NO SE Tax On Temporary Job

[dyne]

WHAT is the AUTHORITY that states that NO self-employment tax is due on short-term,
or non-recurring or temporary jobs, etc? It was an IRS ruling but I cannot find it now.

[Bees Knees]

TTB page 5-24

Court Case: The courts have ruled that an activity subject to SE tax must
be regular and continuous. A taxpayer was not liable for SE tax for doing a
one-time window installation job where he had never performed that kind
of service before, nor did he ever again at any time thereafter. (Batok, T.C.
Memo 1992-727)

In my opinion, it is not a very solid case. Each set of circumstances are different, and it is a vague concept. You are playing with fire if, as a tax advisor, you try to tell a client his one time job is not subject to SE tax.

[JohnH]

I've only seen it tested one time. This was over 10 years ago, and I didn't prepare the return. A friend who self-prepares asked me about his situation and I told him about the Batok case.

He was employed full time as a manager for a minI-storage chain, and a friend of his in another town decided to build a mini-storage facility. He provided help in drawing up the site plans, put him in touch with various construction contractors, did some site visits while the facility was under construction, and gave advice on how to set up administrative procedures.

His salary on his main job was about $30k. The friend paid him $6k for the consulting work. He reported the income but did not pay s/e tax on it. A few months later IRS sent him a CP2000, and he replied with an explanation that basically tied his situation to the
Batok case. (I did give him some suggestions on what he letter should say) IRS agreed and the matter was closed.

None of that is to say it would work today, nor that it would have worked at that time if a different person at IRS had reviewed his respond. All I know is that bit saved him about $800 and he was very happy. (he also bought my lunch a few times out of gratitude)

[dyne]

Thank you Bees Knees and JohnH. Best wishes.

[Uncle Sam]

No SE Tax

I would write to my Congressman to ask.

[ChEAr$]

There is one alternative of course, and that is for taxpayer to maintain that he was in fact an employee, paying his half of the FICA tax with that certain form and also filing the SS8 form.

[Burke]

There is one alternative of course, and that is for taxpayer to maintain that he was in fact an employee, paying his half of the FICA tax with that certain form and also filing the SS8 form.

Can anyone tell me what that certain form is? Tried to find it, but no luck.

[okie1tax]

Form 8919

This is off the top of my head, and I just had a haircut!

[FEDUKE404]

Form 8919 and instructions

http://www.irs.gov/pub/irs-access/f8919_accessible.pdf

[ChEAr$]

http://www.irs.gov/pub/irs-access/f8919_accessible.pdf

I kind think Burke knew that. (grin

However we've always had such a form; used to be the 4137.

[FEDUKE404]

Clarification

However we've always had such a form; used to be the 4137.

The Form 4137 was/is still out there, but IIRC is basically for dealing with unreported tip income only.

The Form 8919 drops the hammer a bit more strongly on an "employer" who should have been taking out various employee taxes on what is construed as wage income.

Many people envision the Form 8919 as a "burning the bridges" approach regarding, more than likely, a "former" employer.

The Form 4137 is there for the well-intended (and rare!) wait-person who feels the need to report "more" tip income......

FE

[taxea]

I have on occasion report on ln 21 1099 income with an explanation that it was a one-time payment for a one-time job, not subject to SE.

Not one was ever questioned by the IRS. F8919 is used when the work is determined to be an employee not subject to SE

[Possi]

Fellow and Writer

My college professor is paid $3000 to attend a weekend as a "fellow" (he is also a writer) and I have always put it on a Sch C subj to SE tax.

If you get right down to it, he is paid to play, and not a lot of work. They wine and dine them, and it's always a fun weekend.

This is only my second year with him, and it looks like this is a regular, annual event.

I considered it as Line 21 for a fleeting moment, as it really is more of a social thing, but it happens every year and is reported as non-empl. comp.

I KNOW I won't be questioned if I err on the side of the IRS, but was I doing the right thing by my client? Or should I have asked for an opinion before making that call?

[snowshine]

I answer that question with one of my own, namely, "What does the client think it is?" I have 1 client in almost exactly your situation and we put it on SCH-C. As he is already way over the SS limit it only costs him medicare and he gets deductions for the tips and other out-of-pocket expenses (everything else is paid for). Another client insists on the Line 21 route even though her "appearences" are twice a year. The appearences are unrelated to her normal job so I go along. Neither has ever heard a peep from the IRS.

[DaveO]

I'm almost always on the no SE tax side on sideline work argument but I also hold that if the sideline work is in the same field as the taxpayer’s regular work then its SE income. If I do accounting for a non-profit I'm involved with and get paid on a 1099 I don't think there is any question it's subject to SE tax.

On the other hand I bush hogged out a few lots for a friend of mine a couple years ago during the summer when he was short of help in his landscaping business. I reported it as other income as I'm not in the bush hogging business and I did it for only a few days.

I have a minister who receives royalties from books they have written. Since the books are religious in nature and are sold through their ministry I include the income on their clergy "C".

I also have a systems analyst who writes romance novels on the side. Her income goes on Line 21. Facts and circumstances control and are different every time.