How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Richard Price, Esq Your Own Question
Richard Price, Esq
Richard Price, Esq, Attorney
Category: CA Real Estate
Satisfied Customers: 59
Experience:  Attorney at The Law Office of Richard Samuel Price
88270820
Type Your CA Real Estate Question Here...
Richard Price, Esq is online now
A new question is answered every 9 seconds

Can a mortgage broker in CA who is licensed under BRE pay a

Customer Question

Can a mortgage broker in CA who is licensed under BRE pay a loan officer who is also licensed under the BRE and who is an outside loan officer (they pay for their office but work where they want to) by 1099 if the loan is a borrower paid compensation loan?
Submitted: 1 year ago.
Category: CA Real Estate
Expert:  Richard Price, Esq replied 1 year ago.

There are a list of factors to determine whether or not someone you hire is an employee (Form W-2) or independent contractor (Form 1099). It's difficult to fully advise you by writing without fully understanding the facts and circumstances of your working relationship with the loan officer. The fact that the loan officer works in their home and is paid a commission on loans is not enough information.

The National Association of Realtors recently posted an article about the issue: http://www.realtor.org/law-and-ethics/independent-contractor-status-in-real-estate-2015-white-paper

Here is a link to the California information about the issue: http://www.taxes.ca.gov/iCorE.bus.shtml

Here is a link to the IRS information about the issue: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Independent-Contractor-Self-Employed-or-Employee

Customer: replied 1 year ago.
I understand and have looked up the issue. I am still unclear which is why I have asked here. Under the circumstances presented, is there anything wrong with 1099'ing the loan originator if they otherwise fit the guidelines of independent contractors?
Expert:  Richard Price, Esq replied 1 year ago.

As the taxpayer, you would file based on the status that you want to give to the loan officer. However, if you classify a loan officer as an independent contractor, and either the IRS or California EDD determine that the loan officer is actually an employee, then you can be subject to penalties and interest. There is Internal Revenue Code section 3508 regarding independent contractor status of real estate agents: https://www.law.cornell.edu/uscode/text/26/3508

Expert:  Richard Price, Esq replied 1 year ago.

Do you have any additional questions that I can answer? I want for you to be satisfied with my answer so that you can rate me on the top right hand side of your window.

Related CA Real Estate Questions