Reply
 
Thread Tools Display Modes
 
Old 07-09-2015, 09:05 PM   #21
Guru
 
Moonstruck's Avatar
 
City: Hailing Port: Charleston, SC
Country: USA
Vessel Name: Moonstruck
Vessel Model: Sabre 42 Hardtop Express
Join Date: Nov 2008
Posts: 7,848
Quote:
Originally Posted by VAtrawlerguy View Post
In the motorhome world, working on the road is called "work camping" so I guess this is "work cruising". The tax implications of doing this are potentially severe since legally, you are creating a tax liability in nearly every state you might do it in. Some states tax your entire income even tho' only a (tiny) portion was earned in their state. A slip (or campsite) is provided? That's taxable too, unless the employer can reasonably prove that you have to be there in order to meet the requirements of your position. Food provided? Same deal. I suggest you Google "work camping" or "workcamping" and read some of the legal advice that's offered on some of the sites and forums.


Gary
Not only that, Gary, but if you do contract work or self employment work you are subject to the self employment tax. This is about 15% as you are really paying both sides of the Social Security tax.

This is why the underground economy is so strong.
__________________
Advertisement

__________________
Don on Moonstruck
Sabre 42 Hardtop Express & Blackfin 25 CC
When cruising life is simpler, but on a grander scale (author unknown)
http://moonstruckblog.wordpress.com/
Moonstruck is online now   Reply With Quote
Old 07-09-2015, 09:10 PM   #22
Senior Member
 
n36511's Avatar
 
City: Lake Lanier, GA
Country: USA
Vessel Name: Miller Time part deux
Vessel Model: 1995 Carver 355
Join Date: May 2014
Posts: 105
Quote:
Originally Posted by windmill29130 View Post
There is a huge difference between working on a boat, RV, car or whatever and actually performing Commerce (buying, selling, or setting up a retail/store front). I believe you are referring to someone working at a place of business like flipping burgers at Mickey D's while in port. This case will cause you to get a W-2 which in turn you would be subject to state and local taxes. Working at your own business while out of town in no way constitutes you having a liability to pay taxes in that state.

I see it this way as well. We will continue to be residents of GA and will only write off our internet expenses and office supplies. I don't see how that would cause any other tax implications in any state we travel to. Otherwise, I am doing illegal activities every time I end up working while on vacation ....Hmmmm may try and work that angle with my employer.

I really don't have a clue as to what I will do. Really just looking to see what others have done successfully. I appreciate all of the feedback!
__________________

n36511 is offline   Reply With Quote
Old 07-09-2015, 09:13 PM   #23
Senior Member
 
n36511's Avatar
 
City: Lake Lanier, GA
Country: USA
Vessel Name: Miller Time part deux
Vessel Model: 1995 Carver 355
Join Date: May 2014
Posts: 105
To elaborate further.... if I chose to do some local work at whatever port I am in, I do understand that I will need to pay state income tax in that state if they collect it.
n36511 is offline   Reply With Quote
Old 07-09-2015, 09:31 PM   #24
Scraping Paint
 
City: -
Country: -
Join Date: Oct 2007
Posts: 13,748
I don't know what your area of expertise in IT happens to be, but I'm an employee of a very large company in which IT is a major component. I would think that if you offer something a business or company needs an advantage you would have is your part-time or contractor status.

An employer does not have to pay benefits like medical, vacation, overtime, etc. to its contracted help, particularly to those working less than 4o hours a week. The organization I work in has set a 60/40 split as a target, 60 percent full time employees, 40 percent contractors.

Companies are shedding more and more full-time employees where it makes sense to do so. The work is still there, but the status of the people being hired to do the work is changing. For example all the guards on our plant gates used to be full time employees. Over the past couple of years this function has largely been contracted out to independent security firms.

This kind of thing could be a real advantage in your favor depending on the kind of work you do and the nature of the companies who need this kind of work. It's certainly an advantage you can play up when offering your services to them. Doesn't necessarily mean you'd get paid less for your work, but it would cost the businesses hiring you a lot less for the service.
Marin is offline   Reply With Quote
Old 07-10-2015, 10:18 AM   #25
Veteran Member
 
Join Date: Oct 2011
Posts: 25
My purpose in posting was to alert you to the potential ramifications and recommend you do some research before doing it.


I was a South Dakota resident and did some work in Virginia for a Virginia-based company. Received a 1099 at year end and included it on my federal taxes. Did not file a Virginia return. They came calling a few years later and because I did the work in Virginia (was physically in the state), I had to pay, plus interest and penalties.


