A Company Called TOS And Being Labeled An Independent Contractor

[KaitlynL22]

Hey y'all,

So honestly this is a question I should have asked years now but it's really bothering me now so here I go. I work for a nanny/babysitter/pet sitting company called TOS (abbreviated for safety reasons), it was started and is owned to this day by two moms. They have hundreds of us sitters, or so they've said in the past. Here's how the job works so you understand the ins and outs from my side.

A family will pay for an annual fee to able to use the company service and whenever the want a sitter for whatever reason they submit a job. To begin a random sitter is selected, keep in mind we have yearly background checks and have to be CPR+First Aid certified (that we pay out of pocket). They beginning hourly rate for a job is $15.50 for 1 kid, $55/night ($18/day) for petsitting (not hourly- base pay). On top of that they charge families a travel fee and families can tip us if they wish. So here's the thing, whatever we make for that job will have a 20% cut taken out (I did the math). Now they claim they don't touch the travel fee ($0.54/mile) but that didn't appear to be the case when I did the math for my payouts. 

When a job is made they used to be listed on facebook or texted out in mass text for someone to pick up. Now they have an available jobs section in our portals that allows us to pick and choose as we see fit (assuming we're up to date in all of our background checks and certificates). At the end of the job we open the closing page on our phone, hand it to the customer so they can check the times is correct and tip us if they like, select the card they have on file they wish to use, and then hits confirm. Easy, done.

They do not give us W-2s, only 1099s if we make over a certain limit and even then they said we are independent contractors and are in charge of paying our taxes. I have access to an employee handbook that is very specific about it,

I will be the first to admit I am not too well-versed in the laws around taxes but like this is weird right? E

[DJS]

No, this is not weird. You're an independent contractor and not an employee. Please see the following TurboTax article, which explains the difference. 

https://ttlc.intuit.com/community/self-employed/help/am-i-an-employee-or-an-independent-contractor/0... 

Regards

[xmasbaby0]

You are working as an independent contractor. This is not at all uncommon.

You have to report your own self-employment income and pay self-employment tax for Social Security and Medicare, and depending on how much you earned, ordinary income tax as well.

https://ttlc.intuit.com/questions/2903027-how-do-i-report-income-from-self-employment

https://ttlc.intuit.com/community/self-employed/help/what-is-the-self-employment-tax/00/25922

https://ttlc.intuit.com/questions/2902389-why-am-i-paying-self-employment-tax

https://ttlc.intuit.com/questions/1901340-where-do-i-enter-schedule-c

https://ttlc.intuit.com/questions/3398950-what-self-employed-expenses-can-i-deduct

If you use online TurboTax you need to use the version called Self-Employed.  If you use desktop software you can use any version of desktop can prepare the Schedule C you need.

Or--if you qualify there are free versions that become available in mid-January.

If you qualify to use it, there is another full-featured free version of the software:

Try Free File: 

You qualify if your income was $39,000 or less, or $72,000 or less if active duty military, or if you qualify for Earned Income Credit

https://ttlc.intuit.com/questions/1900583-what-is-turbotax-free-file-program

• https://ttlc.intuit.com/questions/2026912-how-do-i-switch-to-turbotax-free-file-program

Or—-Use this IRS site for other ways to file for free

https://apps.irs.gov/app/freeFile/

[Opus 17]

If in the state of California, things may be different after AB5.  But for the IRS, whether you are an employee or independent contractor depends on many things including the level of relationship and control the company has over your working conditions.  The fact that jobs are put out to bid and you are free to take one or not, and are free to work for other clients or services, strongly supports the idea you are an independent contractor.

If you were required to sign an exclusive contract with this agency and they required you to be available every Friday and Saturday in case they called you, and you were not free to take other jobs or socialize, the scales might start to tip the other way.  There's no one simple rule that applies to all situations.

And like California, the laws of your state might regulate or prohibit the arrangement, but that's not something we can analyze for you. 

[Opus 17]

It's also fine for them to deduct an agency fee or finders fee.  You are responsible for reporting your gross income on your tax return, and you can deduct ordinary and necessary expenses like travel.  If they issue the 1099-NEC for the entire amount of the job instead of the net after the agency fee, you would report the entire amount as gross income and then list the agency fee as an expense, so you only pay income tax on the net.