Self-employed or subcontracting work without EAD

[jenni and sami 0]

A theoretical question here, related to the "working as an illegal" thread. Say a K1 visa holder is waiting for an EAD, but can get work subcontracting, i.e. even if they had an EAD they would be filling out their own tax returns etc and would not be having taxes deducted directly from their pay. As long as they paid their taxes in April, would there be any likely repercussions from not having the EAD?

If there were any likely repercussions, would these be avoidable by simply avoiding invoicing the companies they are working for until after the EAD arrives?

Many thanks for any advice.

[kitkat1 5]

I cannot guarantee that I am correct, but here is my response from the other thread. I don't think you would need to wait to invoice because a 1099 doesn't show the timeframe the work was done.

Some companies hire independent contractors and don't require proof of eligibility to work or even ask for a SSN (that's their mistake, right?) The contractor is resonsible to pay their taxes - sometimes that means making estimated quarterly tax payments otherwise they'll be hit with a penalty - and the employer is required to provide a 1099 by the end of January for the upcoming April 15 payment. I guess they could even file with an ITTN rather than a SSN.

Since 1099s don't provide detail on the time period the work was done, technically I suppose someone who entered on a K1 could work as a contractor without having an EAD in hand and no one would be the wiser. . . .

[payxibka 10,044]

A theoretical question here, related to the "working as an illegal" thread. Say a K1 visa holder is waiting for an EAD, but can get work subcontracting, i.e. even if they had an EAD they would be filling out their own tax returns etc and would not be having taxes deducted directly from their pay. As long as they paid their taxes in April, would there be any likely repercussions from not having the EAD?

If there were any likely repercussions, would these be avoidable by simply avoiding invoicing the companies they are working for until after the EAD arrives?

Many thanks for any advice.

I agree with kitkat1 in that hypothetically speaking you probably would be able to pull it off. Typically all an employer requires the contractor to fill out is a W-9. There is no requirement for an I-9 between you and the Company you are contracting for. Technically if there was an I-9 requirement it would be between you and yourself.

[Yodrak 7]

jenni and sami,

Independent contractors wear two hats - employer and employee. As an employee, married to a USC they are OK with the USCIS for immigration purposes. Don't know how they would stand with ICE as an employer.

I would be surprised if when they sent the invoice was more important than when they performed the work, but I don't know.

Good questions for an immigration attorney, who might answer by saying 'good questions for a law school exam'.

Yodrak

A theoretical question here, related to the "working as an illegal" thread. Say a K1 visa holder is waiting for an EAD, but can get work subcontracting, i.e. even if they had an EAD they would be filling out their own tax returns etc and would not be having taxes deducted directly from their pay. As long as they paid their taxes in April, would there be any likely repercussions from not having the EAD?

If there were any likely repercussions, would these be avoidable by simply avoiding invoicing the companies they are working for until after the EAD arrives?

Many thanks for any advice.

[jenni and sami 0]

jenni and sami,

Independent contractors wear two hats - employer and employee. As an employee, married to a USC they are OK with the USCIS for immigration purposes. Don't know how they would stand with ICE as an employer.

Thanks Yodrak. So if there were any repercussions, they would more than likely be of the financial/tax variety, rather than the "you're on the next plane home" type of problem? Theoretically speaking, of course.

[jenni and sami 0]

the employer is required to provide a 1099 by the end of January for the upcoming April 15 payment. I guess they could even file with an ITTN rather than a SSN.

Since 1099s don't provide detail on the time period the work was done, technically I suppose someone who entered on a K1 could work as a contractor without having an EAD in hand and no one would be the wiser. . . .

But if they need to file the 1099 in January, but their EAD isn't likely to show up for another month or so, would this cause difficulties, or would the 1099 not need an EAD? It's all so confusing.

Edited December 20, 2006 by jenni and sami

[kitkat1 5]

the employer is required to provide a 1099 by the end of January for the upcoming April 15 payment. I guess they could even file with an ITTN rather than a SSN.

Since 1099s don't provide detail on the time period the work was done, technically I suppose someone who entered on a K1 could work as a contractor without having an EAD in hand and no one would be the wiser. . . .

But if they need to file the 1099 in January, but their EAD isn't likely to show up for another month or so, would this cause difficulties, or would the 1099 not need an EAD? It's all so confusing.

The 1099 is the form the employer sends to the contractor for tax filing purposes. It is the equivalent of the W2 that employees receives to file taxes. By law the employee or contractor is supposed to receive their W2 or 1099 no later than January 31. This is so they can file their taxes. (Some people like to file ASAP because they are expecting a large tax return).

If the company you (theoretically) do contract work for doesn't ask for an EAD, the only thing they would require in order to issue the 1099 is a SSN or an ITTN. It's not technically necessary for you to show an EAD to get your 1099, unless of course the company knows the rules and asks for it. Some do, some don't.

I did contract work for a company that never asked for a SSN or anything - but they are based in another country and my assumption was they didn't have a clue. At some point before January they will need a SSN from me - and as long as I get my 1099 from them and I pay my taxes on time, I'm covered. In your hypothetical case, I can't see how YOU could get into trouble for having done the work - it *seems* the company could but really, who knows?

Sure hope this hasn't confused you more - it's a great question, but we need someone who really knows the answer!!!!

[jenni and sami 0]

Sure hope this hasn't confused you more - it's a great question, but we need someone who really knows the answer!!!!

Thanks for the concern KitKat (and the informative advice). I exist in a permanent state of confusion anyway , so I wouldn't worry too much about that.

[payxibka 10,044]

Sure hope this hasn't confused you more - it's a great question, but we need someone who really knows the answer!!!!

