client wants to 1099 workers now???

[mblatour]

What a pain!!

Got a phone call from a client's son (non-dependent) who does independent work as a roofer. Said he was 1099'd by several companies (one for about $50,000), but figures after expenses that he'd only have about $20-$30 grand in income to report. That still translates to around $8,000 due between federal and state. He wants me to file an extension and then prepare his taxes sometime in the next month. He doesn't want to make a payment now, just file for the extension. I explained to him the penalties and interest issue.

Here's the kicker. He has a few guys that have done work "for" him in which he paid them. Most were paid only a couple thousand. But one he paid $10,000 to. He did not 1099 him, but wants to do that now (he even thought about 1099'ing the other guys). The $10,000 guy wants to file an extension too, get his 1099 from the first guy, then have me file his taxes once that's all said and done.

I'm not super busy today, so I will do some digging, but I know nothing about the deadlines for filing and 1099'ing someone. I'd assume it's way too late.

Can anyone give me some direction here?

Also, the first guy said that he had his taxes prepared by some "iffy" gal last year and that he's not sure if she actually filed them because he got a letter that says he owes like $12,000. He wants to know what he should do about that because he only received 1099's for a few thousand in income, the rest were jobs that paid him in cash. I asked him some questions, but the answers were vague. He said he could get copies of the stuff he has and show it to me.

I just want to run from this, but my hubby wants me to give it a go and make some money off these guys. What do you think?

[JohnH]

Do what you want, but I suspect you can't charge these guys enough money to pay for the aggravation yet to come once you get involved with their tax work.

[mblatour]

that's my gut too.....

but my husband has been laid off of work 1/2 the winter and I'm the only income we've had to keep us afloat. Now that the season's almost over, it was looking like a chance to make a little more money. I totally agree that the headache isn't going to be worth it. I'd hate to turn him away only because of the fact that I prepare his dad's return (this is sort of a "like father like son" situation, as I cleaned up his father's mess a couple of years ago, but it was no way near this bad).

Ughh! What to do?

[SueBaby]

What a pain!!

Got a phone call from a client's son (non-dependent) who does independent work as a roofer. Said he was 1099'd by several companies (one for about $50,000), but figures after expenses that he'd only have about $20-$30 grand in income to report. That still translates to around $8,000 due between federal and state. He wants me to file an extension and then prepare his taxes sometime in the next month. He doesn't want to make a payment now, just file for the extension. I explained to him the penalties and interest issue.

Here's the kicker. He has a few guys that have done work "for" him in which he paid them. Most were paid only a couple thousand. But one he paid $10,000 to. He did not 1099 him, but wants to do that now (he even thought about 1099'ing the other guys). The $10,000 guy wants to file an extension too, get his 1099 from the first guy, then have me file his taxes once that's all said and done.

I'm not super busy today, so I will do some digging, but I know nothing about the deadlines for filing and 1099'ing someone. I'd assume it's way too late.

Can anyone give me some direction here?

Also, the first guy said that he had his taxes prepared by some "iffy" gal last year and that he's not sure if she actually filed them because he got a letter that says he owes like $12,000. He wants to know what he should do about that because he only received 1099's for a few thousand in income, the rest were jobs that paid him in cash. I asked him some questions, but the answers were vague. He said he could get copies of the stuff he has and show it to me.

I just want to run from this, but my hubby wants me to give it a go and make some money off these guys. What do you think?

Wow. I feel for you. Thought I had a headache the very last day. I have been through it this year and I would not do it---NOT the last day. But I know you can go for it. GOOD LUCK!!! I am pulling for you. (and your husband is too)

[tilt53]

If you decide to take them on, make sure you get a good retainer up front.

[mblatour]

You sound just like my husband....

that's the last thing he said to me before he headed out to run an errand. "Make sure you get some money down".

[KBTS]

It's tough turning away clients especially when you need the money, but I'm not sure you can charge enough for what you may face with this situation. The fact that the guy isn't even sure his taxes were ever filed last year is a pretty bad sign. You may wind up with a mess that cannot be fixed and then have the client get mad at you for his own mistakes.

I had to turn away a client this year who sold antiques - he had no idea where the previous preparer came up with the inventory figures on his prior year returns. He had no idea he even needed to keep track of inventory. To make matters worse, the previous preparer was deceased - so there was no way to find out about the figures! I just had a really bad feeling about the whole thing, so I just told him that I could not do the return because of the inventory issue.

The best thing I can say is to trust your feelings on this one - if it feels bad, just walk away from it.

[mblatour]

thank you for the advice...

I think I'm going to try and tackle the returns for this year. I did some digging and know now what needs to be done. But I'm still not sure if I want to do anything with his '06 taxes. I'll see if he wants to bring his information and go over it and then decide from there.

[Nashville]

Do It

Go ahead and file extensions. Charge up front, and then charge as you go.

Put in writing the extent of your liabilities with respect to penalties and the extent you are responsible for accuracy.

Make THESE guys get out and furnish social security numbers and addresses for their subcontractors, and if not you will not be deducting their payments.

Do the work you're supposed to do, but not the work they're supposed to do. Don't let them turn their problems into YOUR problems.

[JohnH]

Definitely get a large retainer up front if you intend to take this on.

I'm betting that if you stick to your guns, there's a 50-50 chance the requirement for the retainer will render all our other speculations about the project irrelevant. These guys are always going to have some money "as soon as we get paid for the next project", but there's nothing in the bank right now.

[ChEAr$]

what to do?

but my husband has been laid off of work 1/2 the winter and I'm the only income we've had to keep us afloat. Now that the season's almost over, it was looking like a chance to make a little more money. I totally agree that the headache isn't going to be worth it. I'd hate to turn him away only because of the fact that I prepare his dad's return (this is sort of a "like father like son" situation, as I cleaned up his father's mess a couple of years ago, but it was no way near this bad).

Ughh! What to do?

If you decide to do the work, get paid up front, i.e. a retainer worth your time.

[DaveO]

I'll add another vote on the retainer

I fielded a similar call a few weeks ago. Guy was in a panic because he was sure he'd have a refund for 2004. I explained that we don't do prior year work during season but he insisted. I agreed to set an appointment, then he asked about pricing. I told him we would take a $500 retainer upfront and work till it was gone then bill him for more. That was the last I heard from him.

[JohnH]

That $500 in billing you lost is probably one of the most productive nvestments of your time you've made in the past week or so.

[taxladyea]

Do It!

Get an engagement letter spelling out everything.
Get money up front.
Get a power of attorney and request a transcript of 2006 and you will know if he has filed;.
File his 1099s but only if he brings you in signed W-9s.

File the extension being sure to explain that it is only an extension of time to file not time to pay and explain what his penalties and interest will consist of.

You just might make a good client out of these guys. If everyone knew everything that had to be done they would not need us.

Life will settle down and this could be good busy work. Very challenging. I say give it a shot.

[joanmcq]

You can file 1099s late. There could be a $50 penalty.