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I have a Tutoring Corporation in California that employees

four full time employees and...
I have a Tutoring Corporation in California that employees four full time employees and 35 1099 contractors that tutor students at the families' homes. Can I pay my 1099 tutors an hourly wage PLUS a travel stipend based on amount of miles travelled?
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Answered in 21 minutes by:
9/1/2011
Tax.appeal.168
Tax.appeal.168, Tax Accountant
Category: Tax
Satisfied Customers: 3,866
Experience: 3+ decades of varied tax industry exp. Tax Biz owner
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Hello, THANK YOU for choosing Just Answer. My goal is to help make your life...a little...LESS taxing.

You can pay an hourly wage, but if you start paying a travel stipend, you're starting to treat the IC (Independent Contractor) as an employee. Let me explain, typically an IC is an independent business responsible for his/her own expenses, including mileage. When you pay a IC's mileage expense you're heading towards misclassification. Paying mileage is one factor that can point to employee. What I mean by this is that an employee would expect to be reimbursed for his/her mileage if they were driving to a client's house for business purposes, whereas an IC would normally tally up all of his/her business miles for the year and take a deduction for the mileage at the end of the year.
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Further clarification,...if you include a travel stipend in the IC's pay, it will be considered income and the IC will be taxed on it.
Tax.appeal.168
Tax.appeal.168, Tax Accountant
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