Do you have any information that allows HPD officers not to pay SE tax on 1099's for special duty work? Where do you report 1099 income and special duty expenses? How do you justify that it is not subject to SE tax?
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Believe nothing you have not personally researched and verified. -
Special Duty
I have no experience with Hawaii. I have never done a return for a resident of Hawaii.
Having made that disclaimer, I do think I know a little bit about special duty police work.
The short answer: Your client is misinformed. It's probably subject self-employment tax. But for some other cop that your client knows, it may not be. The reason is...
Well, here's the long answer:
What you are referring to, I think, is cases where business establishments such as grocery stores, banks, and sometimes bars and night clubs, hire off-duty police officers to provide security. Another example I know of is a church that hires off-duty cops to direct traffic on Sundays, to bring some order to the chaos of having 400 cars trying to get out of the parking lot onto a main drag, all at the same time.
Most police officers work for a city. That's important, because the rules and guidelines can sometimes be different for deputy sheriffs, or even for state troopers.
Here in Ohio, most cities, towns and villages have established fairly strict guidelines for "special duty" work. I can't fully explain the politics behind it. The idea is that cops are sworn, appointed officers, and they are never really "off-duty." So they are permitted to wear their uniform and exercise their authority as a police officer even when they are not "on the clock" working for the city. But the city has an interest in keeping these activities under control, and carefully managed. Some of it is politics; some of it is just about money, plain and simple.
Suppose you are the owner of a banquet hall, and you want off-duty cops to direct traffic at a big event. Your brother is a cop, and he knows a bunch of other cops. Well, you can't just call up Officer Smith and say, "Hey, my brother gave me your name. Wanna work this Saturday night at my banquet hall?" It just doesn't work that way.
Cops who want this kind of work have to put their name on a list that is managed by the department, or they have to sign up through the department. This allows the police department to hand out the assignments based on seniority, and refuse to give an assignment to a cop who is on some sort of probationary status, and all kinds of other things that the department wants control over.
But at the end of the day, at least here in Ohio, even though the police department is the sole point of contact, the compensation agreement has to be worked out directly between the business establishment and the officer. The grocery store or banquet hall does not pay the city for the services. The business entity pays the officers directly.
In some cases, the city may establish hourly rates. In other cases, the hourly rate may be negotiated between the business and the officer.
End result: Some businesses that use the same special duty officers on a regular basis either choose, or are required, to put them on a payroll. The officers get a W-2 from the business. End of story. It's not subject self-employment tax because it's subject to FICA.
Grill your client. Find out where he got the idea that it's not subject to SE. He probably talked to some other cop, who works at the same grocery store every Saturday night, and gets a W-2. That other cop may not even realize that when you take a one-time casual assignment for a big wedding, you get a 1099-MISC.
BMKLast edited by Koss; 04-09-2011, 03:39 PM.Burton M. Koss
koss@usakoss.net
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The map is not the territory...
and the instruction book is not the process. -
Police
When our church or other organization hires police from our town, the town sends us an invoice for their wages and payroll taxes, maybe even pension. We write a lump sum for the total to the town, and the town pays the individual policemen via their usual payroll. So, the special duty work will be included on their W-2 from the town. Obviously no SE tax, but all the usual withholdingsComment
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Christopher Mewhort, EA
mewhorttax.comComment
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---> It is to the point that I refuse all new clients who are police officers. <---
Christopher: Drive carefully out there, my friend."The only function of economic forecasting is to make astrology look respectful" - John Kenneth GalbraithComment
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Uncle...no offense but my dad is retired HPD. I am retired CA. Send your clients my way I will gladly take them off your hands.
I was asking because there is supposed to be a special memo between IRS and HPD (that is Honolulu PD) that addresses this issue specifically. Just wondered how others on the island were handling it.Last edited by taxea; 04-09-2011, 10:04 PM.Believe nothing you have not personally researched and verified.Comment
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Yes, get a copy of this 'special agreement' and you'll know. The police union would have copies and the cop should be able to get it quite easily. Heck if it did exist, he would have walked in your office waving a copy in your face because to be sure you didn't screw it up.
Geez Uncle, I watch Hawaii 5-0 so I know there are honest cops in Hawaii.......somewhere."A man that holds a cat by the tail learns something he can learn no other way." - Mark TwainComment
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If the officer was really supposed to be treated as an employee by the business and not self-employed, then file Form 8919 and only pay the employee’s share of FICA.Comment
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If you only want Hawaii preparers to respond you should clarify that. If you really want to ignore me you should just not respond to me rather than send me cute private messages.
Not sure what in my response was so offensive, my attitude is just fine, thank you!Comment
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T.C. Memo. 2003-179 is the answer.
If all else fails, call and ask them.
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