Are investigators Employees or Independent Contractors?

[Larry Sanders--]

I assume that earnings through referals are on a contract basis...(?) As opposed to an employer/empolyee relationship.

[Robert Donovan]

It is mixed with different agencies.

As a rule, you will earn more on a contract basis than as an employee. But some firms still prefer to place investigators on the payroll for a variety of reasons.

[Tracey Tonkovich]

im wondering if we have to take out our own taxes or does every company take them out for us

[Robert Donovan]

As an example, most California agencies can easily place a trainee under their license for an assignment or two if considered an employee, rather than an independent contractor.

The issue is based on the type of work, the licensing laws in the state (and even if they apply or not), and that of a tax question for both the agency and the trainee.

[Thom Briggs -]

I have been wondering about this since I first applied to IPIU.

I am used to doing freelance work, which is why I'm asking this question(s):

Are we to assume that we will be "independent contractors" to any agency we get placed with for training? Will we receive a 1099 form at the end of the year from each agency we work for?

I have been recording EVERYTHING relative to my expenses pursuant to my becoming a Private Investigator Trainee. Some examples are:

1. My IPIU fees.
2. Photos/fingerprint card fees.
3. Mileage to/from police station, library, etc.
4. Internet connection fees.

I've read in other posts/books about things being deductible, such as:
1. Mileage/gas
2. Food
3. Clothing
4. Supplies/gadgets

Since we will be "trained" possibly by more than one agency, I would only assume that we are "hired help," and not necessarily hired as employees of any agency.

Can someone help clarify my assumptions? Thanks!

:D
Thom

[Dianne Lundquist]

That is a good question, and I have assumed the same as you that this is a "contractor Job" and a "1099" tax situation also. It only makes sense that if you can refuse and decline assignments that this would be the only way to do it. I could be wrong and I too would like to know, as I am doing the bookkeeping too. So I will wait to see what the answer is and if we have "solved our first assiugnment"!!! :D
Dianne

[Terry Smith -]

I have been wondering the same exact thing......I am calling my tax guy in the morning to get his thoughts on this.

I want to be sure that I take the correct tax credits that are allowed....so that I can for once get ahead in this game we call "life"
:D

[Kanda Force]

I merged your thread with this topic.

Take a few moments and read the previous posts by Robert Donovan. Agencies differ in their practices.

I think the best advise is to keep accurate records of all expenses for each job and/or agency and whether or not you were reimbursed for the expense. (Don't forget receipts!)

Discuss the situation with a trusted tax advisor. Keep accurate records for each job or agency. When tax times comes, you should then have all your "ducks in a row".

Clear as mud now!?!?!? :D

[admin]

Regardless of whether you receive a wage earners paycheck with taxes deducted or just a straight assignment check, it is the advise of IPIU that all private investigators file a year-end tax return as a small business because of the many exemptions that are allowed under the business expense code.

So a wage earner would have their tax return, and they can still add a part time business return that will OFF SET the income from the wage earner portion and may return many tax dollars to your wallet.

Rush Limbaugh said, "Everyone in America should have a part time business just because of the tax benefits of off setting personal wage income."

How much does your gasoline cost you are the pump?

Many self employed private investigators have said their gasoline costs at the end of the tax year on costs 80 cents a gallon!

[David Copeland]

Originally posted by Thom Briggs
Hmm..

I am hoping to have this P.I. stuff as my only "gig." I always thought that people who are self-employed or run a small business, must file QUARTERLY on their taxes.

Your recommendation was to file a "year-end" tax return for the P.I. work, which to me, sounds like a once a year tax filing.

Is there any hard and fast rule to filing our taxes?

Thanks again!

Thom Briggs
:cool:
The filing of an annual small business tax return is always after the end of the year. The quarterly tax deposits for a small business is to make a projection to the amount of tax that is owed at the end of the year. That is not a "return", but a tax deposit so that the business person does not come up owing at the end of the year.

But a wage earner already has withholding taken out each paycheck, and most will show a refund due at the end of the year. That can offset the tax owed for any business income.