The key to the answer is what set or sets of laws are we dealing with. Is it immigration, tax, employment or some combination. If we want to lay out the real questions then we can decipher what the real items are get them answered. This discussion has covered a lot of ground.

kitkat1,

In your mind what do you think is still open ?

[kitkat1 5]

kitkat1,

In your mind what do you think is still open ?

I don't think there is any tax issue - as long as the contractor receives a 1099 and pays the appropriate taxes, they are covered in that respect. I think it's more a question of immigration law -- what are the repercussions of working without an EAD and would anyone who cares ever have a way to find out? Since 1099s don't indicate the specific time period worked, I think it's pretty unlikely. The other question is whether or not working as a contractor requires an EAD - I would think so but perhaps not.

[payxibka 10,044]

I don't think there is any tax issue - as long as the contractor receives a 1099 and pays the appropriate taxes, they are covered in that respect. I think it's more a question of immigration law -- what are the repercussions of working without an EAD and would anyone who cares ever have a way to find out? Since 1099s don't indicate the specific time period worked, I think it's pretty unlikely. The other question is whether or not working as a contractor requires an EAD - I would think so but perhaps not.

I think there are many potential tax issues but in the grand scheme of things they may be the most easy to deal with.

Your other questions certainly weave a tangled web because you can easily answer it from one set of laws or regulations only to get yourself trapped by another.

[kitkat1 5]

Looks doable to me -- what tax issues are you thinking of? I really can't see any as long as the appropriate taxes are paid, can't imagine who would care (or know).

This may be out of date but here's what I just found on a site geared toward employers:

Employer I-9 Compliance in a Nutshell

For whom is a Form I-9 unnecessary?

• Individuals performing casual employment who provide domestic service in a private home that is sporadic, irregular or intermittent;

• Independent contractors (see Employer Information Bulletin 110)

• Workers provided to employers by individuals or entities providing contract services, such as temporary agencies

(in such cases, the contracting party is the employer for I-9 purposes)

NOTE: An employee may not be able to provide a social security number if the Social Security administration has not yet issued the individual a social security card.6 This information block is optional. Therefore, an employer cannot require an employee to complete it.

Discovering an Unauthorized Employee

An employer who discovers that an employee has been working without authorization should re-verify work authorization by allowing such an employee another opportunity to present acceptable documentation and complete a new I-9. However, employers should be aware that if it knows or should have known that an employee is unauthorized to work in the United, they may be subject to serious penalties for "knowingly continuing to employ" an unauthorized worker.

Responsibility of the Employee

Employees need to provide the information requested in Section 1. In particular, they must attest to their status by checking the applicable box indicating that they are:

• Citizen/national of the United States (top box),

• Lawful permanent resident with a "green card" (middle box), or

• Alien authorized to work in the United States until a specified date (bottom box).

Employees must sign and date this Section of the Form I-9 when completed.

Employer Review and VerificationThe second part of the form requires the employer to list the documents that were produced by the worker to verify his or her identity and employment eligibility. There are three groups of documents that a worker may use for this purpose. The documents that can be presented by employees are listed on the reverse side of the Form I-9.7 A worker may choose to provide a List A document (which establishes both identity and work authorization), or he/she may choose to provide one List B document (which establishes identity) and one List C document (which establishes work eligibility). Documentation must be rejected if it is expired, with two exceptions: the U.S. passport (a List A document) and all List B documents. Employers who fail to complete the Form I-9 or who hire or continue to employ workers they know are unauthorized to work in the United States may be subject to civil and, in certain cases, criminal penalties. See Employer Information Bulletin 111.

There is also a section on Employer Sanctions - but nothing regarding employee.

What's your take?

[Killer_Clown_2009 0]

I'm going out on a limb and will say that no there "probably" won't be any repercussions.

As long as the IRS gets the their tax money, they don't care if you were working legally or not. I highly doubt that the dates that you worked will come up @ your AOS interview(or matter if they do come up or even if you'll get an interview). From what I've read "working illegally" is forgiven when you are married to a USC anyway.

I don't know if the company that hired you will have issues if they get caught hiring you without seeing proof of employment authorization - somehow I doubt that'll be an issue either.

This is just my opinion though and an answer to the question asked. I am not encouraging anyone to do anything that they know is "not quite legal".

Edited December 20, 2006 by jane2005

[payxibka 10,044]

My take is this....

Many people forget that they may not only be subject to income taxes but self employment taxes and quarterly estimate requirements. They get that check for $1000 a week and spend it. They do not realize that upwards of 40% of that money may have to be paid in some form of taxes. You can get yourself behind in a hurry and that is what I meant about potential tax issues. Paying and paying on time cures a lot of problems.

My other take is that I would like to see Bulletin 110.

The other information you posted pretty much confirms most of the discussion that has taken place as it relates to the I-9.

Looks doable to me -- what tax issues are you thinking of? I really can't see any as long as the appropriate taxes are paid, can't imagine who would care (or know).

• Independent contractors (see Employer Information Bulletin 110)

What's your take?

[kitkat1 5]

I agree - I'd like to find that Bulletin as well. As for the tax issues, there are definitely self-employment taxes and quarterly estimate requirements that need to be followed or there are penalties. So as long as the independent contractor was well educated on these points and paid the appropriate taxes on time, it appears they would be ok in terms of being allowed to work.

I suppose if the IRS ever cross-referenced the SSN with INS status, there could be ramifications, but considering how many people work with fake SSNs or the SSN of someone deceased, seems unlikely that it would happen, at least until they straighten out the SSN verification issue for employers.