Tag Archives: IRS

Tax Day For Independent Contractors: More Paperwork, More Taxes

Today’s post comes from guest author Jon Rehm, from Rehm, Bennett & Moore.

The issue of whether Uber drivers and other so-called “Gig Economy” workers are employees or independent contractors is a hot topic among lawyers and policy makers. But last week independent contractors in the Gig Economy and beyond had a more mundane but no less serious dilemma:

Filing their taxes

Independent contractors are required to pay their full FICA and Medicare taxes. These higher taxes can be offset by more liberal deductions but that assumes a contractor has more expenses to deduct.

Deductions also require paperwork.  Filing your taxes as an IRS Form 1099 independent contractor is more complicated than filing your taxes as an IRS W-2 employee.

Independent contractor status can be helpful for someone who wants to be an entrepreneur. But for those who just want to support themselves and family, involuntary independent contractor status can mean higher taxes, more paperwork and more risk of trouble with the IRS and state revenue agencies.  Future tax days could be even more stressful if more workers are forced into independent contractor status in order to support themselves and families.

Confidentiality Agreements and Dennis Rodman

Today’s post comes from guest author Leonard Jernigan, from The Jernigan Law Firm.

Many defendants, particularly celebrities, often try to keep settlement agreements private and they seek confidentiality as part of the bargain. Dennis Rodman, former Chicago Bulls basketball player and current friend of the North Korea dictator Kim Jong-un, kicked a photographer in 1997 during a basketball game and the photographer sued for personal injuries. Eventually a $200,000.00 settlement was reached and, as part of the deal, the photographer agreed to keep the settlement confidential.

In steps the Internal Revenue Service. The IRS asserted that since no specific dollar amount had been allocated for the confidentiality portion of the agreement, 60% of the amount should be taxed. The photographer appealed and argued that the tax value was de minimis, if any, but he lost his appeal.

So, dear friends, the next time a confidentiality clause is suggested by the defendant as a necessary part of the agreement, remember Dennis Rodman. Remember the photographer who had to pay taxes on $80,000.00. Remember that you should always try to avoid confidentiality agreements.  However, if you do agree, be sure to designate a specific dollar amount for that portion of the settlement and expect this amount to be taxable. For more information, see Amos v. Commissioner of IRS, T.C.M. of 2003–320. US Tax Court. 

Mileage Reimbursement Set at 56 Cents per Mile for 2014

Today’s post comes from guest author Brody Ockander, from Rehm, Bennett & Moore.

Getting reimbursed for mileage and travel expenses is often part of the medical process in a workers’ compensation claim. However, it’s essential to keep detailed receipts and have a plan for submitting those expenses in a timely manner.

The federal government has set the 2014 mileage reimbursement rate to 56 cents per mile. This rate was effective Jan. 1, 2014. This is a decrease from 56.5 cents per mile last year, but the price of gasoline is also slightly cheaper.

Generally speaking, the federal rate changes annually. However, when gas prices went soaring in 2008, a mid-year increase went into effect.

As a reminder from a blog post that firm partner Todd Bennett wrote in 2011, injured workers can be reimbursed for activities such as “travel to seek medical treatment, pick up medications, or while participating in a vocational rehabilitation plan.”

The best way to do this is to work with your attorney and legal assistant to keep track of all mileage. This can include appointments for Independent Medical Exams (IME), too. Then your attorney can help you get reimbursed. 

It is often essential to save receipts and keep a record for yourself of your doctor’s visits and other reimbursable trips, including physical therapy and trips to pick up medication. Providing that log to your attorney and saving receipts incurred from specific doctor visits and other reimbursable trips creates a “narrative” that makes it easier to justify those expenses.

Because money is always tight for injured workers, contact an experienced workers’ compensation attorney if you have questions about a specific situation.