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Roni et al....

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~M~

"Wisdom is expressed best not by that which is spoken but rather by that which is not."

Excellent quote, very wise advice.

Very good, Larry. I must remember that one.

I don't think anyone has directly addressed the problem of having taxes withheld whild being an indpendent adjuster:
1.An employee can not deduct on his tax return expenses incurred on behalf of his employer until it exceeds a certain percentage of the income, and then there are several factors that come into play. My guess is that most would not be able to deduct the expenses.
2.An adjusters expenses can easily run 20% of the gross income. At $500 /day billing, that is only $100/day. When searching for motels and buying meals and expensive gasoline, it can run more. BUT, an adjuster on a W-2 will pay social security and medicaid on the entire $500 and so will the employer. On a 1099, whether incorporated or not, self emp. income is based on the net, not the gross, and the IA who is paying on a 1099 will have a greater cash flow and be able to pay a higher percentage of the fee billings.
3.When self employed, and even more so when incorporated (I work through my sub-s corporation), the business usually owns and depreciates the vehicle, pays the gas, and pays all of the related travel expenses, and in some cases allows expenses for home office and other expenses. If working on a w-2, I don't know of any proper way to transfer part of that income to the corporation and take a legitimate deduction and get a refund of SS & medicaid overpayment because a W-2 can not be adjusted.
4.When working throughout the year for your own business then having to also work for a company who only pays with a W-2, it screws up all of the bookkeeping, depreciation schedules, and taxes. In theory, it could also complicate a tax audit because technically, while working under a W-2 you are using corporate owned tools, vehicles, etc. for personal gain and may have to prorate the depreciation and other deductions based on the percent used for personal travel. I don't see anyway to tie the corporate expenses directly to the job, but maybe a good CPA could.
SOLUTION:
5.A good solution, I think, is if using W-2, for the IA firm to agree to allowing the adjuster to submit a weekly expense report then they split the check into two parts, expense reimbursement payable to either the IA or his company name, depending on his tax structure, and the paycheck to the IA. There could be a benefit in doing this because the adjuster could probably submit a per-diem expense in accordance to the IRS allowance for the area where working, and that can exceed the actual cost, especially if staying in a travel trailer. If this were done, then the SS is a wash and everyone gains.

I do not need insurance, already have it.  I don't need a short term retirement fund (assuming we are talking a cat job), instead need to control my own investments or my companies investments. What I prefer is a good contract for my business to do the adjusting and get paid for it as an indpendent contractor, which is the way I have always worked,  not as an employee, but I would not rule out the W-2 way of doing the adjusting if I had no other options.

You gave a good example of the point I was trying to make.  Although I agree with your statement about paying taxes, there are exceptions.  If instead of being "self-employed" (schedule c), you have incorporated as a subchapter S business, your net income (after all expenses and business deductions) flow through to your personal tax return on a k-1.  It is not unusual to own investment real estate that most likely create a loss each year after depreciation, taxes, and other related rental expenses.  The income from the sub-s K-1 for the adjusting work ends up being added to the real estate loss (or any other business loss or write-off) and can result in no income taxes being paid on the adjusting income.

Maybe I am getting too technical here, if so I apologize.  However, many independent contractors and small business owners do incorporate themselves in order to minimize liability and keep their income taxes as low as possible. For this reason, and due to the tax problems caused when not incorporated, I do not understand why Pilot and some other companies insist on requiring an adjuster to be paid on a W-2, especially when the federal laws specifically all adusters to work on a 1099, stating that "independent adjusters" legally are self employed, not employees for purposes of overtime pay and other benefits. Once you go on a W-2, you are no longer legally an independent adjuster, you are an employee.

From what I was told from my vendor I work for, it was State Farm made any vendor that was going to do claims for them had to go W2 in mid 2005.  The reason was so many adjusters made so much in 2004 and 2005 and were just blowing the money and not paying taxes.  I am not sure if this is correct but this is what my vendor told me.

Rob

What is the significance of the ruling?  Are you able to deduct all of the expenses and get reimbursement on that portion of your SS tax?  Can you tell us how that changed your tax return?