Even more, most private investigators that work a wage job and run a part time investigative business do not have to make quarterly tax deposits on their business income, because they expend all the income out, leaving little or no taxable FICA due at the end of the year. It is a science worth making a study, as the real challenge is not to find business expenses for the sole owner (non-corporation), but to find ways and means to find business expenses that are also exempt from FICA (Social Security tax on a sole owner non-corp business).

Incorportation these days is cheap and has many more tax exempts than ever before (including more than the sole owner version).

The US Tax code has a code for most professions, but not journalist. Why? Because journalists and news writers can virtually deduct everything in the pursuit of their job (writing). And, they can run a loss for at least three years before showing a profit. Does that mean they don't eat, live, drive, have clothes? Nope. Write-offs. (I knew a guy who wrote off ALL of his clothes because he wrote short reviews and submitted the stories. Did he get published? Doesn't matter. He saved 33% in after tax dollars because he did not have to pay taxes on the clothes. ;)

(The above is my personal opinion and is not to be relied upon solely without consulting a professional CPA).

[Amy Badertscher]

"NEVER LOOK BACK,LIVE FOR THE DAY AND NO REGRETS"
I don't think this has been on the board, I have not seen it so if it has please excuse me. I was wondering when we do start working how will we get paid, will we have to take out our own taxes or will they already be out for us like any other pay check? Or is it some other form of pay that we will get? Any help with this will be appreciated.

[William R. Larson -]

Amy -

Your questions have been addressed, in different locations. :)

There is a timeframe thread in this forum which will detail the road to assignments. It can be a long road, but worth the wait. :)

Regarding payment, taxes, etc. those issues will be addressed upon receipt of your referral letters. The agency(s) you are referred to will communicate pertinent information such as that with you. Some agencies have that information in their designated forum here (which you will be upgraded to upon confirmation of receipt of your referral letter, if that agency is part of your referral(s). )

Long story short, when your referral letters come, follow the instructions completely, and the other pieces will fall into place! :)

[Lynn A Piecuch -]

I know this is an older thread, but tax implications can be really important and I'm glad I came across this thread! Thank you to all who posted their insights and of course, the excellent advice to consult with a tax expert.

[Peter Martin]

If you're ever confused about whether you're an employee: Did you fill out a W-2 Form? Are you providing your own transportation and equipment? Did you read your contract? Do you have a business name? Is someone withholding your taxes for you?
If you're in doubt - chances are that you're NOT an employee.
Most investigators are contract and have a business.

See an attorney - in fact, most investigators who have a new business should have an attorney and an accountant to help them - it's well worth the few hundred dollars in consultation fees to get your business running correctly from the beginning.

[Peggy Thornhill]

Just wanted to say thanks to all who provided information on this subject. I found it to be very informative and to be honest, something I had not previously thought about.

Good Luck All!! :)
Peggy

[Diane Rotunda]

Hi Thom,

The question you asked about being self-employed and all that includes was a great question! Thank you for the tips on expenses too, I hadn't thought of those things yet. The more I read in these Forums, the more I like participating!

Thanks to all for sharing their ideas!

[Tony Laskowicz]

This is good info, my wife and I were curious about how all of this works. I didn't think about the fact that I could write off my internet, gas and so forth, that stuff will add up to a pretty penny when I'm done at the end of the year. It will be a new to me to keep all of my reciepts and such though. I've never been good at remembering to keep reciepts for stuff like that. Definately a new mind frame to be in so I don't forget my reciepts for everything.

[Kevin Torren]

Dont forget mileage is better to deduct than gas...you get about .33 a mile for mileage.

Theres also clothing, tools of the trade, home office and supplies. Taxes from a contractors stand point makes you more money at the end of the year. As long as the work is there steady enough for you. There is also less security but more flexability.

The new guy

[Mark B Littman -]

we all have the same questions and I am glad to see that someone else has asked them for me...NOw I have some ofthe answers.

Thanks,

[John Mocker]

Do books also count? I just ordered the Idiots Guide... last night. I would imagine anything that pertains to the job.

[Christopher Fryar -]

I was wondering the same thing . Would you please let me know when you find this out.

Thank you,
Chris

[George Vandewater -]

I agree that it mostly depends on state licensing regulations. Some states require you to be an employee (full or part time) with an state certified agency. Some will grant individual license. Other states do not require a license if you are an investigator for a single corporation and only do investigations in house.

