My client pays college students to drive her children to various after school and weekend events all year long. She paid them in excess of $1700. To me these are household employees. Anyone disagree?
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Sounds reasonable to me
The main concern is whether "employer" has control over actions of the "employee," which seems to be the case here.
I am curious as to whose vehicle is used for all of the travel.
If the student, then there could be some rather challenging Forms 2106 out there! Perhaps a non-issue if total income for each student was not too high?
Of course, I guess someone will make the argument the students are not really "in business" and (at best) call it misc income with no Sch C/SE issues.
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How much per student?
The threshold is $1700 per person! Whose car is used might also bear on whether it is an employer-employee situation.Evan Appelman, EAComment
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Excellent Question
I had thought of asking her whose car was used and then before I got to it I forgot about it. I just emailed her. I will tell you what the answer is when I get it.Comment
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If you really want to dig deep into this issue, I suggest reading some of the court decisions concerning the classification of FedEx drivers as independent contractors. The cases have gone both ways, depending on the state law.
But if you don't want to dig that much, the mere fact that FedEx has won at least some of those cases should at least make you pause before classifying them as employees. The ownership of the car is likely to be the easiest factor to apply. If it's the students' cars, as seems likely, then presumably the client isn't specifying minimal insurance levels (above those required by the state), nor insurance companies, nor routes, nor maintenance schedules, nor seating capacities, nor expressly prohibiting the students from doing other things on the way (like mailing a letter or getting a drink at a drive-thru), nor prohibiting them from taking on other clients, etc., etc. I'm sure the client isn't providing benefits, nor do the students have expectation of any.
While the Sch. H instructions list "Drivers" among the categories of common household employees, my take is that it's referring to cases where the adult is being driven (and thus much more in control), including, but not limited to, chauffeurs.Comment
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Let's be [ractoca; here
The amount of money in question is not worth a fight with the IRS. When a taxpayer pays an individual for doing work for them, treating that person as an employee will always fly with the IRS and treating them as a contractor may not. Unless there is a shortage of people willing to take the work and be treated as an employee, then it is preferable to treat the person as an employee unless the person performs the same service for more families than just this one.Comment
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Let's be practical here
The amount of money in question is not worth a fight with the IRS. When a taxpayer pays an individual for doing work for them, treating that person as an employee will always fly with the IRS and treating them as a contractor may not. Unless there is a shortage of people willing to take the work and be treated as an employee, then it is preferable to treat the person as an employee unless the person performs the same service for more families than just this one.Comment
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I kinda liked "[ractoca;"
It has a bit of class!Evan Appelman, EAComment
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I'd be reluctant to decide on this basis without first checking the implications for unemployment insurance, worker's compensation, and most especially, liability insurance. If one of these students causes an accident while driving as an employee, and is under-insured (say because they're from a state with lower insurance requirements), can the employer be sued? I don't know - but I'd want to know for this situation.Originally posted by erchess View PostComment
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Car
As I suspected, the driver's used my client's car. To me this ends the issue. They are household employees.Comment
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