The laws vary by state, sometimes significantly, and some states are far more aggressive than others. I don't mind paying taxes on what I earn there but I really dislike any claim on the rest of my income so there are some states I will not work in.


Gary
VAtrawlerguy is offline   Reply With Quote
Old 07-10-2015, 12:57 PM   #26
Guru
 
Wayfarer's Avatar
 
City: Oneida Lake, NY
Country: USA
Vessel Name: Radio Flyer
Vessel Model: Wilderness Systems Aspire 105
Join Date: Aug 2014
Posts: 784
I had a battle with Michigan a few years ago. I work all over the Great Lakes, but my payroll office is in Michigan. I live in New York. After 5 years of just paying NY state tax, Michigan decided they wanted a piece of the pie. I'm 99% sure it's because I made the mistake of going H&R Block, and they screwed something up. Michigan hounded me for a year and a half, despite the fact that I was able to supply them with the actual law that said I only had to pay the state I lived in. They didn't care about 'anything I went and found on the Internet,' literally called me a deadbeat and sent it to collections.

I finally hired a real accountant. She was able to straighten it out. Turns out Michigan owed me 40 bucks. Suck on that, Michigan.
__________________
Dave
Just be nice to each other, dammit.
Wayfarer is offline   Reply With Quote
Old 07-10-2015, 04:03 PM   #27
Senior Member
 
seasalt007's Avatar
 
City: Punta Gorda, FL
Country: U.S.
Vessel Name: Aweigh
Vessel Model: Nordic Tug 42
Join Date: Jun 2014
Posts: 481
I work (online) for a school in Virginia. Every year I have to submit a form stating that I don't live or go to work there to avoid state income tax withholding...which I don't have to pay.
seasalt007 is online now   Reply With Quote
Old 07-10-2015, 06:55 PM   #28
Guru
 
windmill29130's Avatar
 
City: Little River SC
Vessel Name: JAZ
Vessel Model: Ta Chaio/CT35
Join Date: Jan 2011
Posts: 716
Quote:
Originally Posted by Wayfarer View Post
I had a battle with Michigan a few years ago. I work all over the Great Lakes, but my payroll office is in Michigan. I live in New York. After 5 years of just paying NY state tax, Michigan decided they wanted a piece of the pie. I'm 99% sure it's because I made the mistake of going H&R Block, and they screwed something up. Michigan hounded me for a year and a half, despite the fact that I was able to supply them with the actual law that said I only had to pay the state I lived in. They didn't care about 'anything I went and found on the Internet,' literally called me a deadbeat and sent it to collections.

I finally hired a real accountant. She was able to straighten it out. Turns out Michigan owed me 40 bucks. Suck on that, Michigan.
H&R Block :bangh ead:
__________________
Tracy & Susie Hellman 1985 Ta Chiao CT 35
Twin Lehman Super 90's Westerbeke 4.4kw
Lightkeepers Marina -Little River, SC
windmill29130 is offline   Reply With Quote
Old 07-10-2015, 07:24 PM   #29
Guru
 
City: kemah
Country: USA
Join Date: May 2015
Posts: 997
just as an example refererence to go by...

I have been contracting thru various shops and by 1099's for the past 15 years as a EE. I have been to a lot of places over the years, all temporarily.

when you work in plant for a company you have to pay that states income tax (including local county income taxes as applicable), as well as your own residency states tax. They all give credit for the other so you wont be paying double tax. But you will pay as the IRS notifies each state that you claim income for.

California says if you are working in their state for more than 9 months they have claim on ALL FUTURE income no matter where you earn it as they consider you a permanent resident at 9 months. And they will sue you for the taxes. It's designed to keep the hollywood types tax money coming in, but it snares everyone in the process. For most contractors it's not a big deal, but you do have to prove that your residency is physically in another state.
what_barnacles is offline   Reply With Quote
Old 07-10-2015, 08:27 PM   #30
Guru
 
Off Duty's Avatar
 
City: Tampa
Country: USA
Join Date: Oct 2013
Posts: 843
Quote:
Originally Posted by Moonstruck View Post
Not only that, Gary, but if you do contract work or self employment work you are subject to the self employment tax. This is about 15% as you are really paying both sides of the Social Security tax.

This is why the underground economy is so strong.
Took my attorney's and CPA's advice.

An LLC took care of that problem for me.

