Labor provided for contract labor

[equinecpa]

I have a client who has various working students throughout the year. At any given time she has one of these students working for her (not foreign exchange students). She provides them housing, meals and token compensation for their work (maybe $100.00 per week ).

She issues a 1099-misc to them for the cash paid to them.

My question: Can she deduct any part of her grocery bill for feeding these students? It seems it is a legitimate expense since if she didn't feed them she'd have to pay them more.

[veritas]

What kind of work?

Are the meals and housing provided for the convenience of the employer?

I doubt whether a 1099 is a proper method of reporting.

[Corduroy Frog]

Cash Only

The requirement for issuing a 1099-MISC is for cash only. If there are other forms of income to the recipient there is no requirement to include that value on the 1099.

As far as deductibility for providing food, housing, etc. I believe she can do this as well. Not sure I would include indirect costs, but certainly the out-of-pocket cost of providing these things.

[equinecpa]

Meals and housing-convenience of the employer: I'd say yes on this. It's a working ranch.

I agree the 1099-misc is probably not appropriate -the working students are probably more employees than contract labor. However they are in a learning type situation... it's comparable to an internship.

One other thing that I wonder on this...if these students were deemed employees does she then have to worry about minimum wages?

[veritas]

don't know

good question.

[luke]

minimum wage

Yes IF (and thats a BIG IF) it was determined that these were actually emplyees then all the wage laws would apply - min wage, overtime, etc - in addition to the payroll taxes that would NOW be paid by the "employer"..... IMO

[dsi]

workers compensation? etc.

[erchess]

Exempt Employers

Depending on what Sate one is in small employers may be exempt from some of the laws. For example in NC a small enough employer does not have to provide Worker's Comp.

[Davc]

The requirement for issuing a 1099-MISC is for cash only. If there are other forms of income to the recipient there is no requirement to include that value on the 1099.

Do you have a cite for that?