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1099 Or W-2 Employee ?

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centuryappraisal

Freshman Member
Joined
Feb 18, 2013
Professional Status
Appraiser Trainee
State
California
I am a certified appraiser in California for 4 years. I have 2 questions:

1) If I am going to hire a trainee now(he will get his AT license in 2018), can I pay him as 1099 or it has to be W-2 ??

2) If I am going to hire a typist (no AT license, only typing without much supervision), can I pay him as 1099 or it has to be W-2 ??

Appreciate any quick reply. Thank.
 

hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
My feedback:
1. A trainee cannot be considered an contractor due to the level of supervision required. This type of person should be hired as an employee, W-2. You would be doomed if you hired such a person, it didn't work out, and then they filed for unemployment and you didn't hire them as an employee.

2. A "typist" could fall under the contractor provision. There are services that will form-fill much of a residential appraisal report for appraisers on a contract basis. The level of control you have over the typist is one (not the only one) of the criteria. It would be helpful if the typist worked as a contracted typist for other appraisers/businesses.
 

centuryappraisal

Freshman Member
Joined
Feb 18, 2013
Professional Status
Appraiser Trainee
State
California
My feedback:
1. A trainee cannot be considered an contractor due to the level of supervision required. This type of person should be hired as an employee, W-2. You would be doomed if you hired such a person, it didn't work out, and then they filed for unemployment and you didn't hire them as an employee.

2. A "typist" could fall under the contractor provision. There are services that will form-fill much of a residential appraisal report for appraisers on a contract basis. The level of control you have over the typist is one (not the only one) of the criteria. It would be helpful if the typist worked as a contracted typist for other appraisers/businesses.
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Thank for the quick reply Denis.

A followup question: For the sake of simplicity, let's assume that for the whole year I pay the trainee $10000, how much it costs me more paying him in W-2 comparing to 1099 ?? The reason I ask because if it costs me much more for hiring a W-2 employee, then I rather hire an AL as 1099.
 

CindyR

Senior Member
Joined
Oct 26, 2003
Professional Status
Certified Residential Appraiser
State
Arizona
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Thank for the quick reply Denis.

A followup question: For the sake of simplicity, let's assume that for the whole year I pay the trainee $10000, how much it costs me more paying him in W-2 comparing to 1099 ?? The reason I ask because if it costs me much more for hiring a W-2 employee, then I rather hire an AL as 1099.

for an employee you have to pay federal and state unemployment taxes and the employer portion of social security.
 

Meandering

Elite Member
Joined
Feb 26, 2006
Professional Status
Real Estate Agent or Broker
State
Pennsylvania
My feedback:
1. A trainee cannot be considered an contractor due to the level of supervision required. This type of person should be hired as an employee, W-2. You would be doomed if you hired such a person, it didn't work out, and then they filed for unemployment and you didn't hire them as an employee.

2. A "typist" could fall under the contractor provision. There are services that will form-fill much of a residential appraisal report for appraisers on a contract basis. The level of control you have over the typist is one (not the only one) of the criteria. It would be helpful if the typist worked as a contracted typist for other appraisers/businesses.


Not to argue, just a question,
but,
isn't it true that the only "client" of a trainee is the mentor? As, trainees can not send reports directly to "other" clients.

And the mentor as the "client" gets to request corrections to report,
not much differently than a lending client can ask an appraiser to make corrections to a report.

Oh what a slippery slope.

.
 

Michigan CG

Moderator
Staff member
Moderator
Joined
Nov 1, 2006
Professional Status
Certified General Appraiser
State
Michigan
The IRS says a trainee has to be an employee.
 

Howard Klahr

Senior Member
Joined
Oct 4, 2004
Professional Status
Certified General Appraiser
State
Florida
isn't it true that the only "client" of a trainee is the mentor?
Wouldn't your assertion depend on state licensing regulations? Some states restrict trainees to only one supervisor/mentor. Others, such as Florida, allow more than one supervisor, but they are restricted to only two and are to be from the same firm. Yet other states do not restrict the number of supervisor.

Under this last option, a trainee might be able to qualify as an independent contractor.

The IRS says a trainee has to be an employee.
There is no such regulation.
 

GA Benny

Junior Member
Joined
Oct 19, 2007
Professional Status
Certified Residential Appraiser
State
Georgia
Employee/contractor status has nothing to do with being a trainee or not. It has to do with the position requirements, pay structure and the business relationship. This may vary depending on state laws regarding the trainee/supervisor relationship. I would advise looking at the IRS website and maybe talking to a tax professional.
 

timd354

Elite Member
Joined
Jan 11, 2008
Professional Status
Certified Residential Appraiser
State
Maryland
Employee/contractor status has nothing to do with being a trainee or not. It has to do with the position requirements, pay structure and the business relationship. This may vary depending on state laws regarding the trainee/supervisor relationship. I would advise looking at the IRS website and maybe talking to a tax professional.
An appraiser would be very hard pressed to convince the IRS that a trainee that cannot sign a report by himsel without the supervisors/appraiser's signature is not an employee - there is approximately a zero percent chance that the IRS won't determine that a trainee is an employee not an independent contractor.
 

GA Benny

Junior Member
Joined
Oct 19, 2007
Professional Status
Certified Residential Appraiser
State
Georgia
An appraiser would be very hard pressed to convince the IRS that a trainee that cannot sign a report by himsel without the supervisors/appraiser's signature is not an employee - there is approximately a zero percent chance that the IRS won't determine that a trainee is an employee not an independent contractor.
You are also making the assumption that the trainee is signing a report. They may be contracted to do data entry and research only. Appraisal experience does not necessarily mean they must be signing as the appraiser.
 
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