I've left United American and will be captively working for American General. One of the other agents who still works with UA has a wife that is GREAT at telemarketing. She generates interest on cold calls, and then hands it off to him to work. In order to supplement my own prospecting efforts, I've talked to him about the possibility of engaging in a business arrangement where she will generate leads and I will pay her based on appts kept and appts closed. If our arrangement goes as well as I expect, a decent sum of money will change hands over time. If possible, I would like to get a credit on my taxes and I also want to make certain that I won't owe have any tax liabilites. Since I am technically working for AIG, it's not like it is my own business and she is my employee - right? If so, what are the tax liabilities? The way I'm thinking, I can deduct what I pay her by calling it a work expense.
Tax liabilities/benefits of paying a telemarketer?
- Thread starter Survivor
- Start date
You may be a captive but I question if you are an employee of AIG. They are paying you wages that will show up on a W2?
If you have 1099 income the cost of the leads (including telemarketing expense) can be deducted on your Schedule C.
If your income is all W2 you may be able to deduct those expenses on form 2106 or you may be limited as an itemized deduction on Schedule A.
Be careful about paying per app. If you pay a flat fee you may be able to avoid issues with the DOI. If you pay as a percent of the premium you are walking on thin ice.
You may also be liable for your telemarketers FICA taxes if you are not careful.
Best to check with your tax accountant before walking too far out this plank.
If you have 1099 income the cost of the leads (including telemarketing expense) can be deducted on your Schedule C.
If your income is all W2 you may be able to deduct those expenses on form 2106 or you may be limited as an itemized deduction on Schedule A.
Be careful about paying per app. If you pay a flat fee you may be able to avoid issues with the DOI. If you pay as a percent of the premium you are walking on thin ice.
You may also be liable for your telemarketers FICA taxes if you are not careful.
Best to check with your tax accountant before walking too far out this plank.
- Thread starter
- #3
- 7,790
Even if you are a W-2 employee of AIG, you can file a Schedule C and deduct the expense of the telemarketer. If you pay her more than $600 in a tax year, you must file a Form 1099-MISC and issue a copy to her. Of course you will run into Schedule SE, Self-Employment Tax, if the net income from the side business earns more than $400. The SE Tax can be offset to an extent by the FICA taxes AIG deducts on your W-2. You do not have to pay her FICA because she is an independent contractor from the way you describe the set up.
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- 1,641
If your earnings are all w-2, rules out the schedule c. If you were 1099 earlier this year then you are good to go on sked c for 2007.
Form 2106 flows to the sked a, and you can only deduct business expenses
that are greater than 2% of agi (adjusted gross income).
Of course if your itemized expenses are less than:
Single: $5,350
Married Filing Joint: $10,700
Then you won't be writing any of it off.
Form 2106 flows to the sked a, and you can only deduct business expenses
that are greater than 2% of agi (adjusted gross income).
Of course if your itemized expenses are less than:
Single: $5,350
Married Filing Joint: $10,700
Then you won't be writing any of it off.
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- 7,790
My bad. I misinterpreted the post. I thought he was doing this telemarketing for a side business rather than stictly for AIG. If he has 1099 income from other carriers then W-2 income from AIG would not preclude Schedule C. I don't believe it was made clear to me if he was strictly W-2 in which case, of course, he has to use Form 2106, Employee Business Expenses and Schedule A. I guess`I read too much into it.
- 7,790
True. Insurers that pay life insurance agents as W-2 place them in a special class provided by the Internal Revenue Code whereby income tax is not withheld, but FICA (1/2) is. AS you ststed , he could be a 1099 captive which means he is responsible for self-employment tax as well as paying any income tax.
G
Guest
Guest
It's called a Statutory Employee. I've never understood it. Perhaps some kind soul will explain what it is? I believe realators are often in the same 'boat'?
Al
- 7,790
Yes, Al, that is what it is called. I am busy now but will respond to you later today or tomorrow.
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