Putting personal "benefits" on my W2

[Confused]

Our company has a part time handyman, and right now his work load is
really slow. Could I have him do work at my house as long as I added
the fair value of his work to my W2? For various insurance reasons
cutting his hours back and my hiring him as a independent contractor
is impractical, but I don't want to get anyone into trouble.

If it is not acceptable, I would appreciate any alternatives.

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[Gene E. Utterback, EA, ABA]

>"Confused" wrote in message
>news:1fc69f6c-57fd-4af8...@l14g2000vbe.googlegroups.com...

?Our company has a part time handyman, and right now his work load is

>really slow. Could I have him do work at my house as long as I added
>the fair value of his work to my W2? For various insurance reasons
>cutting his hours back and my hiring him as a independent contractor
>is impractical, but I don't want to get anyone into trouble.

>If it is not acceptable, I would appreciate any alternatives.

Why would you add the value of his work to YOUR W-2?

He earned the money so it should be reported to him, not to you. Whether
your company will allow you to pay him via an after tax withholding from
your wages may be possible, but it seems like a lot of work for the H/R
department.

Gene E. Utterback, EA, RFC, ABA

[Bill Brown]

On Jan 31, 2:40 pm, "Gene E. Utterback, EA, ABA"

<G...@AllianceTax.Com> wrote:
> >"Confused"  wrote in message
> >news:1fc69f6c-57fd-4af8...@l14g2000vbe.googlegroups.com...
>
> ?Our company has a part time handyman, and right now his work load is
>
> >really slow.  Could I have him do work at my house as long as I added
> >the fair value of his work to my W2?  For various insurance reasons
> >cutting his hours back and my hiring him as a independent contractor
> >is impractical, but I don't want to get anyone into trouble.
> >If it is not acceptable, I would appreciate any alternatives.
>
> Why would you add the value of his work to YOUR W-2?
>
> He earned the money so it should be reported to him, not to you.  Whether
> your company will allow you to pay him via an after tax withholding from
> your wages may be possible, but it seems like a lot of work for the H/R
> department.
>
> Gene E. Utterback, EA, RFC, ABA
>

The OP would be receiving compensation from his employer if the
employer paid for another employee to do personal work for the OP.
That is why the value of the service would be on the OP's W-2.

[removep...@yahoo.com]

On Jan 31, 7:27 am, Confused <w...@lippman.info> wrote:

> Our company has a part time handyman, and right now his work load is
> really slow.  Could I have him do work at my house as long as I added
> the fair value of his work to my W2?  For various insurance reasons
> cutting his hours back and my hiring him as a independent contractor
> is impractical, but I don't want to get anyone into trouble.
>
> If it is not acceptable, I would appreciate any alternatives.

This does not sound clean. Anyway, because the amounts are added to
your W-2, the company gets a bigger deduction -- ie, if your salary is
50k, the company deducts 50k, but because of the work they now deduct
50,250. Anyway, if your tax rate is higher than the company's tax
rate, the IRS ought to be happy. Also, as the handyman is working at
a new site, isn't this a new job, to be reported on Schedule C? In
this case the handyman would also report $250 on his Schedule C, and
pay FICA + federal + state tax. So essentially the $250 is double
taxed by both you and the handyman.

[Confused]

On Jan 31, 2:40 pm, "Gene E. Utterback, EA, ABA"
<G...@AllianceTax.Com> wrote:

> >"Confused"  wrote in message
> >news:1fc69f6c-57fd-4af8...@l14g2000vbe.googlegroups.com...
>
> ?Our company has a part time handyman, and right now his work load is
>
> >really slow.  Could I have him do work at my house as long as I added
> >the fair value of his work to my W2?  For various insurance reasons
> >cutting his hours back and my hiring him as a independent contractor
> >is impractical, but I don't want to get anyone into trouble.
> >If it is not acceptable, I would appreciate any alternatives.
>
> Why would you add the value of his work to YOUR W-2?
>
> He earned the money so it should be reported to him, not to you.  Whether
> your company will allow you to pay him via an after tax withholding from
> your wages may be possible, but it seems like a lot of work for the H/R
> department.
>

I guess I didn't explain it adequately.
He would get paid exactly as always, and it would be reported as
always.
However he would be doing some work at my house instead of at the
company.
The value of his work would show as compensation to me, because I was
getting something of value from the company.
If my normal pay is X and the value of his services is Y, then my W2
would be for X+Y. HR is happy to cooperate. It benefits him, me, and
the company.