OD
Off Duty is offline   Reply With Quote
Old 07-10-2015, 09:08 PM   #31
Guru
 
Wayfarer's Avatar
 
City: Oneida Lake, NY
Country: USA
Vessel Name: Radio Flyer
Vessel Model: Wilderness Systems Aspire 105
Join Date: Aug 2014
Posts: 784
Quote:
Originally Posted by windmill29130 View Post
H&R Block
You can say that again.
__________________
Dave
Just be nice to each other, dammit.
Wayfarer is offline   Reply With Quote
Old 07-11-2015, 01:11 AM   #32
TF Site Team
 
ksanders's Avatar
 
City: SEWARD ALASKA
Country: USA
Vessel Name: LISAS WAY
Vessel Model: BAYLINER 4788
Join Date: Feb 2011
Posts: 3,954
Quote:
Originally Posted by Off Duty View Post
Took my attorney's and CPA's advice.

An LLC took care of that problem for me.

OD
Actually the only way to avoid paying both sides of Social Security is to file as an subchapter S corporation.

You can't avoid all of the Social Security because you have to draw a paycheck and be paid a reasonable wage for all actual work performed. those paychecks have to have Social Security witheld just like any employer and since you own the company you are in fact paying both halves of the Social Security for those wages.

The savings come in when your business makes a profit(after it pays your wages), that profit flows in to your personal income as unearned income, with the earned income portion being reported on form W2 just like any other job.

If you DO NOT file under subchapter S then all income from the business flows into your personal income as earned income and you will pay both halves of Social Security on it.

An LLC is a state function, not a federal function, so it has no bearing on your federal tax status. A LLC is meant to provide protection of the LLC owners (members), from liabilities incurred by the LLC, whereas a sole proprietorship or a partnership offers no such protection. Forming an LLC also offers things like registration of business name, etc... under the laws governing corporations in the state where the LLC is formed.

I've been through this for a decade and a half. As my business grew I was first forced to change my accounting method from "cash" to "accural", then I decided to change my federal tax status to subchaper S to avoid Social Security on business profits. My wife and I now draw regular paychecks and have done so for years. Profits are distributed as well and are accounted for separately.
__________________
Kevin Sanders
Bayliner 4788
Seward, Alaska
www.mvlisasway.com
ksanders is offline   Reply With Quote
Old 07-11-2015, 01:49 AM   #33
Guru
 
Off Duty's Avatar
 
City: Tampa
Country: USA
Join Date: Oct 2013
Posts: 843
Quote:
Originally Posted by ksanders View Post
Actually the only way to avoid paying both sides of Social Security is to file as an subchapter S corporation.

You can't avoid all of the Social Security because you have to draw a paycheck and be paid a reasonable wage for all actual work performed. those paychecks have to have Social Security witheld just like any employer and since you own the company you are in fact paying both halves of the Social Security for those wages.

The savings come in when your business makes a profit(after it pays your wages), that profit flows in to your personal income as unearned income, with the earned income portion being reported on form W2 just like any other job.

If you DO NOT file under subchapter S then all income from the business flows into your personal income as earned income and you will pay both halves of Social Security on it.

An LLC is a state function, not a federal function, so it has no bearing on your federal tax status. A LLC is meant to provide protection of the LLC owners (members), from liabilities incurred by the LLC, whereas a sole proprietorship or a partnership offers no such protection. Forming an LLC also offers things like registration of business name, etc... under the laws governing corporations in the state where the LLC is formed.

I've been through this for a decade and a half. As my business grew I was first forced to change my accounting method from "cash" to "accural", then I decided to change my federal tax status to subchaper S to avoid Social Security on business profits. My wife and I now draw regular paychecks and have done so for years. Profits are distributed as well and are accounted for separately.
You are absolutely correct sir. I should have been more specific.

We are a sub S Corp.
Dumped the SET I was saddled with as a sole proprietorship, as well as the benefits you mentioned above.

Thanks for the clarification.
(That's why I do what I do, and leave the CPA stuff to the CPA's.

OD
Off Duty is offline   Reply With Quote
Old 07-11-2015, 01:54 AM   #34
TF Site Team
 
ksanders's Avatar
 
City: SEWARD ALASKA
Country: USA
Vessel Name: LISAS WAY
Vessel Model: BAYLINER 4788
Join Date: Feb 2011
Posts: 3,954
Quote:
Originally Posted by Off Duty View Post
You are absolutely correct sir. I should have been more specific.

We are a sub S Corp.
Dumped the SET I was saddled with as a sole proprietorship, as well as the benefits you mentioned above.

