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Discussion Starter · #1 ·
Is there any way to take a tax deduction for day labor?

I usually work by myself, but once in awhile I need another guy to help out. Suppose I sell a job for $1,000 and I do it with a guy who takes $400 cash. If I can't deduct my employee, I'll wind up paying tax on the full $1,000. I'll wind up with $200 in my pocket!

I don't think asking for social security cards and filling out I-9's and stuff is realistic for day laborers. They would look at me like I had two heads!
 

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instock said:
Is there any way to take a tax deduction for day labor? I usually work by myself, but once in awhile I need another guy to help out. Suppose I sell a job for $1,000 and I do it with a guy who takes $400 cash. If I can't deduct my employee, I'll wind up paying tax on the full $1,000. I'll wind up with $200 in my pocket! I don't think asking for social security cards and filling out I-9's and stuff is realistic for day laborers. They would look at me like I had two heads!
Dude you are going to get beat down with a question like that. You need to al least fake like your legitimate. Your making it way too obvious.
 

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Cash is cash...... no deduction. It's a no win for an employer.

Check should come with a W-9 and a 1099 at the end of the year. They pay their own taxes. You deduct your 1099.
 

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Jaws said:
Random dude who is an extra body or set of hands
How can you pay him cash legally? What if he gets hurt? I understand you can pay them cash but you still have to withhold his deductions. So his liabilities would still be an expense. Wouldn't they?
 

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You can legally pay up to $600 to an individual in a year without issuing a 1099. Otherwise there is no requirement from an IRS standpoint that they have liability insurance comp. , most states would classify anyone doing this work as a 'contractor' though and require they have a contractor's license. In fact you may be violating the terms of your contractor's license by employing a subcontractor/day laborer without a contractor's license.

As far as liability you can clarify with your liability provider what your premium hit is for using uninsured casual labor. Sometimes they will assess a premium and still provide you coverage, sometimes your policy explicitly forbids the use of anyone who can not provide a certificate of insurance and will reserve the right to terminate your coverage at audit time and not cover any work performed with those individuals.
 

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How can you pay him cash legally? What if he gets hurt? I understand you can pay them cash but you still have to withhold his deductions. So his liabilities would still be an expense. Wouldn't they?
It is not legal at all to pay cash and not claim it. :no:

If the dude gets hurt your on the hook.

WC is not required in Texas, I'm one of the contractors I know who has it, but it doesn't cover people not on my payroll. I have a guy who is on my Vfd who works for me on weekends sometimes, and my brother in law who is a maintenance guy during the week work for me on weekends when I need an extra hand. They are on my payroll because of the WC issue.
 
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Jaws said:
It is not legal at all to pay cash and not claim it. :no: If the dude gets hurt your on the hook. WC is not required in Texas, I'm one of the contractors I know who has it, but it doesn't cover people not on my payroll. I have a guy who is on my Vfd who works for me on weekends sometimes, and my brother in law who is a maintenance guy during the week work for me on weekends when I need an extra hand. They are on my payroll because of the WC issue.
I friend of mine (a contractor) who had a new guy that got hurt like 2 hours into his first day. He was nervous about how suspicious that looked so he changed his hired date to the week before and paid him for it
 

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jlsconstruction said:
I friend of mine (a contractor) who had a new guy that got hurt like 2 hours into his first day. He was nervous about how suspicious that looked so he changed his hired date to the week before and paid him for it
I understand his concern, but that could create a bigger problem. However the guy got a check, he must of been happy.
 

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Californiadecks said:
I understand his concern, but that could create a bigger problem. However the guy got a check, he must of been happy.
He's a good guy, but always seems to have the worst luck. He's got the craziest stories
 

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jlsconstruction said:
He's a good guy, but always seems to have the worst luck. He's got the craziest stories
Can't really see how you could get into trouble for paying too much workers comp! How do you prosecute that? :laughing:
 

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I friend of mine (a contractor) who had a new guy that got hurt like 2 hours into his first day. He was nervous about how suspicious that looked so he changed his hired date to the week before and paid him for it
This isn't a problem in ON because we have up to 11 days to register an employee with WC. If something happens on the first day and you haven't processed the paperwork they are still covered.
 

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You can deduct cash you spend on day laborers. All you have to do is swear (sign your tax return) that it is a true expense.

If you are audited, you may be required to prove you paid it. A reciept or log of paid outs may work. It depends on the auditor.

But the biggest problem is workmans comp and wage and hour people.

If the guy gets hurt, you better be prepared with workmans comp or he could own you. If he calls the wage and overtime people and claims you are not paying minimum wage, they can and will come and audit you. If he claims unemployment, prepare for another audit. There are many ways he can screw you if he wants.
 

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He's a good guy, but always seems to have the worst luck. He's got the craziest stories
If you hire under the table and someone has an accident, it's bad luck. If you hire legally and someone has an accident, it's something you were prepared for. We all know it's no accident that some people always have the worst luck.

I have a few guys I use for casual labor. When we need an extra set of hands or some grunt labor, I give them a call. They're on the books. I tried casual pick-up labor a bunch of years ago, and in addition to the accident potential, I hated it - you have no idea who they are. Never again.
 

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Pick your man and run him through a temp agency. They pay for work mans comp. Costbis generally thirty percent of wages. Its the beat way to avoid wc and payroll expenses if your a small operation like yourself. You only pay for what you use and price the temp agency into the bid. No 1099 required, you get an invoice from the agency.
 

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Metro M & L said:
Pick your man and run him through a temp agency. They pay for work mans comp. Costbis generally thirty percent of wages. Its the beat way to avoid wc and payroll expenses if your a small operation like yourself. You only pay for what you use and price the temp agency into the bid. No 1099 required, you get an invoice from the agency.
I did this with my father in law. I also paid him the difference that the temp agency didn't. He wanted to come out and help me on a job, he's retired, almost just paid him cash, but chickened out at the last moment.
 

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Discussion Starter · #18 ·
Dude you are going to get beat down with a question like that. You need to al least fake like your legitimate. Your making it way too obvious.
Dude, you are staggering blindly around a cesspool of your own pompousness. Unprovoked passive-aggressive bigotry doesn't contribute to the discussion.

Anyway........

If I had a payroll, I guess it would be pretty easy to add a few guys to it. As it is, the infrastructure does not exist.

I think Metro M & L hit the nail on the head if I can make that work. I never thought of running a guy THROUGH a temp agency. When I think of a temp agency, I think of random people. I DEFINITELY want to be able to pick my own guys!

It will still be a challenge to talk the guys into this. But somehow the challenge of finding and working with employees is much more palatable to me than paying taxes on somebody else's income and hoping nobody gets hurt. Anybody know an agency that does this in NJ?
 

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instock said:
Dude, you are staggering blindly around a cesspool of your own pompousness. Unprovoked passive-aggressive bigotry doesn't contribute to the discussion. Anyway........ If I had a payroll, I guess it would be pretty easy to add a few guys to it. As it is, the infrastructure does not exist. I think Metro M & L hit the nail on the head if I can make that work. I never thought of running a guy THROUGH a temp agency. When I think of a temp agency, I think of random people. I DEFINITELY want to be able to pick my own guys! It will still be a challenge to talk the guys into this. But somehow the challenge of finding and working with employees is much more palatable to me than paying taxes on somebody else's income and hoping nobody gets hurt. Anybody know an agency that does this in NJ?
Just because it's hard to run guys legally through your own payroll doesn't mean doing it illegally is somehow ok. Is this what your saying? We all have to pay taxes skirting the law is not the way to do it. Why is it most other guys can do it legally but for some reason your an exception?
 
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