If you are an independent investigator all expenses should be taxed deductible if you are not reimbursed by the client. Most often you will find that investigators will bill clients on a hourly basis plus expenses. All of which means keeping good records.

[Kevin-- Nathaniel]

This is all great information. A helpful book that I recommend that I have used to save me literally thousands of dollars the past couple of years is called "It's How Much You Keep That Counts" (http://www.kickstartcart.com/app/aftrack.asp?afid=158679)

Not all of the information is geared towards Independent contractors, but the majority of the information is well suited for our profession and what we do. You can find it clicking the link above or going to the site below.

Home Business Tax Savings (http://www.kickstartcart.com/app/aftrack.asp?afid=158679)

Hope you enjoy the info like I did ;)

Kevin Nathaniel

[John Mocker]

Awesome link Kevin. I think I'll pick that up. Thanks.

[George Vandewater -]

Thank you Kevin. That's a great link. I will be checking into the book.
George

[Denise Damazio]

You can also deduct space that you are using in your home for your office. It really does help to keep track of expenses for tax time. I worked many years for CPA's and you cannot believe what people deduct legally.

Thanks for the great info Kevin

[Kevin-- Nathaniel]

You are all welcome!!! Just wanted to share information with the family here who have always provided me with excellent resources. Using the concepts in that book has allowed me to save honestly more than a couple thousand dollars a year.

Kevin

[Michael Held]

Great advice in this thread, but one thing I can think to add to assist in keeping records of everything spent and earned. Use a CD-RW drive to keep all records digitized in the event of a system crash so you can easily recall the information. Also most public librarys have computers that will read the burned cd's and charge a few cents per page to print any records you need so they can be presented to your tax consultant. Also you can archive many pages of information on a CD and store the CDs in a safe deposit box. Hope this helps someone in the future, Mike.

[Tammy Elia]

Thanks everyone for the info! I started doing Mystery Shopping a couple of months ago and wasn't quite sure how I handle the reimbursement I get when it's a restaurant assignment or even if mileage was deductable. And you are all right about keeping really good records. It definately helped me last year with my relo.

[Douglas A Norris--]

Thanks to everyone for all the great information.

[Jimmy Jordan -]

Thanks for the info. Taxes are a big issue and a good accountant can save you a ton of money in the long run.

[Alexandre Marra]

beeing working with a lienseed private investigator as an independent contractor, this is meant that you in training for the purpose to get your license

advise me on this


Alexndre marra
private investigator member

[Daniel Clark]

thanks to all who have contributed. Great info.

Daniel Clark

[Lonnie Boswell]

I have recieved the book that is mentioned and it is very helpful in knowing what can be done on taxes in a legal way from the government, I always appreciate the help i get out of these forums.

[Nicole Rhoades]

Thank you everyone for all of the information you posted here. It will REALLY be a big help. I am just buying my first home and this is helpful info for tax breaks. Thanks a million!!

[Anna M Lawson]

I am young and very inexperienced with taxes. Many of you are saying that you keep a log of all of your expenses related to this job. Should I be doing that? I'm still a trainee and I still need to take my test so I haven't done any jobs yet, but I have had the dues and the fingerprint expenses and such. Should I be logging all of that? What else should I be keeping track of?

[Alexandre Marra]

Yeas Ana
you should keep any peny spend on file, but you can only applied them against any income, that is meant any dollar you make in this profession.

good luck

Alexnadre Marra

[Flora Porter]

Thanks IPIU,

This is good to know info.

[Paul Shuman]

I have been an independent contractor for several years (not in the PI business), and all the information here is good advice. I can't stress enough the need to find a CPA you can trust and work with her to figure out your best alternative. I have not set-up a small business for one reason - insurance.

The field I work in has a very high risk factor, and insurance for me as a consultant runs about $5K per year, with a minimum 3 year contract, non-refundable, paid up front. I don't know about you, but coming up with $15K just to work was impossible. Discussing this with my CPA, it has been more cost and tax effective for me to negotiate with my clients to be included on their insurance as an individual, and not as a small business. The attorneys for my clients all had the same attitude - as an individual the insurance company would cover me, but if I was a small business, they wouldn't. I don't know what the difference was to them, but to me I got a lower hourly rate than I planned, but then again I wasn't $15K in debt to start out.

