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  • Tax help?

    I work in a small shop, we have a bather that is on the payroll, I'm 1099, I also pay her for bathing my dogs $3-$4-$5 per dog.
    I pay her cash, so I can not claim fees on my taxes, It's a family run shop and I don't want to step on anyones toes, but this is costing me $$ each week.

    Stephen: Lots of problems here. If you pay her $600 or more a year you are supposed to be filing a 1099 you hand to her, because you are self employed. I am speaking legally. Just because you are paying cash doesn't mean you cannot deduct an expense. Businesses spend cash for expenses regularly, that's what is called petty cash expenses. Yes, it would be better for you to write a check, and she should sign a receipt you provide and retain, in a petty cash slip if cash. Otherwise the canceled check you write is a receipt. So I see no reason why you cannot deduct. Sure the bather is responsible to report that income, but that's up to her, your job is the 1099 and no one should be telling you shouldn't file a 1099. The IRS has a different point of view. You would file a 1099 MISC, but only when the amount is $600 plus a year. You know if trouble comes around, because you are actually self employed, the IRS could argue she is ALSO your employee...that really is possible but would require a determination. As a 1099 self employed individual you need to get professional accountant advice to make sure you are filing your 1099 correct and how to handle this...we have good ideas here...but use a pro...don't take a chance.
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