Paying models

[camperjohn64]

When you pay a model, you need to 1099 the amount at the end of the tax year. So that means you need the model's SSN correct?

Even if you pay a model only $100, you still need to 1099 her, and get her SSN correct?

[camdough]

The rule is if you pay them over $600 in a year then you must 1099 them. The answer is yes get their SSN upfront so if they earn over $600 you can 1099. You do not want to try chancing them down to get it after the fact.

Also this only applies to employees working and living in the US.

[camperjohn64]

If I do not pay them more than $600, how do I report that they are an expense?

[camdough]

Well if you pay them in cash then have them sign a receipt. If you pay them by check them your receipt is the check.

[JimmyStephans]

I speak from experience...

DO NOT JUST HAVE THEM WRITE DOWN THEIR SSN ON A SIMPLE RECEIPT UNLESS YOU ALSO USE A CERTAIN FORM AND SEE THE SSN CARD YOURSELF.

http://www.irs.gov/pub/irs-pdf/fw9.pdf

For many years I had my own form where I listed model, name, address, SSN, and they signed for the money. Thing I made in WORD.

About 2011 I am going through an audit and one main question is the amount of money paid to "independent contractors" (Models, sometimes outside helpers, designers, etc.). Turns out I was in trouble -

See, at the end of the year when we send 1099s to the models / contractors there is a transmittal that also sends that data to the IRS. It is supposed to match. When I, or my accountant, send that form to the IRS we are certifying that all information is true and correct.

If I report I paid $2500 to model Jane Doe with SSN 123-45-6789 from Tampa, Florida and they discover that SSN 123-45-6789 matches a 68 year old guy living in Phoenix, Arizona, they can't ask him to pay taxes on that $2500, so they come back to me looking to see if I have the wrong SSN typed into my records.

And that my friends is where the form comes in.

If you just let the model write it down on a model release or receipt AND she gives you a bad SNN you are responsible for that money and the taxes due on it. You can't claim it as a deduction. You have to treat it cash in your own pocket (company pocket) and pay any taxes due on it.

Yes, like you - I thought - the damn girl lied to me so go get her!

WRONG - If you didn't use the IRS form YOU are responsible. End of story, no fighting it.

But, if you use that form THE GIRL is the one making a sworn statement to the IRS that her number is such and such and if somehow she is using tricks or a bad number, SHE would be responsible for the lie / mistake.

Use the damn form.

Now, to finish the story, it started for me in 2009. I got notice from IRS that something wasn't right and I would have to pay something like $1700 on a 2004 return issue. Yes, that many years later. I pay it and forget it just thinking its a simple mistake on one year.

That was like admitting guilt. Soon as I paid that they started looking at other years.

I tried dealing with it myself over about 2 years - writing letters back and forth, digging out receipts, blah, blah, blah... all while running the sites, shooting and traveling.

Soon as I missed one deadline - BOOM - they reach in and take just over $129,000 from personal bank accounts / CD.

Shit, I panic, hire tax lawyers, blah, blah, blah...

It is now 3 years later. I've used two sets of lawyers, two accounting firms, and tons of office hours for TEMP workers digging in receipts to account for every penny of income / expenses for every year from 2007 to 2012. Maybe $100,000 in fees to lawyers, accountants and temp helpers.

As I type this we are still arguing over year 2012 I-1099 issues. Once they start looking at you - they look at every year they can. They do it slow, but the interest and fees and penalties - and interest on the fees and penalties you didn't know about - all add up fast!

So, back to the main issue - USE THE DAMN FORM.

By The Way - I NEVER buy anything from anybody that isn't a registered company (EIN) or doesn't want to give a receipt.

Did you know that if you go out and buy a $2000 used camera from a guy on Craigslist today, and you want to consider it a business expense, you need to report that payment on a 1099 to him and your year end transmittal to the IRS (Which means asking him for his SSN) - or have a receipt made to you from a company that has an EIN?

Seems odd, but its true. I lost TONS of business deductions and have had to eat the taxes on a large amount of transactions over these last few years as I was audited over and over.

I also NEVER pay models in cash any longer. I always type a business check. She can take it and cash it herself so I have a record that the payment was made. Checks are proof that the person exists in eyes of the IRS because its deposited in a bank of hers, or she used a check cashing service that checked her ID, or my own bank she walked into that checked her ID, etc.

I know many guys will have a check and cash. Give the girl that check, she signs it and gives it back for the cash. Cool, but in my case they denied that because it was all me - meaning it was just my word that she was there, that its her real signature, etc. If she cashes at a bank or service it adds a third party to the transaction and the IRS assumes that third party is neutral and did really see an ID.

Yes, checks are old school.... but the IRS gave me slack / help on deals where I had check copies to show I did pay a model / contractor, and gave me no slack / help when I just had a paper receipt she signed.

Use the correct forms for everything. Then double check them.

Jimmy

[Grapesoda]

So, back to the main issue - USE THE DAMN FORM.

By The Way - I NEVER buy anything from anybody that isn't a registered company (EIN) or doesn't want to give a receipt.

