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Question

In the state of SC what are the requirements for paying someone on a 1099 and do we have to pay compensation for that person - also how do you handle per diem expenses given to such an employee - example $25.00 a night for food and the cost of a motel, and travel time - are these all put on the 1099 or not?

Submitted: 24 days ago.
Category: Tax
Value: $30
Status: CLOSED
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Posted by RD 24 days ago.

Answer

Is this per diem payment to your employee?

24 days ago.

Reply

these are tradesmen that install interior tile, painting, carpentry etc. when the job is more then two hours away we give them food money (per diem) and travel time as well as paying for a motel

Posted by RD 24 days ago.

Answer

How do you pay them? Is it as an independent contractor? or as an employee?

Normally payments to independent contractor is reportable on Form 1099 Misc if the payment during the year is $600 or more.

Let me know if you have any question.

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

24 days ago.

Reply

they are paid as individual contractors - but I also asked what the criteria was for paying on a 1099 I know their are certain criteria that has to be met

Posted by RD 24 days ago.

Answer

Since they are paid as individual contractors you are required to report the payment that you make to them during the year on Form 1099 Misc.

Generall form 1099 Misc is required to be issued to an unincorporated entity for payments made to them for services provided during the ordinary course of the business of $600 or more.

Let me know if you have any question.

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.


23 days and 23 hours ago.

Reply

Please read original question again. Thanks

Posted by RD 23 days and 23 hours ago.

Answer

Yes, all payment to the contractor (including the per diem since the contractor is not your employee for whom you issue a W-2) will be reported on Form 1099 Misc.

Here is a link to IRS website on Form 1099 Misc -
http://www.irs.gov/instructions/i1099msc/ar02.html#d0e863

Let me know if you have any question.

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

23 days and 23 hours ago.

Reply

What about the compensation question - do we need to pay compensation for a 1099Misc person working with us?

Posted by RD 23 days and 23 hours ago.

Answer

The amount that you pay to the contractor is considered non employee compensation. You do not have to make a paycheck (if that is what you mean by compensation) to that person. Paycheck are payment made after deducting FICA, medicare and federal withholding taxes. Paychecks are issued to employee and not to independent contractor.

Let me know if you have any question.

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

23 days and 23 hours ago.

Reply

No.... I'm sorry for not being clearer with my questions - I specifically mean Workmans Compensation (insurance)

Accepted Answer


Generally the contractors should carry their own workmen compensation insurance. If this is not the case than the employer using their services will have to provide coverage for them.

Note that-

The rule of thumb is that any employer who regularly employs four or more workers full-time or part-time is required to have workers' compensation insurance. There are some exceptions, including agricultural employees, railroads, and railway express companies and their employees, and employers who had a total annual payroll during the previous year of less than $3,000, regardless of the number of workers employed during that period. Also exempt are Textile Hall Corporation and certain commission paid real estate agents.

The definition of an employee is quite broad. It includes full-time and part-time workers, adults and minors, and others who have been hired to do certain jobs. The critical test is the degree of control the employer exercises over the worker.

Let me know if you have any question.

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.


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Expert: RD
Pos. Feedback: 99.4 %
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Answered: 10/28/2009

Certified Public Accountant (CPA)

CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..

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