85 votes
Accepted

Possible customer wants me to handle payment to another contractor. Is this a scam or not?

100% scam. It's not your job to pay other contractors on behalf of the customer. Ask yourself this: If the situation were reversed and the customer was saying he'd pay the other contractor, who ...
  • 1,107
53 votes

Contractor wants client to open checking account

While a traditional checking account with the contractor's name on it sounds a bit off, it's not uncommon for private contractors to leverage a construction escrow account for larger projects like ...
  • 66k
53 votes
Accepted

Do I need to pay taxes as a food delivery worker if I make less than $12,000 in a year?

Because you're self-employed and make more than $400, you'll need to file a federal return. If you make less than the standard deduction ($12,400 for a single person in 2020), you won't owe any income ...
  • 14.7k
27 votes

Contractor wants client to open checking account

Scam. The contractor is trying to transfer liability onto you. What makes a contractor accountable for getting the job done is the financial peril he faces if he does not. There's the hypothetical ...
26 votes

Possible customer wants me to handle payment to another contractor. Is this a scam or not?

There is no reasonable scenario where a customer can write one check but not two. Even if they were on their very last check, they are just a few days away from ordering more. It may not be a scam ...
  • 46.4k
21 votes
Accepted

Are there contracts for fixed pay vs. fixed pay rates?

Yes. I have personally signed such contracts (fixed budget software development) and lost money every single time. And yes, it is quite possible for you to get paid under minimum wage if you take too ...
  • 532
16 votes
Accepted

What happens to contractors when employer goes bankrupt?

1: no. You are among the rabble. Because you are a contractor, i.e. another business. This is part of the deal of being a contractor - you control your busienss and are responsible for your risk. And ...
  • 11.4k
12 votes

Hiring Foreign Contractors - Is This Tax Deductible?

Your premise is incorrect: I believe if they were US based contractors I would need to send them a form to do my own deduction. If it is a legitimate business expense, you can deduct it regardless ...
  • 46.4k
11 votes

Contractor wants client to open checking account

TL;DR: No. There is no legitimate reason for doing this. It's trying to replicate the invisibility of a cash job with the convenience of not having to lug around briefcases full of cash, with the ...
9 votes

Are there contracts for fixed pay vs. fixed pay rates?

In general the other party will expect you to keep your promises. If you promise to do something for a fixed amount of money, you take on a risk and it is no longer their problem if you work slower ...
  • 221
8 votes
Accepted

Mother wants me to "be a consultant" for her as way to save on income tax

In reality, I do help her every now and then with various bits (specific to her work, e.g.: translation, graphic design, software tutorials) but I would not think of it as consulting... But you are ...
  • 49k
7 votes
Accepted

Excess Social Security Witholdings

I wrote about the Social Security overlap when switching job a long time ago. Your situation is essentially the same. Each employer is required to withhold FICA taxes to the full extent, and it doesn'...
  • 134k
7 votes

W-2 contractor loopholes

To be clear, if you are receiving a W-2, you are an employee, not a self-employed contractor. Before the new tax reform law, it was possible to deduct unreimbursed employee expenses. These were ...
7 votes

What happens to contractors when employer goes bankrupt?

Exactly the same thing happened to me. Short answer: Don't hold your breath waiting for the money. Under US bankruptcy law, there is a long list of priorities for who gets paid first. Yes, "secured ...
  • 20.8k
7 votes

Contractor wants client to open checking account

While I wouldn't do it it might not be a scam. Rather, it could be the contractor is attempting to hide money and doesn't want accounts in their name. Maybe the IRS is after them, maybe they have a ...
6 votes
Accepted

How to properly report income without 1099-MISC

You are right that even if you do not receive a 1099-MISC, you still need to report all income to the IRS. Report the $40 on Schedule C or Schedule C-EZ. Since your net profit was less than $400, ...
  • 3,511
6 votes
Accepted

Moonlighting as a software developer: employee or independent contractor w/ LLC?

I've been in a similar situation before. While contracting, sometimes the recruiting agency would allow me to choose between being a W2 employee or invoicing them via Corp-2-Corp. I already had a ...
  • 46.4k
6 votes

Do I need to pay taxes as a food delivery worker if I make less than $12,000 in a year?

You got this gist of it. However, I don't see anyone mention the Earned Income Credit. I want to say you need to be at least 25, but am not 100% sure on that. https://www.irs.gov/credits-deductions/...
  • 61
6 votes

Should a freelance programmer charge me for hours spent where a computer was running a script?

Would you have been happy had, say, the developer gone to bed or gone to a movie while the script ran? Even if the script was generating errors or causing the CPU on some machine to spike or causing ...
5 votes
Accepted

Can money paid to an independent contractor be split among subcontractors as deductible business expenses?

You're a partnership. You should ask the money to be paid to the partnership. You'll have to fill partnership income tax return (form 1065) and each of you will get a K-1 schedule with your own ...
  • 134k
5 votes

Are there contracts for fixed pay vs. fixed pay rates?

Software Contractors are not employees of the company that is procuring the software. Software Contractors necessarily work for another legal business entity. There is a business to business ...
  • 151
5 votes

Can we legally pay my fiancee's mother as a sub-contractor with cash only?

Generally, with a paper route, you are considered self-employed. The newspaper gives you checks with no taxes withheld, and at tax time you are given a 1099-MISC form. On your tax return, you deduct ...
5 votes
Accepted

Tax considerations for outsourcing freelance work to foreign country

I took littleadv's advice and talked to an accountant today. Regardless of method of payment, my US LLC does not have to withhold taxes or report the payment as payments to contractors (1099/1042(S)) ...
  • 211
5 votes

Excess Social Security Witholdings

They have to withhold. When you file your taxes there is a line item to refund overpayment. Fairly trivial.
  • 314
5 votes

Hiring Foreign Contractors - Is This Tax Deductible?

If you want to be extra sure, get them to sign a W8-BEN form and keep it on file. I have talked to the IRS about this, and they agreed it's generally unnecessary when dealing with a corporation but ...
5 votes

Independent contractors and new U.S. tax law

The new tax law provides a 20% deduction for income from pass-through entities (for next 8 years). So whether you keep operating as a sole-proprietor or establish an LLC,partnership, etc. you'll ...
  • 66k
5 votes
Accepted

Do I need to exchange my EU income (Euros) to GBP to get taxed in the UK?

At some point you will be required to pay some taxes to HMRC. That bill will have to be paid in UK pounds. That is the only exchange to pounds you will need (apart of course from anything you need to ...
5 votes

Should a freelance programmer charge me for hours spent where a computer was running a script?

I work for a consulting company where this comes up fairly regularly. The litmus test for us is this: Could the individual running the script reasonably go work on something else while the script runs&...
  • 51.7k
5 votes

Does side-job with W-9 get listed as 2nd job in W-4 for new job?

You should use the W4 estimator to figure out how to fill your new W4. Generally speaking, W4 is intended to instruct your employer how much to withhold, and you can check the "2nd job" ...
  • 134k

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