Quote: (12-03-2015 11:02 PM)Tokyo Joe Wrote:
Sweet Pea: Although not a certified public accountant, I have had a great deal of experience as both a recipient and a provider of IRS Form 1099-MISC, which among other purposes is used for "independent contractors" such as you and your friend who did some freelance work. As of 2015, if any entity pays someone $600 or more during a tax year, that payer is obligated by law to provide a copy of 1099-MISC to the recipient (by Jan 31 of the following year) and a copy to the IRS (by Feb 28 or 29 of the following year). Of course the recipient of the 1099-MISC must report this income on his filing to the IRS for that year and it becomes part of his gross income on which the tax he owes is based.
Now, it goes without saying that I would never instruct someone to contravene the laws of the United States; the following story is a work of pure fiction.
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On and off throughout 2015, Mr. Sweet Pea (SP) and his associate Wing Man (WM) work in and around Minnesota and Wisconsin as talent scouts for BBW porn actresses on behalf of Bigbootylvr Productions LLC (BP). They split this weighty undertaking evenly, earning a total of $6000 from BP, which they split 50/50, pocketing $3000 each. Come December, BP is preparing to issue one or more 1099-MISCs for $6000, and requests from the SP/WM duumvirate the necessary information (full name, address, social security number, etc.) to complete the 1099 form(s).
While SP works full-time as a freelance porn talent scout for a number of production companies, WM is in fact a full-time employee of Dash Global Enterprises LLC (DG), an outfit run out of a basement somewhere in the Upper Midwest that competes with BP in the plus-plus-plus-size porn industry. Here's the rub: WM has signed a no-compete agreement with DG, forbidding him to work for other porn companies. WM, not realizing that the IRS is a general relativistic Black Hole -- i.e. once his tax returns are submitted and cross the event horizon into IRS, they will never be seen by anyone outside the event horizon ever again -- and that therefore he has no need to worry about DG discovering his moonlighting for BP, asks his buddy SP to claim that he, SP, alone completed 100% of the scouting work for BP and to provide his, SP's, information to BP for the 1099-MISC showing $6000 of income paid to SP. Being a good friend and wanting to put WM's baseless worries to rest, SP agrees and provides the needed info to BP.
In January SP receives a copy of the 1099-MISC from BP, and includes the $6000 as part of his income on the Form 1040 he files on April 15. It was a red-letter year for SP, who brought home the richly larded bacon, big-time, grossing a total of $100,000. After all deductions, exclusions, expenses et al., SP owes the IRS $18,000 in taxes -- his effective tax rate is 18%.
However, his marginal tax rate -- that is, the rate paid on the last dollar he earned -- was 28%. Although he only pocketed $3000 from BP, because he duly reported $6000 in income from BP (and $3000 of this indeed represented his marginal income, as he would not have "earned" it at all if WM had claimed this amount as his own, as he rightly should have done), SP must pay an extra $840 in income tax to the IRS on income he did not in fact receive. He has been fucked by WM.
Fortunately WM is not a dick and understands the situation when SP explains it to him. The next time they meet, WM brings over as a gift a signed copy of Donald Trump's new book Crippled America. SP is touched by this kindness, but still feels his old buddy WM owes him more than a $25 hard-cover book, as fine as it is.
This feeling rankles, until SP reaches Chapter 3 and finds nine crisp new hundred-dollar bills tucked between the pages. All is right with the world. Trump wins the coming election and radically alters the U.S. Tax Code, rendering these considerations for SP and WM moot in 2018.
I am laughing so hard there are people nearby wondering what the fuck is wtong with that guy.