[ira smilovitz]

On Tuesday, January 31, 2012 3:16:09 PM UTC-5, removep...@yahoo.com wrote:

> On Jan 31, 7:27 am, Confused <w....@lippman.info> wrote:
>
> > Our company has a part time handyman, and right now his work load is
> > really slow.  Could I have him do work at my house as long as I added
> > the fair value of his work to my W2?  For various insurance reasons
> > cutting his hours back and my hiring him as a independent contractor
> > is impractical, but I don't want to get anyone into trouble.
> >
> > If it is not acceptable, I would appreciate any alternatives.
>
> This does not sound clean. Anyway, because the amounts are added to
> your W-2, the company gets a bigger deduction -- ie, if your salary is
> 50k, the company deducts 50k, but because of the work they now deduct
> 50,250. Anyway, if your tax rate is higher than the company's tax
> rate, the IRS ought to be happy. Also, as the handyman is working at
> a new site, isn't this a new job, to be reported on Schedule C? In
> this case the handyman would also report $250 on his Schedule C, and
> pay FICA + federal + state tax. So essentially the $250 is double
> taxed by both you and the handyman.

There's no double dip here. It's no different than any other taxable fringe benefit provided by an employer, such as group term life insurance in excess of $50K. The company deducts the payment to the handyman, but doesn't get another deduction from the W-2 reporting. If the OP's salary were $50K, the company would still deduct $50K for salary (plus $3825 for the employer side of FICA/medicare).

Regardless of where the handyman is working, there is no Schedule C. He is employed by the company, not the OP. It's possible the handyman might be able to deduct travel expense if he has to report to the company site on the same day as working at the OP's house.

Ira Smilovitz
Leonia, NJ

[Stuart A. Bronstein]

"removep...@yahoo.com" <removep...@yahoo.com> wrote:
> Confused <w...@lippman.info> wrote:
>
>> Our company has a part time handyman, and right now his work
>> load is really slow.  Could I have him do work at my house as
>> long as I added the fair value of his work to my W2?  For
>> various insurance reasons cutting his hours back and my hiring
>> him as a independent contractor is impractical, but I don't
>> want to get anyone into trouble.
>>
>> If it is not acceptable, I would appreciate any alternatives.
>
> This does not sound clean. Anyway, because the amounts are
> added to your W-2, the company gets a bigger deduction -- ie, if
> your salary is 50k, the company deducts 50k, but because of the
> work they now deduct 50,250.

Why would they be doing that? That would be like saying the employer
bought the employee a car as a bonus, and the employer got to deduct
the cost of the car twice because not only did it pay for it, but put
it on the employee's W-2. That's not the way it works.

> Anyway, if your tax rate is higher
> than the company's tax rate, the IRS ought to be happy. Also,
> as the handyman is working at a new site, isn't this a new job,
> to be reported on Schedule C?

The handyman is already reporting what he is getting paid. There is
no reason for him to report it twice.

___
Stu
http://DownToEarthLawyer.com

[Confused]

>
> The handyman is already reporting what he is getting paid.  There is
> no reason for him to report it twice.
>

Okay...
It wouldn't affect the handyman at all.
Between the company and me, it would be treated as a taxable fringe
benefit.
That sounds good to me, unless someone disagrees.
But is the taxable fringe benefit deductible for the company?
I did a little reading and found that club dues were NOT deductible.
I am guessing this wouldn't be either.
So the IRS gets to tax the work twice, but gives only one deduction.
They should be happy.
Still, it would work for us.

[Stuart A. Bronstein]

Confused <wa...@lippman.info> wrote:

>> The handyman is already reporting what he is getting paid.
>>  There is no reason for him to report it twice.
>
> Okay...
> It wouldn't affect the handyman at all.
> Between the company and me, it would be treated as a taxable
> fringe benefit.
> That sounds good to me, unless someone disagrees.

I don't see why not.

