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1099 killed my compensation policy

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hardlythere

Junior Member
What is the name of your state (only U.S. law)? NY

I own a construction business. My live in girlfriend owns a cleaning business that is a DBA. I do complete remodels of interior homes. I have workmans compensation. My guys were getting sloppy with cleaning the home, dusting, vacuuming, washing windows etc, picking up left over building material ( tile, trim, small pieces of sheetrock). So I hired my girlfriend business which is just her to come in and do a complete cleaning after the job was done. Last year she was issued a 1099 for her work. I did keep her very busy as I contract off a large company that flips 100 houses a year.

Workmans comp did their annual audit and jacked my rate up for her 1099 for 2012. I have never 1099'ed anyone. I assumed she was responsible for her own insurance and it would not affect my workmans compensation.

I am not 1099ing her for 2013 taxes. I am now not making a profit off her cleaning. She bills me with her business invoices, I pay the bill.

Would this still be considered a 1099, or do I just have my accountant write her invoices off as an expense?
 


TheGeekess

Keeper of the Kraken
What is the name of your state (only U.S. law)? NY

I own a construction business. My live in girlfriend owns a cleaning business that is a DBA. I do complete remodels of interior homes. I have workmans compensation. My guys were getting sloppy with cleaning the home, dusting, vacuuming, washing windows etc, picking up left over building material ( tile, trim, small pieces of sheetrock). So I hired my girlfriend business which is just her to come in and do a complete cleaning after the job was done. Last year she was issued a 1099 for her work. I did keep her very busy as I contract off a large company that flips 100 houses a year.

Workmans comp did their annual audit and jacked my rate up for her 1099 for 2012. I have never 1099'ed anyone. I assumed she was responsible for her own insurance and it would not affect my workmans compensation.

I am not 1099ing her for 2013 taxes. I am now not making a profit off her cleaning. She bills me with her business invoices, I pay the bill.

Would this still be considered a 1099, or do I just have my accountant write her invoices off as an expense?
I'd run the whole scenario by your accountant. :cool:
 

LdiJ

Senior Member
What is the name of your state (only U.S. law)? NY

I own a construction business. My live in girlfriend owns a cleaning business that is a DBA. I do complete remodels of interior homes. I have workmans compensation. My guys were getting sloppy with cleaning the home, dusting, vacuuming, washing windows etc, picking up left over building material ( tile, trim, small pieces of sheetrock). So I hired my girlfriend business which is just her to come in and do a complete cleaning after the job was done. Last year she was issued a 1099 for her work. I did keep her very busy as I contract off a large company that flips 100 houses a year.

Workmans comp did their annual audit and jacked my rate up for her 1099 for 2012. I have never 1099'ed anyone. I assumed she was responsible for her own insurance and it would not affect my workmans compensation.

I am not 1099ing her for 2013 taxes. I am now not making a profit off her cleaning. She bills me with her business invoices, I pay the bill.

Would this still be considered a 1099, or do I just have my accountant write her invoices off as an expense?
You would still have to issue a 1099 to her. I honestly don't understand why her 1099 had anything to do with your worker's comp insurance, unless you called her an "employee" when you were audited. However I am not familiar with NY laws regarding worker's comp, and they may be different than what I am accustomed to.
 

TheGeekess

Keeper of the Kraken
You would still have to issue a 1099 to her. I honestly don't understand why her 1099 had anything to do with your worker's comp insurance, unless you called her an "employee" when you were audited. However I am not familiar with NY laws regarding worker's comp, and they may be different than what I am accustomed to.
I know FL expects either the 1099 contractor or the company to hold WC insurance. AL may be the same. Not sure about NY, that's why I told OP to check with his accountant about the best way to handle this. :cool:
 

tranquility

Senior Member
I know FL expects either the 1099 contractor or the company to hold WC insurance. AL may be the same. Not sure about NY, that's why I told OP to check with his accountant about the best way to handle this. :cool:
I agree. Unless we have a certificate of insurance for the 1099 worker, in CA, we are charged as well.

I also agree with LdiJ. Unless girlfriend becomes a corporation, if you pay her over $600, she must get a 1099 or you will be unable to deduct it.
 

Zigner

Senior Member, Non-Attorney
I'm going to echo the sentiment that the problem arose because the GF doesn't have a W/C policy in place.
 

hardlythere

Junior Member
I'm going to echo the sentiment that the problem arose because the GF doesn't have a W/C policy in place.

In NY sole proprietors do not have to have workmans compensation on themselves.

I guess she is just going to have to start direct billing the customer and leave me out of the whole scenario.
 

LdiJ

Senior Member
In NY sole proprietors do not have to have workmans compensation on themselves.

I guess she is just going to have to start direct billing the customer and leave me out of the whole scenario.
If they are not required to have worker's comp on themselves, then once again, I do not understand why it impacts your policy. Your state law may require it, but you should at least research the possibility that an error was made.
 

TheGeekess

Keeper of the Kraken
In NY sole proprietors do not have to have workmans compensation on themselves.

I guess she is just going to have to start direct billing the customer and leave me out of the whole scenario.
Are Any For-Profit Businesses Exempt?

There are only very limited situations where for-profit businesses are exempt from providing workers' compensation coverage, including:

The business is owned by one individual with no employees, no leased employees, no borrowed employees, no part-time employees, no unpaid volunteers (including family members) and no subcontractors and is not a corporation; or
The business is a partnership under the laws of New York State, and there are no employees, no leased employees, no borrowed employees, no part-time employees, no unpaid volunteers (including family members) and no subcontractors; or
The business is a one-or-two person owned corporation, with those individuals owning all of the stock and holding all offices of the corporation and there are no employees, no leased employees, no borrowed employees, no part-time employees, no unpaid volunteers (including family members) and no subcontractors. Specifically, if two people own the corporation, each person must own at least one share of stock and between them own all the shares of stock in the corporation. In addition, they both must be corporate officers and between the two of them hold all the offices of the corporation.
http://www.wcb.ny.gov/content/main/Employers/wclcompliance.jsp

See also:
http://www.wcb.ny.gov/content/main/Employers/coverageEmp.jsp
http://www.wcb.ny.gov/
 

Zigner

Senior Member, Non-Attorney
Perhaps the WC company felt that it was a ploy to avoid paying WC by "hiring" your wife's "company."
 

eerelations

Senior Member
Well, sometimes a GF/BF relationship gets awfully husbandly/wifely...I've been living with my SO for almost 30 years now, and I'm telling you this relationship is 'way more spouselike than it is BF/GF. Just sayin'...:)
 

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