I don't know how things will work out in the PI field. I have not investigated insurance costs as of yet. Once I get to the assignment phase of this adventure, you bet I'll be talking with my CPA!

Good luck to all.

[Bradley P Watson]

Good Morning to all,

Thanks for all the input and information. I do have a good accountant, this day and age everyone should have some kind of professional looking over or maintaining their financial records. Taxes are serious, and keeping track of expenses (every little one & large ones, too.) is probably the best thing you can do for yourself and your family's well-being, financially. Patience and meticulous bookkeeping are very important in this business

Brad Watson :cool:

[Steven Ungles]

I have been an independent contractor for several years (not in the PI business), and all the information here is good advice. I can't stress enough the need to find a CPA you can trust and work with her to figure out your best alternative. I have not set-up a small business for one reason - insurance.

The field I work in has a very high risk factor, and insurance for me as a consultant runs about $5K per year, with a minimum 3 year contract, non-refundable, paid up front. I don't know about you, but coming up with $15K just to work was impossible. Discussing this with my CPA, it has been more cost and tax effective for me to negotiate with my clients to be included on their insurance as an individual, and not as a small business. The attorneys for my clients all had the same attitude - as an individual the insurance company would cover me, but if I was a small business, they wouldn't. I don't know what the difference was to them, but to me I got a lower hourly rate than I planned, but then again I wasn't $15K in debt to start out.

I don't know how things will work out in the PI field. I have not investigated insurance costs as of yet. Once I get to the assignment phase of this adventure, you bet I'll be talking with my CPA!

Good luck to all.

I am a licensed P.I. in California. Here, if you are non-licensed and working under another P.I.'s license, you are not required to carry your own insurance. It would be incumbent upon the licensed P.I. whom you are working for to carry you on his insurance. No doubt this varies state-to-state.

[Steven Ungles]

I am a licensed P.I. in California. Here, if you are non-licensed and working under another P.I.'s license, you are not required to carry your own insurance. It would be incumbent upon the licensed P.I. whom you are working for to carry you on his insurance. No doubt this varies state-to-state.

I should add to my previous posting, that you can be unlicensed and work under another P.I.'s license/insurance (in California) as I stated. Under those circumstances, you are an employee. The only way you can become and independent contractor as a P.I., is if you are a licensed/insured P.I. I hope that answers your question. Again, this no doubt will vary state-to-state.

[Paul Shuman]

I should add to my previous posting, that you can be unlicensed and work under another P.I.'s license/insurance (in California) as I stated. Under those circumstances, you are an employee. The only way you can become and independent contractor as a P.I., is if you are a licensed/insured P.I. I hope that answers your question. Again, this no doubt will vary state-to-state.

Thanks Steve!

Do the regulations in California specifically state that you need to be licensed as an IC -or- that an unlicensed individual must be hired as an employee? Ohio only addresses employees of a licensed firm or individual, but doesn't address IC's at all. It's not clear in the regulations if Ohio requires "trainees" to be employees.

This is my "big question" right now - in Ohio you need 4000 hours over two years to get licensed, if your not there are limited exceptions to the nature of the work you can do. I'm probably going to be limited in the amount of time I can dedicate per week to doing PI "trainee" work, and can't see anyone wanting to hire me as an employee under this restriction. Then I'm bound by the restrictions, and frankly, I don't see how you can get the breadth of training needed for licensing without a license. It just don't make good sense!

Thanks for your time!

[Flora Porter]

Thanks,

You have answered my question for the day?
What is IC?=Independent contractor

This is good to know!!


PI Trainee
Flora Porter

[Steven Ungles]

Thanks Steve!

Do the regulations in California specifically state that you need to be licensed as an IC -or- that an unlicensed individual must be hired as an employee? Ohio only addresses employees of a licensed firm or individual, but doesn't address IC's at all. It's not clear in the regulations if Ohio requires "trainees" to be employees.

This is my "big question" right now - in Ohio you need 4000 hours over two years to get licensed, if your not there are limited exceptions to the nature of the work you can do. I'm probably going to be limited in the amount of time I can dedicate per week to doing PI "trainee" work, and can't see anyone wanting to hire me as an employee under this restriction. Then I'm bound by the restrictions, and frankly, I don't see how you can get the breadth of training needed for licensing without a license. It just don't make good sense!

