1099 As Last Resort

June, I was trying to figure out how to ask you a question on your page-but couldn't find the tab for that.

I appreciate this resource so much. I was self employed massage therapist for 11 years and now am a student RN.

My husband is a subcontractor in the construction (specifically replacing floors) field and he has a helper. His helper is not licensed like my husband is- we paid him quite a bit of money this year- he makes 25%. We never had him fill out a w-9. He is still working helping my husband. Can we still send him a 1099 and will that help protect us? He made $25,000 by helping my husband this last year.

We are going to start paying him by business check starting next week so that we have absolute accurate records of how much we pay him.

I appreciate any feedback you have.

Thank you sooooo much.
Cheniah

AK


Hi Cheniah,

Sorry my site is confusing. A new one is in the works. Was supposed to be up by Thanksgiving. Then Christmas. Switched to a different web-dev company and we are now looking at April. So please hang in there with me.

Ahem! Based on your description your husband has an employee. Doesn't matter whether he's paid by check, cash, or steak dinners. If he works for your husband using your husband's tools, on your husband's schedule, and your husband could fire him if he did a lousy job or if there were no work, and the guy doesn't work for any one else then by all appearances you do not have a sub-contractor working for you.

What to do about 2010? Well, you should set up payroll and file all the back forms and pay penalties. But, my guess it that's not on your agenda. So next best is to file a 1099 and 1096.

My next eLetter, Ways Through The Maze, due out in a few days will give you info on filing a 1099 by the 2/28 deadline.

Best,

June

1099 or not, it's income.

June --

I have been a self employed massage therapist for three yrs now and always received a 1099. Last year I started working directly with clients as well. my question is this... I received a 1099 from a company I worked for but how do I report the other cash and checks I received directly from clients since I don't have a 1099 for that??? do I just combine it with the 1099 ?

judy

Hi Judy --

Whether or not you receive a 1099, all income you earn as a massage therapist is part of your gross self-employment income.

-- June

Income is what you actually receive.

Hi June,

I have been a self employed massage therapist for three years. My question is, I just ran a promotion with a local company. The company sold vouchers of my services for 50% off my regular rate and I get 50% of the sales.

How do I write this off on my taxes at the end of the year?

Jessica
Boylston, MA


Hi Jessica,

Congratulations on setting up promotion.

This is a simple situation. The discount or coupon has no impact on how your income is taxed. If you generally charge $100 for a massage and instead, with the coupon, you now receive $50, then your income is $50.

-- June

Deducting Education Expenses

June --

Massage Therapy 1 year as an indie.

I was wondering if I can deduct the cost of my massage therapy school on my tax return. I went to school in 2007 and 2008 but did not start working until 2009. I was told by some colleagues that I can deduct the cost of school the first year I start working. I want to make sure this is true before I file my taxes.

Thank you for your help.
Mary
Lyons, IL


Hello Mary,

I doubt you'd take advice from me on massage procedure and method. So it's good that you are checking out the tax advice given you by your fellow massage therapists.

They are wrong.

The costs of education to learn a new profession is not a business deduction. It doesn't matter when the expense occurred.

You may deduct the costs of education to maintain or augment skills in your current profession.

There are non-business tax benefits for the costs of education -- both credits and deductions. They could have been taken in 2007 and 2008. Discuss with your tax pro whether you took advantage of them and whether or not it is worthwhile to amend your back returns if you did not.

-- June