Illinois Appraisers

[Laura Tisinai]

I have a question about getting paid as a trainee. My supervisor has her own company out of her house, it is only her. She is training me and I am getting my own clients. When I get paid from a client it goes through her company, then she pays me. What do I do about social security and income taxes? Any suggestions would help me. Thanks in advance!

Laura Tisinai

 

[Couch Potato]

Talk to a tax professional in your area ASAP. While it is possible to be an independent contractor as a trainee in many states, there are very specific rules that must be followed. Among those rules is a written agreement regarding your relationship to your supervisor.

Get professional help IMMEDIATELY.

 

[Brad Ellis]

Laura,

Greg is correct- talk to a tax pro. But, I'll tell you that the IRS has published a long list of requirements governing independent contractors. One of these is deriving income from more than one source. From what you describe, all your income is from your supervisor even when you bring in the assignment.

That might cause you to be seen as an employee in IRS eyes. So, if you want to be independent, sit down with your suprevisor and write up an agreement that allows you to get fees from clients directly. Then you can pay your supervisor their share and have documentation that you do not derive all your income from that one source.

This is important for both of you and you probably should involve an attorney as well. I know of more than one firm in IL who got hit with back employment and SS taxes due to a lack of such an agreement.

Once you are self employed, YOU must file estimates quarterly and will have to pay both portions of the FICA.
Brad

 

[Stone]

When I started appraising, I remember one of the tests of an independant contractor for the IRS was something like are you in control. If one person provides you with all of your income (not talking clients in this case, but your supervisor) you cannot be an IC. If this person sets the conditions and parameters of how you do your job, you cannot be an IC. I was originally going to be an IC until we realized that couldn't work. So, we set up an LLC that payed us according to our work and in that way my partner could keep all of his billing (except for the percentage that went to joint expenses) and we could split to whatever degree we wanted my billing.

It sounds to me, not knowing your state issues, that your supervisor is setting up your work conditions and that basically makes you an employee. There might be other options but it doesn't sound like you have a legitimate claim as an IC.

 

[Lee SW IL]

Ask your supervisor is she is going to send you a 1099 or a w2. Have you filled out a w4?

Its more a repondsiblity of your supervisor if you are an Independent Contractor or an employee.

If your agreement with your supervisor is you work for her and only her. IRS says your an employee, not an IC, but that is up to her (& her tax advisor) to determine. You can't do much about it, if she is insisting in sending you a 1099, even though IRS regulations state you should be classified as an employee. You need to report your income as your supervisor reports it. But, it may not be correct. She would be the one that gets into trouble.

This reason is one of the main reasons on why I will not take on trainees.

 

[Couch Potato]

Everyone who works as an appraiser should have a copy or be familiar with IRS publication 15-A:
http://www.irs.gov/pub/irs-pdf/p15a.pdf
The section on page 5 about "Satutory Nonemployees". If you are paid soley on a per-report basis it applies to you since the IRS says defines appraisers as real estate agents.

Licensed real estate agents. This category includes individuals engaged in appraisal activities for real estate sales if they earn income based on sales or other output.