Thanks for your time!

Hi Joe, I don't profess to know everything about the laws re. P.I.' being employees and I.C.'s. However, I do know that if you are not licensed, you must be an employee of the licensed P.I., you are working off his license, and you do not need to carry the requisite insurance that the P.I. does. (S)he will have to carry you on their E&O and General Liability insurance. Also, in CA, you need 6,000 hours of experience (in essence 3 years full-time experience working under another P.I., or if you are an insurance claims adjuster/examiner, that qualifies you to take the test for P.I. in CA.--Go figure!) The required insurance amount MINIMUM is 1,000,000. total. I have 500K Errors and Ommissions, and 500K General Liability, because I am armed. ( I am a retired deputy sheriff, with a CCW.) I was told at an investigator's meeting the other day, that a million is the bare minimum, and it is not cheap. I am a sole proprietor, and my insurance is $1,217. per year. I just started out in the business about a year ago, after having to retire on a disabiliy after an on-duty car crash that messed me up bad. Keep in mind, all this information is good for the Golden State, California. This stuff varies from state to state. Just like California does not allow, by statue, a private investigator to carry a badge while in the perfomance of his/her duties. Whereas in other states it is just fine. I do understand their reasoning on one hand, but then Security Guards wear badges, and they could be mistaken for a govenment official, which by the way is the reason given for not allowing badges. I am not badge happy, so I don't care. I have my retired badge and that means a lot to me. If in doubt, always check it out, to keep your butt out of hot water, and the best of luck to all newcomer Private Investigators. It is a dog-eat-dog world out there sometimes, but you can make a living doing P.I. work, but you have to spend money to make money, so be prepared to shell out some money for equipment, business cards, stationary, laptop, camera(s), video recorder, business phone, cell phone, etc. You may already have some of these things, but I was shocked at how much money I spent first of all, just to get my license from the State of California. Then it was the equipment. I have been doing this about a year, not only am I still learning (which is not unusual), but I am still buying new "toys" to make my job easier. But remember, much of the equipment you buy for work is tax deductible, so contact your CPA, or tax representative for more information. It is a pleasure to share my experiences with others here in this forum. If anyone has questions about being a P.I. or Peace Officer here in California, I am more than willing to answer them if I can, and if I can't I will either find the answer, or direct you to where you can.

Sincerely,

Dep. Steven Ungles, Solano S.O. Retired
Owner, Southport Investigations
Private Investigator, Lic. # 23786
W. Sacramento, CA

[Paul Shuman]

Thanks, Steve. I appreciate your time!

[Steven Ungles]

Someone else mentioned it in another forum. The one BIG advantage of being an I/C as opposed to an employee, is quite often, you make your own hours, or you at least have a lot of flexibility, and that is GREAT!! I have my own (sole propietorship) P.I. business, but I work as an I/C for much larger P.I. companies and making good money at it (when I get the work.) The flexibility is something I have never enjoyed in my past career as a Deputy Sheriff. Being an I/C had been very, very good to me. (So far.)

Steve Ungles

[Steven Ungles]

Someone else mentioned it in another forum. The one BIG advantage of being an I/C as opposed to an employee, is quite often, you make your own hours, or you at least have a lot of flexibility, and that is GREAT!! I have my own (sole propietorship) P.I. business, but I work as an I/C for much larger P.I. companies and making good money at it (when I get the work.) The flexibility is something I have never enjoyed in my past career as a Deputy Sheriff. Being an I/C had been very, very good to me. (So far.)

Steve Ungles

P.S. No problem Joe, anytime you have a question, please feel free to ask.

[Deborah Bogard-Wynn]

Hello everyone,

A big thanks to all of you, for your continued investigation into the FAQ's of this business. I have been contemplating and researching this myself. I have learned a great deal here, in this forum.

So correct me if I am wrong, which....I know, it really does happen, LOL :), I can have a small business license, be an IC and file my own taxes (w/ CPA, for optimal success), and be an employee of another company as well, filing a separate income tax form for this? Has my brain exploded from information overload? I am waiting for my book and badge at this point, however, it is never to soon to plan an action. To be a IC you have to be a licensed PI, or is this in accordance to the State reg's? Also, an IC can be in training, working towards the license?

