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1099 Vs W2

Corporate Law Discussions

1099 Vs W2

Postby Carolo » Sat Dec 10, 2016 12:42 am

s About Taxes)/1099 VS w2 Advertisement Expert: John L. Tidwell - 9/24/2009 I AM A LOAN OFFICER. I WORK FROM MY HOME. I RECEIVE NO COMPANY BENEFITS. I PAY FOR ALL OF MY BUSINESS EXPENSES INCLUDING 2 ASSISTANTS, MARKETING, TRAVEL, BUSINESS AFFILITATIONS, EQUIPMENT, PENSIONS/401K  ETC. OUT OF MY POCKET. THESE EXPENSES RUN ABOUT 60% OF GROSS INCOME. THE BROKER WHRE i HANG MY LICENSE HAS RECENTLY STATED THAT HE MUST PAY US AS  W2 EMPLOYEE IN ORDER TO BE IN COMPLIANCE WITH HUD. THIS WILL DESTROY MY ABILITY TO SUPPORT MY BUSINESS. GIVEN THE STRUCTURE OF THE BUSINESS MODEL, I LIKEN MY SITUATION TO THAT OF A SALES PERSON WORKING ON STRAIGHT COMMISSION FOR AN INSURANCE COMPAY. AM I ABLE TO BE A W2 EMPLOYEE BUT BE TREATED AS A 1099? I HAVE READ THAT THERE IS A CASE IN WHICH THE AMT WAS CHALLEGNGED FOR SIMILAR REASONS AND PREVAILED.

ANSWER: Rhoda:

I understand your situation, however, due to the problems in the financial markets the federal regulators are enforcing strict compliance with each state's law.  You are either a chartered financial institution or you work for one.  Since you are licensed only to the extent that you "must hang" your license with a broker.  This arrangement makes the "broker" your "superior", therefore, your supervisor.  This arrangement removes you from the "independent contracting" scheme to being an employee.

Since you are not an insurance agent, you do not have a law that treats yous commissions as something other than wages.  On the other hand, insurance agents have a law that addresses the manner of their payments if solely by commissions, its independent contracting.

If you receive a W-2 you can file form 2106 to report your expenses, however, it does constrict your abilities to deduct certain expenses. Hopefully I have answered your question.  If not, please reply back for more detail.

John

---------- FOLLOW-UP ----------

I have been told that this issue has been tested in the courts. case Butts vs. Commis. and has held on appeal to a higher court. In this instance the loan officer received a W2, filed as a 1099 and was not subjected to the AMT. IN this case, the courts rule in favor of the loan officer on the grounds mentioned above and the decision was upheld upon appeal. Does this case not count on this issue? It has been cited in other situations.
Carolo
 
Posts: 32
Joined: Sat Feb 22, 2014 7:24 am

1099 Vs W2

Postby Hennessy » Sun Dec 11, 2016 2:57 am

s About Taxes)/1099 VS w2 Advertisement Expert: John L. Tidwell - 9/24/2009 I AM A LOAN OFFICER. I WORK FROM MY HOME. I RECEIVE NO COMPANY BENEFITS. I PAY FOR ALL OF MY BUSINESS EXPENSES INCLUDING 2 ASSISTANTS, MARKETING, TRAVEL, BUSINESS AFFILITATIONS, EQUIPMENT, PENSIONS/401K  ETC. OUT OF MY POCKET. THESE EXPENSES RUN ABOUT 60% OF GROSS INCOME. THE BROKER WHRE i HANG MY LICENSE HAS RECENTLY STATED THAT HE MUST PAY US AS  W2 EMPLOYEE IN ORDER TO BE IN COMPLIANCE WITH HUD. THIS WILL DESTROY MY ABILITY TO SUPPORT MY BUSINESS. GIVEN THE STRUCTURE OF THE BUSINESS MODEL, I LIKEN MY SITUATION TO THAT OF A SALES PERSON WORKING ON STRAIGHT COMMISSION FOR AN INSURANCE COMPAY. AM I ABLE TO BE A W2 EMPLOYEE BUT BE TREATED AS A 1099? I HAVE READ THAT THERE IS A CASE IN WHICH THE AMT WAS CHALLEGNGED FOR SIMILAR REASONS AND PREVAILED.

ANSWER: Rhoda:

I understand your situation, however, due to the problems in the financial markets the federal regulators are enforcing strict compliance with each state's law.  You are either a chartered financial institution or you work for one.  Since you are licensed only to the extent that you "must hang" your license with a broker.  This arrangement makes the "broker" your "superior", therefore, your supervisor.  This arrangement removes you from the "independent contracting" scheme to being an employee.

Since you are not an insurance agent, you do not have a law that treats yous commissions as something other than wages.  On the other hand, insurance agents have a law that addresses the manner of their payments if solely by commissions, its independent contracting.

If you receive a W-2 you can file form 2106 to report your expenses, however, it does constrict your abilities to deduct certain expenses. Hopefully I have answered your question.  If not, please reply back for more detail.

John

---------- FOLLOW-UP ----------

I have been told that this issue has been tested in the courts. case Butts vs. Commis. and has held on appeal to a higher court. In this instance the loan officer received a W2, filed as a 1099 and was not subjected to the AMT. IN this case, the courts rule in favor of the loan officer on the grounds mentioned above and the decision was upheld upon appeal. Does this case not count on this issue? It has been cited in other situations.
Hennessy
 
Posts: 54
Joined: Sat Jan 04, 2014 10:50 pm

1099 Vs W2

Postby Broddy » Mon Dec 12, 2016 8:34 am

Rhonda:

I have not read the BUTTS case and do not know the issues presented.  However, I am mystified with the referrals to "AMT"(Alternative Minimum Income) tax calculation.  Which is usually tax on excessive "passive" income or "passive" schemes to reduce income.  As we know "W-2" income is not "passive".

All my tax clients who work in the mortgage business as either a broker or as a licensed placement  officer(s), who is licensed by my state(Tennessee), either files according to my interpretation or uses another service.  If the legislators intend for the mortgage brokerage business to be treated differently they will file and pass the necessary laws to insure this will happen.  This change in interpretation not only effects income tax but also Unemployment and Workman compensation.

But, in the end if you choose to test the laws, then test the waters, "put that one toe over the line" an go for it.

John

P.S.

"I will review the BUTTS case when I get off vacation."
Broddy
 
Posts: 48
Joined: Mon Jan 06, 2014 4:12 pm


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