Single Mom in a Messy Situation

June --

The sole practitioner attorney I work for didn't want to put me on "payroll" and have me technically be an employee for tax and other reasons.

He helped me get incorporated as I also had a brief (craft shows) side business I wanted to start, which failed. He pays me an extra $2.75 hour towards the taxes.

It has messed me up with some things -- As a single mom and trying to get help and having to provide proof of income; Costing $300 a year to the accountant; Extra extra steps in getting mortgage financing. Even now in my attempt to modify my loan, he signs a paper saying I'll continue to provide administrative services.

Now, I am considering applying for SSI disability benefits and realize that this is going to put a huge damper on things. Especially since it goes by past pay.

I am not really an independent contractor. I'm his secretary and only an Independent on paper for his benefit and my detriment.

Any suggestions? Comments?

Chrissy
Legal Secretary/Assistant; 7 years as an indie
Dania Beach, FL


Dear Chrissy,

You say you're not an independent contractor. You probably knew that when you set up this deal with the attorney. So we can't blame this entirely on him. You must take some responsibility for your situation.

OK. Now that you've taken some responsibility, I really blame him. He's an attorney. You're a single mom in desperate need of income. It appears he took advantage of you.

As an attorney he is an officer of the court and is supposed to adhere to high standards of integrity, and he knows better than to stoop to this kind of tax evasion.

You need to dissolve the corporation immediately. How your accountant went along with your corporation since it's just you a legal secretary and a crafts person is difficult for me to understand. You might just want to call your local H&R Block office and see if you can set up an appointment with someone there who can dissolve the corp and file the final corporate returns. You might ask the attorney to cover the fees for this.

The next step takes some heavy thinking on your part. Do you want to pursue your options in dealing with this fraudulent situation in which the attorney may have placed you? If you do then contact the State of Florida Agency for Workplace Innovation . Or you may email directly to peter.dehaan@awi.state.fl.us for advice.

It may be hard for you to extract yourself from this mess, but you must. Do not go along with anything that isn’t legitimate and be sure you completely understand potential consequences before making any decisions. Bring a savvy friend with you to any meetings.

Good Luck.
June

Reimbursed Auto Expenses

June --

I have been an attorney for 7 months.

I know there are two ways to deduct car expenses. But if I am reimbursed by a client for some of my mileage, am I stuck with the mileage method? E.g. I travel regularly from my home office to my office down town. I am paid by the client at 50 cents a mile for trips to court and meetings at their sites.

Elizabeth from Rapid City, SD


Elizabeth,

The reimbursement is part of your income. You may want to read these posts on expenses -- reimbursed .

Combine those miles with all your other business miles and use same deduction method for all business miles.

-- June

Check out my book Self-employed Tax Solutions. It will simplify your tax and financial life, and save you money!

Deducting an Attorney's Time

June --

As a self-employed attorney, ordinarily I would charge my travel time to a client, usually at my full billable rate, but sometimes at a reduced rate. I spent several months last year working at a temporary work location as an independent contractor responsible for reviewing my clients' contracts, and negotiating and drafting agreements. The temporary work location in central North Carolina was situated 61 miles from my tax home in southern Virginia, so I spent about 2.5 hours per day traveling to the worksite for which I was not separately compensated, and for which I could not bill to the client (per our consulting agreement, I was responsible for my own travel costs).

Can I claim the 2.5 hours per day of non-productive, otherwise billable, but unreimbursed (by the client) travel time as an ordinary and necessary business expense to offset my gross profits on Schedule C?

The common practice of law firms billing travel time, and the stock-in-trade of an attorney being his/her "time" as measured by billable hours, seems to suggest I can list my expended travel time (necessary in order to reach my distant worksite, and unproductive because i could not work for this or for other clients while driving) as an ordinary and necessary business expense for purposes of trimming my taxable net profit.

Chris

Hello Chris,

Good argument, but no. you cannot claim your time, no matter how valuable, as a business deduction.

The same reasoning applies to contributions of your time and or services to a charitable organization. For instance, were you to donate your services to a non-profit you would get no tax deduction. But, were you to bill me for services and then give to the charity as a donation whatever I paid you, then you'd be able to deduct it. Take a look at No deduction for donated work or services on my website for a little more info.

Best,
June