Thanks for the input clarification, Deborah

[Donna Reagan]

This topic has been moved to the PI Licensing Forum because there have been some comments made that are not correct according to the individual state laws pertaining to Licensing and the Exemptions to licensing.

In short, you do not need a PI License to perform all types of private investigations. Each state has a list of the exemptions. Therefore, read your state topic first.

[John J Coveyou--]

Wow, that is a great subject that we all need to research ahead of time. I have a certification in financial planning so I will go back through my books and study that subject and see if I can’t shed some new light on it. Taxes are a very tricky thing and I know the Federal Tax will stay the same State to State but each individual State may have to be researched separately for State taxes. But it is definitely worth the research because that’s the last place you want to mess up!

[Rob Grimm -]

Great info! Alot of things here, that I had not thought about!!

Thanks to all for sharing!

[Samir Tulic]

Thanks for info.

[Alexandre Marra]

This topic has been moved to the PI Licensing Forum because there have been some comments made that are not correct according to the individual state laws pertaining to Licensing and the Exemptions to licensing.

In short, you do not need a PI License to perform all types of private investigations. Each state has a list of the exemptions. Therefore, read your state topic first.
dear Donna

What type of investigations can you do without License I am in New York State

Yours
Alexandre Marra

[Lisa Frye -]

dear Donna

What type of investigations can you do without License I am in New York State

Yours
Alexandre Marra

Alexandre,

Each state has a list of the exemptions. Therefore, read your state topic first. This should clear up any questions you have. If not, post your question in that topic.

Thank you :)

Lisa

[Gretchen Cobb]

Thanks to everyone for all of the information. Extremely helpful!!

:)

[Stacy L Slocum]

Thank you all for the info your helping along in my search for clearity & guidance.

Again Thank You All

[Calvin Burrell -]

Does anyone Know about Copstat security? Please post a reply? :cool:

[Edward Spacer]

Just wanted to say thanks to all who provided information on this subject. I found it to be very informative and to be honest, something I had not previously thought about.

Good Luck All!! :)
Peggy


I wonder why I have only certain permissions to access certain forums for I'd like to get licensed and start ASAP....

[Robert Elliott Samuels]

This was a very informative thread, and I will definitely consult a tax advisor in the near future.

[Michael A Langley Jr]

There is some great information available. Things that I have thought of as well as things I had not thought of previously to ask. Thanx to all who have contributed with this information...keep it coming!!!

[Karin Solomon]

Wow this is a fantastic thread!!! Very informative. It has answered many of my questions and informed me of things I haven't thought about.

[Patricia A Jernigan -]

I just want to thank everyone for all the hopefully information here. I will be checking into the laws for my state and do some more research!


Patricia A Jernigan

[Robert Andrews 1]

In my case, since my wife has a W2 job and we file our taxes jointly, I do not need to make quarterly tax payments because my wife pays taxes from every paycheck, tax payments are already paid since we both file joint tax returns, and she pays tax already from her W2.


I know this is an older thread, but tax implications can be really important and I'm glad I came across this thread! Thank you to all who posted their insights and of course, the excellent advice to consult with a tax expert.

[Nichole Brooks -]

Wow! Thanks for the info. It was very beneficial.

[Stacy Moll]

Thanks Everyone,
There is a lot of good information here. I know I gained some knowledge. There were some interesting questions. I am glad I came cross it.

Stacy

[Jack Welch -]

Thanks to everyone for all the great information. It helps a lot.

[Nicole Leon]

Wow I must say that this is some very resourceful information. I have been spending a lot of time reading on the forum here and it has been helpful in answering some questions I have had. :)

[Vicki McCarthy -]

Are we to assume that we will be "independent contractors" to any agency we get placed with for training? Will we receive a 1099 form at the end of the year from each agency we work for?

Thom

"Independent Contractor" is defined by the IRS code as anyone who is responsible for setting his/her own hours to work, and not limited by the demands of the employer. In this case you would be responsible for your own income taxes, and only get the 1099MISC from the hiring agency when you get paid the minimum reportable as required by the IRS. If you are paid any less than the minimun, I think it is $600. now, the hiring agency is not required to send you a 1099MISC, so you should keep accurate records of your income, as well as your expenses.