Thanks for the clarification.
(That's why I do what I do, and leave the CPA stuff to the CPA's.

OD
You sounded like you had it down cold, I just wanted to make sure others considering the same path understood the full pricture.

I was just filling in some gaps if you will.
__________________
Kevin Sanders
Bayliner 4788
Seward, Alaska
www.mvlisasway.com
ksanders is offline   Reply With Quote
Old 07-11-2015, 02:56 AM   #35
Guru
 
BandB's Avatar
 
City: Fort Lauderdale
Country: USA
Join Date: Jan 2014
Posts: 13,142
Quote:
Originally Posted by ksanders View Post
An LLC is a state function, not a federal function, so it has no bearing on your federal tax status. .
An LLC does have bearing on federal tax status. Here are the basic rules.

Depending on elections made by the LLC and the number of members, the IRS will treat an LLC as either a corporation, partnership, or as part of the LLC’s owner’s tax return (a “disregarded entity”). Specifically, a domestic LLC with at least two members is classified as a partnership for federal income tax purposes unless it files Form 8832 and affirmatively elects to be treated as a corporation. And an LLC with only one member is treated as an entity disregarded as separate from its owner for income tax purposes (but as a separate entity for purposes of employment tax and certain excise taxes), unless it files Form 8832 and affirmatively elects to be treated as a corporation.

An LLC that does not want to accept its default federal tax classification, or that wishes to change its classification, uses Form 8832, Entity Classification Election, to elect how it will be classified for federal tax purposes. Generally, an election specifying an LLC’s classification cannot take effect more than 75 days prior to the date the election is filed, nor can it take effect later than 12 months after the date the election is filed.


The keypoint is that every situation is slightly different as every state has different rules and the method in which you handle the setup of the entity will impact your federal tax filing. So, get expert assistance, especially at the time you start the business entity.

I've seen or known of so many people over the years adversely impacted because they filed one form a few days late, a form such as 8832. I've seen people thinking they'd be treated as an S-Corporation and finding the paperwork wasn't filed and they were a C-Corporation so had both Corporate taxes and personal taxes involved.

Then the complexity extends to state income taxes, unemployment taxes, requirements for workers' compensation coverage, legal rights to conduct business in the state and treatment as a foreign entity.

Another issue the others mentioned is the payment of salary to oneself within your Corporation. You must pay a "reasonable amount" as salary. Now determining a reasonable amount isn't as easily done as said. However, if you have a profitable corporation whose revenues are a result of your personal work and you fail to pay salary and subject part of the income to payroll taxes, then the IRS will often determine it is 100% subject to payroll taxes, that essentially you're just self employed.
BandB is online now   Reply With Quote
Old 07-11-2015, 08:25 AM   #36
Guru
 
Off Duty's Avatar
 
City: Tampa
Country: USA
Join Date: Oct 2013
Posts: 843
KSanders- thank you.
BandB- thank you as well.

This is exactly why I DON'T do my own taxes!
Lord knows we need to dump the IRS, trash the tax code, simplify everything, and start over!!!! :-(

OD (for now).
__________________
"I'm the only one who has removed half a brain, but if you went to Washington, you'd think someone beat me to it"...Dr. Ben Carson 08-06-2015
Off Duty is offline   Reply With Quote
Old 07-11-2015, 08:40 AM   #37
Guru
 
roguewave's Avatar
 
City: Hill Country TX/S.Portland Maine
Country: Texas
Vessel Name: Southern Cross III
Vessel Model: 1988 Defever 41
Join Date: Jul 2012
Posts: 610
We enjoy working while traveling, real estate income does not care where we are
__________________
..."some gave all, KIA"...
roguewave is offline   Reply With Quote
Old 07-11-2015, 09:29 AM   #38
Guru
 
Sailor of Fortune's Avatar
 
City: Saint Augustine, Fl.
Country: Port of St Augustine ,FL
Join Date: Sep 2009
Posts: 1,957
I think Wayfarer is in a different category due his merchant marine employment status.
I am employed in New Jersey, live in Florida and work in many states. I just spent three weeks in Texas. There is a clause in the tax code that provides for MM types. Most accountants don't know about these because they don't deal with them on a regular basis.
I don't pay NJ state taxes. Federal taxes only. My current accountant needed an education on this in the beginning. She is comfortable and used to it now.
Don't get me started on travel deductions.
Sailor of Fortune is offline   Reply With Quote
Old 07-11-2015, 10:02 AM   #39
TF Site Team
 
ksanders's Avatar
 
City: SEWARD ALASKA
Country: USA
Vessel Name: LISAS WAY
Vessel Model: BAYLINER 4788
Join Date: Feb 2011
Posts: 3,954
Quote:
Originally Posted by BandB View Post
An LLC does have bearing on federal tax status. Here are the basic rules.

