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 Lev Your Own Question

Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22737
Experience:  Taxes, Immigration, Labor Relations
870116
Type Your Tax Question Here...
Lev is online now
A new question is answered every 9 seconds

My husband and I own a social club where our dealers only make

Resolved Question:

My husband and I own a social club where our dealers only make tips.. We do not pay them hourly or give them any type of benefits. We are trying to figure out if they are considered self employed or if we need to 1099 them as independent contractors... Could you possibly help explain the difference and what you would classify them as? We get paid from them by charging them an hourly rental fee, just as a beauty salon or as a stripper, who pays the house to work ... how would we classify that income? Just as an hourly rental fee or something else?
Submitted: 3 years ago.
Category: Tax
Expert:  Lev replied 3 years ago.

LEV :

Hi and welcome to Just Answer!

LEV :

We are trying to figure out if they are considered self employed or if we need to 1099 them as independent contractors... Could you possibly help explain the difference and what you would classify them as?


In determining whether the person providing service is an employee or an independent contractor, all information that provides evidence of the degree of control and independence must be considered.


Facts that provide evidence of the degree of control and independence fall into three categories:


1. Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?


2. Financial: Are the business aspects of the worker’s job controlled by the payer? (These include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)


3. Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?


If they are employees – you are required to pay at least minimum hourly wages (under your state labor laws). If they are self-employed contractors – that is their responsibility to account and report their taxable income. As long as you do not pay them – you do not need to issue any tax form.


We get paid from them by charging them an hourly rental fee, just as a beauty salon or as a stripper, who pays the house to work ... how would we classify that income? Just as an hourly rental fee or something else?


Generally – that is an income of your social club – regardless how that amount is determined – as rental fees, hourly fees, or just a flat rate - it should be reported on the social club tax return.

Customer:

We file a regular income tax return that includes the business and our personal... is that wrong? I didn't realize that we had to file separately for the business... I assumed that it was all included in our personal income tax..

Customer:

so as far as our dealers, would they be responsible then for their own returns and tax liability or would they be considered independant contractors where we have to keep track or their tips and have to give them a 1099 form at the end of the year?

Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22737
Experience: Taxes, Immigration, Labor Relations
Lev and 5 other Tax Specialists are ready to help you
Customer: replied 3 years ago.

my husband and I always just filed a income tax return... do we have to do a separate return for the social club? also, if my dealers are considered self employed do I have to do anything as far as forms for them at the end of the year? Or would they be considered independent contractors and do I have to issue them 1099-misc at the end of the year?

Expert:  Lev replied 3 years ago.

If you do not have a separate registration for a social club - there no need to file a separate tax return - in this case - a social club is your business and that is your self-employment income. As long as dealers are not your employees - you do not need to keep track of their compensation (as long as the compensation is not paid by you).

You need to issue the form 1099-misc only if you pay them compensation for services.

If they pay you in the course of their business activities - they should issue the form 1099-misc if total amount is more than $600 over the tax year.

Customer: replied 3 years ago.

Could you explain what a separate registration means? and does this mean that I should be issued a 1099 from each dealer that has paid us more than 600 in the course of the year? and would they use the 1099 form and the amount they list as the amount they paid us for the rental in their own income tax return?

Expert:  Lev replied 3 years ago.

Social clubs might be registered as not-for-profit organizations under section 501(c)(7).

When you mentioned that you have a social club - my impression was that it is a separate organization.

You may find some additional information here - http://www.irs.gov/charities/nonprofits/article/0,,id=96189,00.html

 

If the dealer paid you more than $600 - that is a dealer's - not yours - responsibility to issue the form 1099-misc. Most likely - they will use the amount paid to you as a deductible business expense.

You still need to report that income regardless if the form 1099-misc was issued to you or not.

Customer: replied 3 years ago.
We have never registered the company under any classification... I don't believe... we have a retail sales license, and also have a business class 17 retail license because we sell poker supplies etc, as well as having the social club... Do we need to register it? Or can we handle our taxes as income tax like we have been doing just as long as we claim all of our income from sales, and also hourly rental fees? if we do have to register it as a no profit organization, how would I go about doing that if I have to do it at all?
Expert:  Lev replied 3 years ago.

For income tax purposes - you do not have to register your social club.

For retail operations - sales tax purposes - you do need registration - on the local level - but seems you are OK with that.

If your activities are for profit - you may not have not-for-profit registration.

If you want to have a not-for-profit status for your social club - here are filing information - http://www.irs.gov/charities/nonprofits/article/0,,id=226391,00.html

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
< Last | Next >
  • http://ww2.justanswer.com/uploads/KU/KUMI95/2013-9-30_195031_kumar.64x64.jpg Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
  • http://ww2.justanswer.com/uploads/CU/Cuttinggirl/2011-10-29_03719_wcrop2.64x64.jpg Wendy Reed's Avatar

    Wendy Reed

    Enrolled Agent

    Satisfied Customers:

    3052
    15+ years tax preparation and tax advice.
  • http://ww2.justanswer.com/uploads/CATax/2009-08-04_204548_Mark.jpg Mark D's Avatar

    Mark D

    Enrolled Agent

    Satisfied Customers:

    985
    MBA, EA, Specializing in Business and Individual Tax Returns and Issues
  • http://ww2.justanswer.com/uploads/IN/insearchoftheanswer/2013-8-16_0233_attorney.64x64.jpg Richard's Avatar

    Richard

    Tax Attorney

    Satisfied Customers:

    3229
    29 years of experience as a tax, real estate, and business attorney.
  • http://ww2.justanswer.com/uploads/MY/MyVirtualCPA/2012-7-5_44024_cookmegan1.64x64.jpg Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    6121
    Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JG/jgordosea/2012-6-7_43138_GordosVeritas.64x64.jpg jgordosea's Avatar

    jgordosea

    Enrolled Agent

    Satisfied Customers:

    2783
    I've prepared all types of taxes since 1987.
  • http://ww2.justanswer.com/uploads/OZ/ozaukeecpa/2012-6-7_193219_Picture1croppedandshrunk.64x64.jpg MequonCPA's Avatar

    MequonCPA

    Certified Public Accountant (CPA)

    Satisfied Customers:

    2231
    CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.