> But is the taxable fringe benefit deductible for the company?

It's not a benefit offered to all employees on the same basis, so I
doubt it should be treated as a fringe benefit, taxable or not. Why
not just treat it as wages, like any bonus would be?

> I did a little reading and found that club dues were NOT
> deductible.

Some dues are not considered a legitimate business expense. But in
your case they are pay you and you aren't deducting it. So it's like
wages. Yes, the IRS can come in and say your wages are too high and
that what is more than reasonable won't be deductible to the company.
But that almost never happens, except in small corporations where
they try to convert deductible wages into nondeductible dividends.
And even those are pretty rare.

___
Stu
http://DownToEarthLawyer.com

[Hank Youngerman]

On Jan 31, 4:51 pm, Confused <w...@lippman.info> wrote:
> > The handyman is already reporting what he is getting paid.  There is
> > no reason for him to report it twice.
>
> Okay...
> It wouldn't affect the handyman at all.
> Between the company and me, it would be treated as a taxable fringe
> benefit.
> That sounds good to me, unless someone disagrees.
> But is the taxable fringe benefit deductible for the company?
> I did a little reading and found that club dues were NOT deductible.
> I am guessing this wouldn't be either.
> So the IRS gets to tax the work twice, but gives only one deduction.
> They should be happy.
> Still, it would work for us.

It's true that the company is getting a double deduction, but the
company is also in effect paying the handyman for work he doesn't
perform. While he is working on the OP's house, he is getting paid by
the company for not working for the company. You might argue that
compensation for work not performed is not a business expense, hence
not deductible.

I'm equally confused, and this is starting to sound like a Monty
Python routine. Anybody want some cheese?

[Confused]

On Jan 31, 5:10 pm, "Stuart A. Bronstein" <spamt...@lexregia.com>
wrote:

> > But is the taxable fringe benefit deductible for the company?
>
> It's not a benefit offered to all employees on the same basis, so I
> doubt it should be treated as a fringe benefit, taxable or not.  Why
> not just treat it as wages, like any bonus would be?
>
> > I did a little reading and found that club dues were NOT
> > deductible.
>
> Some dues are not considered a legitimate business expense.  But in
> your case they are pay you and you aren't deducting it.  So it's like
> wages.  Yes, the IRS can come in and say your wages are too  high and
> that what is more than reasonable won't be deductible to the company.
> But that almost never happens, except in small corporations where
> they try to convert deductible wages into nondeductible dividends.
> And even those are pretty rare.
>

Excessive pay is not an issue; the amount involved is pretty small.
Seems wrong to call it wages when the company is not actually paying
me anything; but what do I know.
Can wages be non-monetary?
I am not an accountant, so excuse me if this sounds foolish (I can't
keep debits and credits straight), but wages are increasing pay and
decreasing cash. This would be increasing pay and decreasing what?
The handyman's pay?

[dpb]

On 1/31/2012 9:27 AM, Confused wrote:
> Our company has a part time handyman, and right now his work load is
> really slow. Could I have him do work at my house as long as I added
> the fair value of his work to my W2? For various insurance reasons
> cutting his hours back and my hiring him as a independent contractor
> is impractical, but I don't want to get anyone into trouble.
>
> If it is not acceptable, I would appreciate any alternatives.

What's the reason to open the can of worms about the work for an
employee and just pay the employee's wage if it's the company's desire
to keep him?

Surely there's _something_ he could do if it's repainting the lines in
the parking lot...

--

[Stuart A. Bronstein]

Hank Youngerman <donts...@redtopbg.com> wrote:

> Confused <w...@lippman.info> wrote:
>>
>> Okay...
>> It wouldn't affect the handyman at all.
>> Between the company and me, it would be treated as a taxable
>> fringe benefit.
>> That sounds good to me, unless someone disagrees.
>> But is the taxable fringe benefit deductible for the company?
>> I did a little reading and found that club dues were NOT
>> deductible. I am guessing this wouldn't be either.
>> So the IRS gets to tax the work twice, but gives only one
>> deduction. They should be happy.
>> Still, it would work for us.
>
> It's true that the company is getting a double deduction, but
> the company is also in effect paying the handyman for work he
> doesn't perform.

