What do I do when someone tells me that they are self employed or I think they might be self employed?
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Do they work in Self Employment is it?
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YES
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Do they run their own business as sole proprietors and use a schedule C when filing taxes?
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NO
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Do they work for cash, "under the table" or work as Home Depot Day Laborers?
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NO
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Do they work for a company they own that is registered as a corporation or partnership?
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NO
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Are they independent contractors or receive a 1099 from their employer or employers for their taxes?
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NO
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YES
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YES
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YES
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YES
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YES
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Do they own their own company?
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They need to complete the Declaration of Self Employment form with a declaration of their actual profits/income and expense deductions covering the 3 months prior to application along with copy of recent tax return with all forms & schedules.
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They need to complete the Declaration of Self Employment form with a declaration of their actual wages covering the 3 months prior to application.
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Ask for copies of the wage-stubs they pay themselves along with copy of recent tax return with all forms & schedules. They Do Not Need a Declaration of Self Employment form and Cannot Take Deductions.
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They need to complete the Declaration of Self Employment form with a declaration of their actual profits/income and expense deductions covering the 3 months prior to application along with copy of recent tax return with all forms & schedules.
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NO
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YES
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Do they have business royalties or income from a partnership?
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Compare declared statement of 3 months income and deductions with last tax return. If numbers differ to become income eligible then is there reason why? Use gross wages declared and eligible deductions.
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We use the clients statements. There is no way to verify this type of income. Cannot use deductions
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*If any personal expenses are paid for such as bills, mortgage, car payments etc by corporation then request verification of amounts and use as additional income.
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Compare declared statement of 3 months income and deductions with last tax return. If numbers differ to become income eligible then is there reason why? Use gross wages declared and eligible deductions.
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NO
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Are they ministers or persons working in a religious vocation or occupation?
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YES
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Do they receive any "Church Offerings" or any other forms of compensation?
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YES
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Ask for verification or declaration of amounts if none on the Declaration of Self Employment form.
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NO
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NO
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It doesn't sound like they are self employed.
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It doesn't sound like they are self employed.
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Self Employment Question and Action
