Am I Being Screwed?

[wfs]

I agree - no argument from me. Again, there must be a clear difference between 1099 and employees. If you treat them the same as employees, or "as" an employee, you are asking for trouble.

My employees have specific office hours with paid time off.
My one contractor has no office hours, is paid commission only plus a small flat consulting fee - which covers various misc tasks that I give to complete.

 

[TwiLight]

You guys know nothing of the 1099 rules.... Take it from a guy who does know a thing or two and has been working in the payroll and HR industry for 23 years and has been in front of more IRS agents than I can count on behalf of my clients.

First, a licensed insurance agent is one of two professions that are exempt from the standard independent contractor rules established by the IRS. The other is a licensed real estate agent.

Everything that was said in the previous 5-6 posts are not true and does not apply to Licensed Insurance Agents.

You can be 1099'd as an agent with hours controlled by the agency. The only thing that could be established is:
1. If the agency controls your schedule AND
2. you can only place business through the agency by contract

The IRS may declare you a Statutory Employee and hold the Agency Liable for 50% of the SocSec/Medicare Taxes (6.4%/1.45% respectively).

You will have more issues with your State's Wage and Hour Division. There are 50 Jusdicitions and most sign off on the IRS Statutory Employee Rules. Some States will require the Agency to also pay Unemployment Tax on 1099'd Agents. But that is of no concern to this OP it is of concern to the Agency the OP works for.

Sorry guys, you need to beef up on your so called expert tax advice and leave it to the pro's.

 

[Thad.Sipple]

You guys know nothing of the 1099 rules.... Take it from a guy who does know a thing or two and has been working in the payroll and HR industry for 23 years and has been in front of more IRS agents than I can count on behalf of my clients. First, a licensed insurance agent is one of two professions that are exempt from the standard independent contractor rules established by the IRS. The other is a licensed real estate agent. Everything that was said in the previous 5-6 posts are not true and does not apply to Licensed Insurance Agents. You can be 1099'd as an agent with hours controlled by the agency. The only thing that could be established is: 1. If the agency controls your schedule AND 2. you can only place business through the agency by contract The IRS may declare you a Statutory Employee and hold the Agency Liable for 50% of the SocSec/Medicare Taxes (6.4%/1.45% respectively). You will have more issues with your State's Wage and Hour Division. There are 50 Jusdicitions and most sign off on the IRS Statutory Employee Rules. Some States will require the Agency to also pay Unemployment Tax on 1099'd Agents. But that is of no concern to this OP it is of concern to the Agency the OP works for. Sorry guys, you need to beef up on your so called expert tax advice and leave it to the pro's.

.


In California you must meet 3 things

1. Licensed
2. Commission only
3. A contract stating self employment status and race responsibility, etc.

All 3 must be full filled or the agent is a w-2 employee (period)

If you pay a base then they are an employee, even if the base is an advance on commissions.

----------

. In California you must meet 3 things 1. Licensed 2. Commission only 3. A contract stating self employment status and race responsibility, etc. All 3 must be full filled or the agent is a w-2 employee (period) If you pay a base then they are an employee, even if the base is an advance on commissions.

Ugh. (TAX responsibility)

 

[TwiLight]

.


In California you must meet 3 things

1. Licensed
2. Commission only
3. A contract stating self employment status and race responsibility, etc.

All 3 must be full filled or the agent is a w-2 employee (period)

If you pay a base then they are an employee, even if the base is an advance on commissions.

To ELECT to pay someone as an employee is voluntary in CA. Mostly for Health insurance group benefits and 401k contributions.

You are still not a w-2 employee for Federal Purposes. In CA you are 1099 with State withholding.

CA just wants the SDI Tax and the small State Withholding they have and to get the Agency to pay Unemployment and Training Tax.

They still do not have to withhold Federal Taxes in CA (unless they are classified as a Statutory Employee) if they choose not too.

Also, the Labor rules are hard to enforce (Hire/Fire) in California for Insurance agents as they are exempt under Federal Wage/Hour as employees.

Still need a contract with the agency to make it a IC/1099 but not any violation because of a Controlled sched. or other IC rules for non Licensed Agents.

The best State is Nevada. All 1099 people must have the business pay the State unemployment tax and the NV State Business Tax on all compensation paid as 1099. NV has been cracking down on this the past 4 years and nailing many businesses, especially the casinos that have been contracting out much of their entertainment and food services. Those Subcontractors are getting nailed.