Did you know that if you go out and buy a $2000 used camera from a guy on Craigslist today, and you want to consider it a business expense, you need to report that payment on a 1099 to him and your year end transmittal to the IRS (Which means asking him for his SSN) - or have a receipt made to you from a company that has an EIN?

.

I also NEVER pay models in cash any longer. I always type a business check. She can take it and cash it herself so I have a record that the payment was made. Checks are proof that the person exists in eyes of the IRS because its deposited in a bank of hers, or she used a check cashing service that checked her ID, or my own bank she walked into that checked her ID, etc.




Use the correct forms for everything. Then double check them.

Jimmy

great solid info and even use wire transfer if possible

[camperjohn64]

Thank you so much. Great eye opener.

[JizzBizzWriter]

JimmyStephans - dropping science!

I speak from experience...

DO NOT JUST HAVE THEM WRITE DOWN THEIR SSN ON A SIMPLE RECEIPT UNLESS YOU ALSO USE A CERTAIN FORM AND SEE THE SSN CARD YOURSELF.

For many years I had my own form where I listed model, name, address, SSN, and they signed for the money. Thing I made in WORD.

About 2011 I am going through an audit and one main question is the amount of money paid to "independent contractors" (Models, sometimes outside helpers, designers, etc.). Turns out I was in trouble -

See, at the end of the year when we send 1099s to the models / contractors there is a transmittal that also sends that data to the IRS. It is supposed to match. When I, or my accountant, send that form to the IRS we are certifying that all information is true and correct.

If I report I paid $2500 to model Jane Doe with SSN 123-45-6789 from Tampa, Florida and they discover that SSN 123-45-6789 matches a 68 year old guy living in Phoenix, Arizona, they can't ask him to pay taxes on that $2500, so they come back to me looking to see if I have the wrong SSN typed into my records.

And that my friends is where the form comes in.

If you just let the model write it down on a model release or receipt AND she gives you a bad SNN you are responsible for that money and the taxes due on it. You can't claim it as a deduction. You have to treat it cash in your own pocket (company pocket) and pay any taxes due on it.

Yes, like you - I thought - the damn girl lied to me so go get her!

WRONG - If you didn't use the IRS form YOU are responsible. End of story, no fighting it.

But, if you use that form THE GIRL is the one making a sworn statement to the IRS that her number is such and such and if somehow she is using tricks or a bad number, SHE would be responsible for the lie / mistake.

Use the damn form.

Now, to finish the story, it started for me in 2009. I got notice from IRS that something wasn't right and I would have to pay something like $1700 on a 2004 return issue. Yes, that many years later. I pay it and forget it just thinking its a simple mistake on one year.

That was like admitting guilt. Soon as I paid that they started looking at other years.

I tried dealing with it myself over about 2 years - writing letters back and forth, digging out receipts, blah, blah, blah... all while running the sites, shooting and traveling.

Soon as I missed one deadline - BOOM - they reach in and take just over $129,000 from personal bank accounts / CD.

Shit, I panic, hire tax lawyers, blah, blah, blah...

It is now 3 years later. I've used two sets of lawyers, two accounting firms, and tons of office hours for TEMP workers digging in receipts to account for every penny of income / expenses for every year from 2007 to 2012. Maybe $100,000 in fees to lawyers, accountants and temp helpers.

As I type this we are still arguing over year 2012 I-1099 issues. Once they start looking at you - they look at every year they can. They do it slow, but the interest and fees and penalties - and interest on the fees and penalties you didn't know about - all add up fast!

So, back to the main issue - USE THE DAMN FORM.

By The Way - I NEVER buy anything from anybody that isn't a registered company (EIN) or doesn't want to give a receipt.

Did you know that if you go out and buy a $2000 used camera from a guy on Craigslist today, and you want to consider it a business expense, you need to report that payment on a 1099 to him and your year end transmittal to the IRS (Which means asking him for his SSN) - or have a receipt made to you from a company that has an EIN?

Seems odd, but its true. I lost TONS of business deductions and have had to eat the taxes on a large amount of transactions over these last few years as I was audited over and over.

I also NEVER pay models in cash any longer. I always type a business check. She can take it and cash it herself so I have a record that the payment was made. Checks are proof that the person exists in eyes of the IRS because its deposited in a bank of hers, or she used a check cashing service that checked her ID, or my own bank she walked into that checked her ID, etc.

I know many guys will have a check and cash. Give the girl that check, she signs it and gives it back for the cash. Cool, but in my case they denied that because it was all me - meaning it was just my word that she was there, that its her real signature, etc. If she cashes at a bank or service it adds a third party to the transaction and the IRS assumes that third party is neutral and did really see an ID.

Yes, checks are old school.... but the IRS gave me slack / help on deals where I had check copies to show I did pay a model / contractor, and gave me no slack / help when I just had a paper receipt she signed.

Use the correct forms for everything. Then double check them.

Jimmy

Great advice for all. It is 2014, my friends. Time to up our Administrative/Paperwork game. There are so many great web-based CRM/ERP/LOB apps out there, it's a bit hard to believe people still thumbnail sketch on cocktail napkin the paperwork.

[ezgirl]

What is the name of this form?

[JimmyStephans]

Its called a W-9

Link here:

http://www.irs.gov/pub/irs-pdf/fw9.pdf