Cash for call tax implications

[caligas]

For those of you that work in employed model, what are your experiences with the tax treatment for exchanging cash and call shifts?

For example, if I pay someone $1000 to take a call shift are folks just doing under the table or is there a way to legitimately deduct the expense? Or is there another way to handle it?

Thanks

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[Iso4ane]

$1000?! What $1000?

 

[The Duck Knows]

That’s a gift to show appreciation. Under $18k (or whatever the limit is this year) should be fine.

 

[caligas]

$1000?! What $1000?

Just whatever number. $100, $5,000 not really the point 😆

 

[caligas]

That’s a gift to show appreciation. Under $18k (or whatever the limit is this year) should be fine.

so the payer (the one getting rid of the call) pays tax on that income but doesn’t receive the income right? And the call taker gets the money tax free?

Nothing wrong with that, just making sure I understand.

Although not sure IRS would agree that it’s a gift, maybe the money Blue Shield sends me is just a gift to show appreciation.

 

[Dr. Rude]

For those of you that work in employed model, what are your experiences with the tax treatment for exchanging cash and call shifts?

For example, if I pay someone $1000 to take a call shift are folks just doing under the table or is there a way to legitimately deduct the expense? Or is there another way to handle it?

Thanks

N=1 but doing it under the table is how it was mostly done. E.g. if call was a worth $1,000 pre tax Dr. x would simply write Dr. y a personal check for $650 or so assuming a 35% marginal bracket. No 1099. Not strictly Kosher, but hey.

 

[thinkorswim]

Our group does it under the table, handled out of pocket between the individuals themselves. Think of it as just giving a friend or family member $1k. It's just cleaner... the corporation and IRS don't need to know anything.

We looked at processing it as business expenses through the corporation but it just became an unnecessary tax liability and made things more complicated than they needed to be.

 

[UscGhost]

I think you should send your buddy a 1099 lol

 

[GassYous]

so the payer (the one getting rid of the call) pays tax on that income but doesn’t receive the income right? And the call taker gets the money tax free?

Nothing wrong with that, just making sure I understand.

Although not sure IRS would agree that it’s a gift, maybe the money Blue Shield sends me is just a gift to show appreciation.

They already got their tax money, no need to pay them twice

 

[aneftp]

For those of you that work in employed model, what are your experiences with the tax treatment for exchanging cash and call shifts?

For example, if I pay someone $1000 to take a call shift are folks just doing under the table or is there a way to legitimately deduct the expense? Or is there another way to handle it?

Thanks

As much as I’m the most (legit) tax deductible person here on my 1099 side gigs.

I don’t even deduct cash I pay for someone to work for me on the w2 employed side.

If I have opportunity to work for 9-10k 1099 (taxable) that 24 hr day 1099 elsewhere I don’t mind paying someone straight $2k cash to work for 8 hrs.

That’s how I roll.

 

[Arch Guillotti]

For those of you that work in employed model, what are your experiences with the tax treatment for exchanging cash and call shifts?

For example, if I pay someone $1000 to take a call shift are folks just doing under the table or is there a way to legitimately deduct the expense? Or is there another way to handle it?

Thanks

under the table

 

[NICMAN]

We do salary transfer. That way the person paying the tax is the one getting the money. It is taxed either way.

 

[Dr. Rude]

We do salary transfer. That way the person paying the tax is the one getting the money. It is taxed either way.

If we lived in an ideal world with flexible and competent and well intentioned payroll and HR personnel, that is the way it would happen.

 

[caligas]

We do salary transfer. That way the person paying the tax is the one getting the money. It is taxed either way.

This is helpful. I did not know that that was a thing, salary transfer. I could see system being anxious about doing that but I guess as long as they have confirmation from the transferring party.

 

[Dr. Rude]

They already got their tax money, no need to pay them twice

I agree, but, technically it is not following the rules and they are by the book entitled to another bite at the same apple. It sücks especially if W2

 

[caligas]

I agree, but, technically it is not following the rules and they are by the book entitled to another bite at the same apple. It sücks especially if W2

Agree, nobody wants to hear this but I this could be a substantial amount of unreported income for someone taking a large amount of aftermarket call.

 

[Ronin786]

Agree, nobody wants to hear this but I this could be a substantial amount of unreported income for someone taking a large amount of aftermarket call.

Technically that's on them for not reporting 1099 income to the IRS.

We have a shift-based model and a way of switching shifts in our scheduling software that allows the balance to transfer with no tax implications. OTOH, if you can't find a taker for your call, it has been known to just pay under the table at a higher rate than what our group reimburses (after tax you pay). I.e. a $1000 shift would be paid out at $800 cash.