? for Hawaii Preparers with police clients

[thomtax]

I'm just working from memory, but isn't there something on the books where, since they are covered by a different retirement system working for government entities, these deductions are not made from the employee paycheck.

Of course, as usual, I reserve the right to have a faulty memory.:-)

[Burke]

I simply cannot imagine it either. There is no reasoning whereby income for services would not be subject to SS/MC taxes in one particular state and not another. Again, are you saying their regular W-2"s do not reflect FICA taxes? And this "memo".....who is it from, and what does it say? Can you quote verbatim here?

[MAMalody]

I would do a Schedule C and adjust the Schedule SE unless, somehow, the taxes are being paid and reflected on the W-2. If that is the case I would use line 21 and F2106. I simply can't imaging the IRS saying this income is not subject to SS and M/Care at all.

[taxea]

? for Hawaii Preparers with police clients

As I first stated this is a memo from the IRS to HPD regarding the extra duty pay that officers get when they work special duty overtime. Most of the companies that hire the officers provide a 1099 at the end of the year.
All of this work is assigned directly through the department. The officers, in most instances, are in uniform and use their duty vehicle. This extra duty is sanctioned by HPD.
And, yes, I do have a copy of it. Police officers, and teachers in Hawaii do not pay SS or Medicare.
I was trying to determine how other Hawaii tax preparers with HPD clients handle this.
Do you enter the 1099 income on line 21 and all of the expenses on the 2106 or do you prepare a Sch C, allot the expenses between 2106 and Sch C, then adjust SE to delete the SE tax?
taxea

[veritas]

Just curious

The W2 for the officer's refelct no Social Security tax witheld?

[MAMalody]

I would also contact HPD HR firectly to get a copy of the ruling.

[Burke]

Well, the reasoning does not make much sense to me, but if they really have an IRS ruling on it that is is not subj to SE tax, then I would put it on line 21. I never heard of salaried police officers not being subject to SE tax, nor have I ever been exposed to an instance where this was the case. What cite in the code are they offering?

[taxea]

I am curious as to how you report the 1099 special duty income for your police clients.
Do you put the income on Line 21 and the expenses on 2106 lumped in with the rest of their "on duty" expenses?
How do you adjust the return to remove SE tax if you do a SCH C?
Here is why I ask:
HPD has a memo from the IRS that states (in summary) that police officers are not subject to SE tax, therefore because the special duty is all sanctioned by the police department then the client should not be subject to SE tax on the special duty income.

Your thoughts on this...taxea