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sch c owner/employee

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Level 1

can a Sch C owner  be employee  with W2?  I can  find NO in pub 334,  Can someone  give me a link to something more authoritative,  a Citation,  Letter ruling,  IRC   ? The rule seems illogical to me

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17 Replies 17
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Level 15

Nope.  If he or she wants to be an employee, they need to change go a corporation. 

ex-AllStar, ex-Lutefisk taste taster, ex-ACME product tester
and ex marks the spot where those rocks and anvils hit me.
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Level 15

No, no, no, no 

Logic and the tax code don't have to go together.

 

Former Chump... umm.... AllStar.
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Level 1

THANKS  abc,  isn't this the truth ????!!  no logic to tax code

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Level 12

I'm intrigued why a person would WANT to go through all of the extra work and expense to go on payroll, when all of it is being taxed anyways.

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Level 15

1) clueless of how tax law works (thinks it will "save taxes")

2) too undisciplined to make estimated tax payments & wants to have "withholding" to solve the problem.   

3) ??

Former Chump... umm.... AllStar.
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Level 2

Probably wants to be clever by pretending he's an actual W2 employee -- trying to camoflage a slack Schedule C biz, so his "income" won't draw as much skepticism/scrutiny by the IRS. 

Actually it's quite logical that you can't be an employee of yourself as an individual.  There has to be a distinct entity, a different legal hat you're wearing, to fulfill two sides of a transaction.

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Level 10

It makes perfect sense to me.  How can you have an employee without an employer?

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Level 15
You can not have an employee without an employers. As a Schedule C filer, you can be an employer. You may hire anyone you want as an employee - Friend, Child, Spouse, Candlemaker, Thief, .... Anyone, but not yourself.

ex-AllStar
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Level 12

In answer to the actual question, an indirect answer is Revenue Ruling 69-184.  That states a Partner is not an employee because he is Self Employed.   Well, if that is true, then a Self Employed person is not an employee because he is Self Employed.

https://www.bradfordtaxinstitute.com/Endnotes/Rev_Rul_69-184.pdf

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Level 1

THANKS  so much for reply.  out  of  12 replies,  this is the only real citation I  got

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Level 13

It's a Discussion.

"2 people dissed you on your reply."

No one was disrespected. Everyone put in some content on the way to figuring out why your client might feel this would be useful or why you are uncomfortable that the resources you found and have been given didn't meet your level of evaluation. We all are used to working together in this virtual environment. No one disses someone for asking for more justification. We simply try to provide it.

I happened to teach that very thing in my Payroll class. We discuss why you don't need to be in my class in the first place, because "payroll" and "employee" don't apply to a sole proprietor. No one ever asked for IRS citation, though.

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"Level Up" is a gaming function, not a real life function.
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Level 11

Once we prove that negative, let's move on to why a narcissist can't get a marriage license and become his own spouse. 

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Level 13

The Supreme Court has ruled that Corporations are "people, too" as a separate entity. They cannot run themselves, so they must hire Humans to do the operations. That makes the Corporation the employer and the Humans the employees. A Sole Proprietorship already is that Person, and you cannot hire yourself to be yourself; you already are yourself. You can hire others, of course, but not yourself.

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"Level Up" is a gaming function, not a real life function.
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Level 15

This is NOT the place to be looking for a tax preparer.  Please stop with the spamming.

Former Chump... umm.... AllStar.
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Level 13

@ranchoninja 

You already asked this on another topic. This is a Forum on the internet. It's not a shopping mall and it's rude to Keep Asking. You need to realize that some people here are not even in the US.

You should contact your own local providers to see what services they offer to you. Shop Locally. Be nice to your community.

Or, post on Craig's List or My Neighborhood; ask your Dentist or Doctor who they use.

You cannot find a way to Direct Message because it does not exist; that's Not a provision. This is not a Message Board. It's a Software Support community.

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"Level Up" is a gaming function, not a real life function.
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Level 1

thanks a lot for your reply and anytime you spent on this,  it is not really a citation,  etc I was looking for, but THANK YOU.  2 people dissed you on your reply.  always several  snotty  people out here who criticize Every Question.

 

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Level 15

No one dissed anyone on this thread.  And no one gave snotty answers.....

Except maybe to the non-tax pro posted that was soliciting for a tax preparer, in violation of the rules.

THAT's been deleted.

 

Former Chump... umm.... AllStar.
If a post answers your question, click on *Accept as solution* for future searches