There is no double deduction. The company pays once and deducts it
once. The question is whether it is considered taxable for the
employee who gets a personal benefit from something his employer
pays for.

> While he is working on the OP's house, he is
> getting paid by the company for not working for the company.

No, he is working for the company. The company is essentially
telling him to work on the OP's home. There is nothing inherently
wrong with that, as long as it is properly accounted for.

> You might argue that compensation for work not performed is not
> a business expense, hence not deductible.

You could argue that a Christmas gift or a bonus payment isn't
compensation for work because it isn't required to be paid under a
contract. But it's still deductible. This likely falls into the
same category.

> I'm equally confused, and this is starting to sound like a Monty
> Python routine. Anybody want some cheese?

Confused is a good word, yes.

___
Stu
http://DownToEarthLawyer.com

[Bill Brown]

On Jan 31, 5:44 pm, Confused <w...@lippman.info> wrote:
...
> Can wages be non-monetary?
...

Yes.

[Seth]

In article <1fc69f6c-57fd-4af8...@l14g2000vbe.googlegroups.com>,

Confused <wa...@lippman.info> wrote:
>Our company has a part time handyman, and right now his work load is
>really slow. Could I have him do work at my house as long as I added
>the fair value of his work to my W2? For various insurance reasons
>cutting his hours back and my hiring him as a independent contractor
>is impractical, but I don't want to get anyone into trouble.
>
>If it is not acceptable, I would appreciate any alternatives.

Hire him from the company: pay the company (cash) for the value of his
time.

Seth

[Confused]

On Feb 2, 12:41 am, se...@panix.com (Seth) wrote:

> Hire him from the company: pay the company (cash) for the value of his
> time.
>

That makes sense. I used to work at a company that made money by
hiring out two surplus programmers.
It avoids the W2 issue.
Is the IRS going to like it or dislike it anymore than the alternative?

[Seth]

In article <c02c35b2-c51b-4802...@s9g2000vbc.googlegroups.com>,

Confused <wa...@lippman.info> wrote:
>On Feb 2, 12:41 am, se...@panix.com (Seth) wrote:
>
>> Hire him from the company: pay the company (cash) for the value of his
>> time.
>>
>That makes sense. I used to work at a company that made money by
>hiring out two surplus programmers.
>It avoids the W2 issue.
>Is the IRS going to like it or dislike it anymore than the alternative?

I pay a company (that happens to be my employer) to have a handyman
come to my home and make repairs. There are 3 entities involved.

(1) The IRS pays no attention to me, because that's a personal
transaction and I don't have to tell them about hiring plumbers,
electricians, etc. for my personal home.

(2) The IRS pays no attention to the handyman because he's working for
a salary the same way he has been for years, for the same company.

(3) The IRS pays no attention to the company for hiring out an
employee to get some revenue from his time when they can't use him
internally. So long as the company reports the revenue, there's no
issue.

Seth

[Katie in San Diego]

On Feb 3, 12:32 pm, se...@panix.com (Seth) wrote:
> In article <c02c35b2-c51b-4802-9d72-0b422f6a3...@s9g2000vbc.googlegroups.com>,

>
> Confused  <w...@lippman.info> wrote:
> >On Feb 2, 12:41 am, se...@panix.com (Seth) wrote:
>
> >> Hire him from the company: pay the company (cash) for the value of his
> >> time.
>
> >That makes sense.  I used to work at a company that made money by
> >hiring out two surplus programmers.
> >It avoids the W2 issue.
> >Is the IRS going to like it or dislike it anymore than the alternative?
>
> I pay a company (that happens to be my employer) to have a handyman
> come to my home and make repairs.  There are 3 entities involved.
>
> (1) The IRS pays no attention to me, because that's a personal
> transaction and I don't have to tell them about hiring plumbers,
> electricians, etc. for my personal home.
>
> (2) The IRS pays no attention to the handyman because he's working for
> a salary the same way he has been for years, for the same company.
>
> (3) The IRS pays no attention to the company for hiring out an
> employee to get some revenue from his time when they can't use him
> internally.  So long as the company reports the revenue, there's no
> issue.
>
> Seth
>

And the parrot is most definitely dead.

Katie in San Diego