Electrician calls me because he needs a hand

[tryinghard]

Sure taxes are owed on this income but will taxes actually be paid? I think probably not. I seriously doubt if this guy is working as a company ( $18 an hour ) so he will be paid cash or check as an individual. There will be no tax deduction for the homeowner so no record of the transaction or even a need for a 1099 form...

Whatever the recipient does with their income is really not the problem of the payer, the payer simply submits a 1099 showing said amount went to recipient. If the recipient chooses not to claim the income they will be exposed in an audit, but again this doesn't matter to the payer.

 

[renosteinke]

And who provides the workmans' comp?

 

[tryinghard]

And who provides the workmans' comp?

With a 1099 arrangement there is no payroll it?s for income other than payroll. The payer is supposed to complete a 1099 for each contractor paid $600 or more (these are non-payroll people). Three copies are made: one for the payer, one for the payee, and one for the IRS. The contractor or payee recipient may actually have staff on payroll and they would be responsible for any workman?s comp.

 

[tryinghard]

?what if you get hurt helping him, who's insurance pays?...

The owner is always responsible for claims regardless what they may think or understand. If they choose to hire contract workers who don?t have comp insurance or even inadequate insurance or are not even a contractor they are still liable regardless what the person promised them when hired, the responsibility always roles uphill to the owner.

In this case if the person hired is a non-contractor or non-insured contractor and they get hurt, or has a person helping that gets hurt, the owner is responsible for the hurt person and if they can?t pay their assets will be attached. The actual person they hired may not be financially affected at all. If they are an uninsured contractor I believe they will lose their license though. If this is service type work it is understood as service type contract and the contractor must carry insurance the owner is still responsible if this contractor is uninsured (it really matters who they hire). Contract wise preliminary notices and release of leans are there to protect the owner but also the contractors involved.

 

[Finite10]

• The payer is openly expressing a willingness to cheat.
• The payer is asking you to cheat.
• Your contract position to get paid, or not get 1099'd, or not get held liable if there's a fire, electrocution, or damage - is based solely on trust.

You'd be agreeing to trust a cheater and to forgo the ability to be made whole. When ya kiss the devil, expect to get....

Many years ago... I knew a guy... he agreed to get paid under the table during bad times. The contractor said "bugger off" after delaying payday week after week. He said, "What are you going to do, report the fact that you cheated when you report me? You gonna get paid after that? No, you'll still be unpaid and also in trouble."

Anyway, liability is much MUCH heavier now and I always pass on those offers. That said - things better turn around soon!!!!

 

[Jps1006]

When asked if I give a discount for cash, I usually reply, "why would I discount for cash?"

To which they reply, "because you don't have to pay tax."

To which I question, "Are you asking me to lie to the government and my insurance company to save you money? I'm sorry, if I'm going to commit fraud, I'm going to keep all the money. What are you risking in this arrangement?"

Of course I only really said something like it once with a customer that could take that kind of a ribbing. Usually something like it can lead to kind of an awkward working relationship. I usually politely reply, "I'm sorry I don't." and if they continue to push I tell them I have plenty of tax deductions and will likely find a way to write it off anyway.