Depending on elections made by the LLC and the number of members, the IRS will treat an LLC as either a corporation, partnership, or as part of the LLC’s owner’s tax return (a “disregarded entity”). Specifically, a domestic LLC with at least two members is classified as a partnership for federal income tax purposes unless it files Form 8832 and affirmatively elects to be treated as a corporation. And an LLC with only one member is treated as an entity disregarded as separate from its owner for income tax purposes (but as a separate entity for purposes of employment tax and certain excise taxes), unless it files Form 8832 and affirmatively elects to be treated as a corporation.

An LLC that does not want to accept its default federal tax classification, or that wishes to change its classification, uses Form 8832, Entity Classification Election, to elect how it will be classified for federal tax purposes. Generally, an election specifying an LLC’s classification cannot take effect more than 75 days prior to the date the election is filed, nor can it take effect later than 12 months after the date the election is filed.


The keypoint is that every situation is slightly different as every state has different rules and the method in which you handle the setup of the entity will impact your federal tax filing. So, get expert assistance, especially at the time you start the business entity.

I've seen or known of so many people over the years adversely impacted because they filed one form a few days late, a form such as 8832. I've seen people thinking they'd be treated as an S-Corporation and finding the paperwork wasn't filed and they were a C-Corporation so had both Corporate taxes and personal taxes involved.

Then the complexity extends to state income taxes, unemployment taxes, requirements for workers' compensation coverage, legal rights to conduct business in the state and treatment as a foreign entity.

Another issue the others mentioned is the payment of salary to oneself within your Corporation. You must pay a "reasonable amount" as salary. Now determining a reasonable amount isn't as easily done as said. However, if you have a profitable corporation whose revenues are a result of your personal work and you fail to pay salary and subject part of the income to payroll taxes, then the IRS will often determine it is 100% subject to payroll taxes, that essentially you're just self employed.
OK, I stand corrected there. We when we set up our LLC we did nothing. We defaulted to a partnership. (we did this before we even had money for a CPA)

Years later we made an election to change to a S corp. Our CPA said it was a one time election.

The issue of what is "reasonable" pay is very relevant. What we do is log 40 hours per week. The pay we receive is in what we feel is a reasonable range if you were to write out the specific job duties of what we do. We might have erred on the high side even.

In order to dispute that the IRS would have to show that our wages were not reasonable. That is a fight they probably would not waste much time on. Where they would get involved is if we did not log regular work weeks of hours.
__________________
Kevin Sanders
Bayliner 4788
Seward, Alaska
www.mvlisasway.com
ksanders is offline   Reply With Quote
Old 07-11-2015, 02:08 PM   #40
Guru
 
BandB's Avatar
 
City: Fort Lauderdale
Country: USA
Join Date: Jan 2014
Posts: 13,142
Quote:
Originally Posted by ksanders View Post

The issue of what is "reasonable" pay is very relevant. What we do is log 40 hours per week. The pay we receive is in what we feel is a reasonable range if you were to write out the specific job duties of what we do. We might have erred on the high side even.

In order to dispute that the IRS would have to show that our wages were not reasonable. That is a fight they probably would not waste much time on. Where they would get involved is if we did not log regular work weeks of hours.
We do it just as you do. While our situation is quite complex, it's really not difficult to determine "reasonable" based on normal wages for equivalent jobs. We err on the high side too. While there is the seemingly negative aspect of employment taxes on that amount there are also group benefits including health insurance, life insurance, and 401-K.

I'm sure they do occasionally, but I've never personally known the IRS to dispute anything that came close to reasonable in this regard. I have known them to take situations where no salary was claimed and declare it all compensation subject to employment taxes and add on substantial penalties. I've also known states to jump in on unemployment taxes and workers' compensation requirements too. Unemployment taxes in Florida for the first 2 and a half years are 2.7%. Then it's based on experience.
__________________

BandB is online now   Reply With Quote
Reply

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off





All times are GMT -5. The time now is 09:50 PM.


Powered by vBulletin® Version 3.8.8 Beta 4
Copyright ©2000 - 2017, vBulletin Solutions, Inc.
Search Engine Optimization by vBSEO 3.6.0
Copyright 2006 - 2012