? for Hawaii Preparers with police clients

[taxea]

? for Hawaii Preparers with police clients

Veritas...doesn't apply to HPD taxea

[veritas]

What doesn't apply?

Veritas...doesn't apply to HPD taxea

Maybe I am reading somthing into the excerpt incorrectly.


Also is it not possible that a public employee is exempt from social security but not medicare (hired after 3-31-86)?

[taxea]

? for Hawaii Preparers with police clients

Veritas
SE does not apply to HPD officers. That is why I asked Hawaii preparers how they prepare returns for their law enforcement officers. You have to separate HPD from any other civil servant because HPD apparently is the only department that took the time to bring this issue to the IRS and ask for a ruling. And, no, HPD is not subject to medicare because they cover their retirees medical insurance also. taxea

[veritas]

I wasn't disagreeing

My point was it seems the payments can be exempted on Sch SE which might lead one to believe you could use Sch C.



A key point here I think "All of this work is assigned directly through the department".

If on the other hand the police officers are exempting these payments as employees it would seem form 2106 would be more appropriate.

I don't have a answer but I found the subject interesting.

Was this a letter ruling? Can you give us a reference?

[taxea]

? for Hawaii Preparers with police clients

Veritas
The memo is from an IRS attorney to HPD prompted by the issue being questioned by HPD. I'm of the opinion that it would apply to any civil service agency that controls their officers overtime.
I had forgotten that several CA agencies could make use of this. Silly me, I'm a retired police sergeant from CA.

As I posted before the response from the IRS is seven pages long...too much to post here but if you have clients that would qualify and want a copy, email me at:
taxea@hawaii.rr.com and I will send you a copy. taxea

[Burke]

taxmandan
The memo is from an IRS attorney to HPD. It is 7 pages long so rather than post it I will give you the gest of it.
The IRS attorney cites each regulation that was used to conclude the following:
Because the HPD is in total control of this work they are considered the employer.
Because officers are not subject to FICA and FUTA as employees of HPD they are not subject to FICA and FUTA for special duty.

What was the Reg he cited for these two?

[taxea]

? for Hawaii Preparers with police clients

Burke
Several. Send me an email and I will send you the memo.
taxea@hawaii.rr.com

[Black Bart]

Putting this query back up top

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

for a second shot at it since none of us knew for sure the answer to your question about procedure and maybe a Hawaii preparer will still see it and respond.

Like Burke, Veritas, and others I assumed everybody was covered and I was really surprised to learn that such a ruling about SE existed. Thanks for enlightening us -- and thanks to taxmandan who apparently knew the score also about FICA:

Government entities can opt out of FICA, if they offer a 'comparable' retirement plan. Almost the entire state of Washington, local and state, are exempt because of their own program. And yes, police and teachers in Hawaii are exluded...