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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29932
Experience:  Taxes, Immigration, Labor Relations
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What are my legal obligation if I want to contract whit a company

Customer Question

what are my legal obligation if I want to contract whit a company for temporary cleaning, but I want to have some extra help, I am not ready to hired people with all the requirements I just want something simple like have a few helpers can I subcontract with them which form or service agreement should I use with those people. how much money can I pay to them before have to pay declared it with IRS
Submitted: 2 years ago.
Category: Tax
Expert:  Lev replied 2 years ago.
Hi and welcome to our site!If that is a personal cleaning service - and you pay to persons for extra help or tips - there is NO obligations to report these payments to the IRS.If that is a payment in connection with your business activities - then payments above $600 to any single person are reportable.For the recipient - regardless of the amount and regardless if there is any reporting - that person is required to include that income into his/her taxable income.
Expert:  Lev replied 2 years ago.
Please see instructions for the form 1099MISC for reporting requirements
File Form 1099-MISC, Miscellaneous Income, for each
person to whom you have paid during the year:
At least $10 in royalties (see the instructions for box 2) or
broker payments in lieu of dividends or tax-exempt interest
(see the instructions for box 8);
At least $600 in:
1. rents (box 1);
2. services performed by someone who is not your
employee (including parts and materials), box 7;
3. prizes and awards (see instructions for boxes 3 and 7;
4. other income payments (box 3);
5. medical and health care payments (box 6);
6. crop insurance proceeds (box 10);
7. cash payments for fish (or other aquatic life) you
purchase from anyone engaged in the trade or business of
catching fish (box 7);
8. generally, the cash paid from a notional principal
contract to an individual, partnership, or estate (box 7);
9. Payments to an attorney. See Payments to attorneys,
later; or
10. Any fishing boat proceeds (box 5).
In addition, use Form 1099-MISC to report that you made
direct sales of at least $5,000 of consumer products to a
buyer for resale anywhere other than a permanent retail
establishment (box 9).
You must also file Form 1099-MISC for each person from
whom you have withheld any federal income tax (report in
box 4) under the backup withholding rules regardless of the
amount of the payment.
At the same time - see following -
Trade or business reporting only. Report on Form
1099-MISC only when payments are made in the course of
your trade or business. Personal payments are not
reportable. You are engaged in a trade or business if you
operate for gain or profit.
Let me know if you need any clarification this matter.