How many times have you heard that a verbal contract is just as good as the paper it’s written on? (In other words, it’s not worth much.)
Well, the IRS is proving that’s the case when it comes to people you might hire to work around your place.
I have been helping out one of our TaxLoopholes Community members who is having a horrible time with the IRS regarding a worker she had at her house.
Yes, her HOME!
She had some general handyman kind of stuff to get done and so she hired him to fix it. It was her personal home and so there wasn’t any tax deduction. She just paid him for a few days work. She liked his work and hired him for some more.
Everything was fine until about 2 years later. That’s when she got a letter from the IRS saying that this handyman hadn’t paid his taxes.
So, the IRS agent asked him if he was really sure he wasn’t an employee. If he was an employee, the agent explained, the homeowner would have to pay his taxes.
He didn’t have the money to pay his taxes and so he decided it would be a great idea to say he was really an employee.
The IRS then told (not asked) the homeowner that she failed to pay payroll taxes for her newly found employee. Oh, and by the way, since it was 2 years ago, the penalties and interest had caused the initial tax of about $4,000 to double to $8,000!!
She appealed and tried to prove, after the fact, that she passed one of the two tests: Section 530 test or the 20 Question test. But, in the end, it came down to just one issue.
Did She Have a Written & Signed Independent Contractor Agreement?
And the answer was “no.” That meant she owed the tax. And it meant that they considered all the people who had worked for her should have been employees as well. That’s because if there was one she hadn’t reported, there were probably others.
If you have people working for you:
• At your business,
• On your real estate investments, or
• Even on your home,
then you must have a written & signed Independent Contractor Agreement.
Get started now with your own agreement that you can use today, plus an audio program and manual that walks you through what it takes to make sure your Independent Contractors STAY THAT WAY and avoid thousands of excess tax and penalties by going to Winning the Independent Contractor Argument
You’ll have immediate access to a contract you can use right now plus learn how to avoid THOUSANDS of dollars in excess tax and penalties.
Remember, if you have workers:
(1) In your business,
(2) On your real estate investments, or
(3) In your home,
you need to protect yourself!