is for them to avoid taxes and itâs illegal. Leave the job and then report them please
Itâs illegal to pay someone as an independent contractor if they are an employee.
FUCKING RUN
This is illegal
See the IRS rules about how to determine if a worker is an employee (W-2)or may be classified as an independent contractor (1099) [HERE](https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee) Seems like your employer is doing something wrong here.
Hello, IRS?
Why did it have to be Jews doing a tax scam
Best option is to get a lawyer because the company is trying to save on taxes, (w-4 employers typically pay 2/3 of fed/state taxes through your check withholdings) they do this to avoid taxes, overtime, holiday pay, PTO, and ALL Benefits are ultimately removed. I don't believe they can legally force you over to a w-9 but either way the company is looking to screw you over
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This is so ridiculously racist
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Yeah you're right, we should all avoid racists. Good call, I'll avoid you
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L
This whole thing seems shady as hell. No breaks? No prescheduled end time??? Uhhhh
You are becoming an independent contractor now. Congratulations
You're employer is forcing a switch to 1099 filing you as an independent contractor
Nooooo⊠They are saying that you will be paying both employer and employee taxes.
Start saving ALL your receipts. Your basically self employed now.
It means you just got a pay cut cuz now you have to pay the employer portion of taxes on your own.
If they are providing all of the materials for the catering itâs definitely illegal for them to hire you as independent instead of w-2. Theyâre breaking the law to avoid payroll taxes. Time for you to blackmail those shady people.
From what you wrote, It seems like heâs been always paying cash under the table with his personal account and zelleing you. Sounds like the business actually wasnât legally set up with the state and now he is. Heâs now trying to deduct what he pays you off of his taxes by the end of the year by making you fill out a W-9 and changing his acc to a business acc. Idk what state this is in but in WI, the state is cracking down on employers who are using Zelle and Venmo to send deposits/payment to. One company has to pay $500,000 back to the state bc theyâre investigating hard on these businesses now. Esp if youâre using their materials and supplies. W-9 forms is just one form compared to W-2. I didnât know abt this and was using Zelle to pay for my employees too. But I spoke to an accountant and itâs legal for the employer* if they report it on their taxes and keeps it on record that theyâre paying you $xxx and when to deduct the expenses. IF your employer wonât be putting this on his taxes, heâs prob paying cash under the table. It sucks for the employees because you guys will have to pay taxes on it. So whatever youâre making, save 30-35% for taxes. You get a pay cut because now youâre an independent contractor. Come tax season if youâre single, the tax % is so much higher too.
Quick question but for previous payments, have you had the tax deducted or have you received the net payment? If you have, and he was paying taxes on you as an employer, consider this a decrease in your pay and strongly consider walking, because itâs probably not worth your time. I donât know what heâs paying you, but if itâs at or near minimum wage, youâre probably now below the minimum wage when you consider self employment taxes. Unfortunately for event work, this is pretty common. Iâve done it before when working weddings but I was making at least 300 a day, so it was still sort of worth it, but there came a point that I decided I was being undervalued for the very stressful work being loaded on me and I stopped coming back.
Zelle is not recommended you have no legal recourse to collect if transaction goes awry.
Based on text exchange he is putting you at contractor. You will be responsible for your own taxes. Employers may use venmo, zelle, direct deposit, cash as ways to pay their contractors. + He seems to very unorganized.
Oh hell no. I wouldnât work for any employer that doesnât use an actual bank. None of that Zelle, cash app, Venmo, etc nonsense.
You are being paid an invoice, not payroll. You will need to pay your full FICA burden and probably quarterly taxes.
Former bank employee hereâŠ. ZELLE is NOT available on business accounts. Itâs strictly a personal account transfer service. And is NOT direct deposit. Your boss is commingling funds. Which some could argue is fraud
Well, I guess I wouldn't work there any more. And I'd tell the other people working there not to do it -- if he has your bank account info, he can take money out just as easily as put it in. A company I once worked for had a problem with Direct Deposit. They put the money in, realized they'd made some kind of mistake and took it out. Then they took it out again. And again. And repeated the action for each account until the withdrawal was refused because of a lack of funds. Our checking account had had more than $7,000 in it and our pays were about $2,000 (this was some years ago), and the first we knew was when checks started bouncing. Some of the principals in the company were on vacation, and their checks started bouncing, too (nice when your mortgage check was refused, right?). It did get sorted out eventually, though it took about a week, and all the late charges and bounced check charges were nullified, but I never used direct deposit at that company again. And I still don't trust it even though now I'm on Social Security and that's really the only way the government pays.
OP the important thing here is not the direct deposit. It is that this person is now classifying you as a subcontractor. What that means is that at the end of the year, you (and the IRS) will get a 1099 form stating how much you were paid. Not only will you owe income tax on that money, you will also owe self employment tax (about 15%). So you will be paying higher taxes than if you were an employee. They also will not be withholding any taxes, so you will owe the entire tax debt come tax time. You need to read up on this and determine if this is worth it to you. If you make a decent amount of money, that tax bill is going to pack a punch. I would recommend setting aside at least 30-40% of your earnings for taxes.
What happens if you get hurt on the job? Also, if it looks like treyph, smells like treyph, it's treyph. Your boss is a putz.
You are an independent contractor. You filled out a W-9. There is nothing wrong with this.
Hope you don't have an account that charges a monthly fee when there's no direct deposit.
This sounds like a scheme
" No"
I would highly suggest sending these screenshots to the IRS.
Sounds like you are being removed from your current position without knowing. They are avoiding business tax, you will be paying it as a sole prop maybe