[Jan C Dillard--]

Thank you everyone for the great info. I have a question, I hope this is the place to ask it. Should we have our own liabilty insurance as a private investigator?

[Technical Support]

Should we have our own liabilty insurance as a private investigator?
See the other topic for Agency Insurance and liability options. (Typically it is a matter of measuring risk, such as how likely it would be for an undercover operative to make a simple observation and submit a report, only to find themselves a target for personal negligence. Bodyguards and armed investigators have more risk than most)

[Jan C Dillard--]

thank you.

[Vicki McCarthy -]

I know this is an older thread, but tax implications can be really important and I'm glad I came across this thread! Thank you to all who posted their insights and of course, the excellent advice to consult with a tax expert.

As an accountant for the past 35 years, and tax preparer for the last 25, I can tell you:

1: If the employer takes payroll taxes out of your check you are an employee, and will, or had better, receive a W-2 for filing your tax returns. Any unreimbursed expenses for your job can be reported on form 2106, Unreimbursed Employee Expenses, and in most cases vehicle expenses and depreciation can be taken on this form.

2: If there are no taxes witheld from your checks, and the employer does not report you on his 941 (quarterly payroll tax reports), then you are an independant contractor, and responsable for your own tax liabilities. You should file a Schedule C with your tax returns, where you will report all your expenses, depreciate your vehicles and equipment. The Client/employer is not obligated to send you a 1099-misc unless you are paid $600 or more during the tax year. Ultimately it is the "contractor" who is responsable for the record keeping and filing of the Schedule C, Income or Loss from Self Employment, with his/her 1040.

Partnerships and Corporations are handled under different tax laws.

I hope that this has been helpful, and do not hesitate to ask if you have any further questions.;)

[Jim Harrington]

That's great information, thanks Vicki! :D

[Luke A Slowik]

I know that Jim already "thank you'd" but I had to say myself thanks for this information. I always have questions regarding taxes, which forms have to be filled out, etc. Great post!:)

[Vicki McCarthy -]

I know that Jim already "thank you'd" but I had to say myself thanks for this information. I always have questions regarding taxes, which forms have to be filled out, etc. Great post!:)

Any time you have a question, just ask, I love helping people.:p

[Donald Papp]

Alot of great info here! My personal advice is to contact a CPA so as to be on the safe side. The old saying, "don't show up to a gun fight with a knife", is especially applicable to federal and state taxation laws.

[Vicki McCarthy -]

Alot of great info here! My personal advice is to contact a CPA so as to be on the safe side. The old saying, "don't show up to a gun fight with a knife", is especially applicable to federal and state taxation laws.

I personally have tought three CPA's right out of college how to keep a set of books, I had my own public accounting business in California, and I am currently in public accounting and a certified Income Tax Preparer. I have my "Gun" and know how to use it.:rolleyes:

[Donald Papp]

WHOOAA Vicky,
I think you misread me. Please don't shoot! That wasn't a veiled threat I hope(about the gun). I simply was implying that if someone doesn't have alot of tax knowledge they "should" contact someone like "you" for advice. Certainly someone would probably have more than just one question and would need additional help.

[Vicki McCarthy -]

WHOOAA Vicky,
I think you misread me. Please don't shoot! That wasn't a veiled threat I hope(about the gun). I simply was implying that if someone doesn't have alot of tax knowledge they "should" contact someone like "you" for advice. Certainly someone would probably have more than just one question and would need additional help.

Sorry to have sounded so tense. I just get a little peeved when people pay a CPA such high wages, then ask me to train them. CPA's don't necessarily know how to do taxes.:rolleyes: What I really was trying to do was qualify myself for the advice that I had given.

And the gun has never been aimed at a human, only the coyotes out on the ranch when they tried to eat my stock.:D

So if you don't come running out of the hen house with a chicken in your mouth, you have nothing to worry about:confused:

Welcome to the IPIU Donald, hope to count you amongst my friends.

[Donald Papp]

Thanks Vicky,
Yes... You can count me as a friend! I do like chicken, but only the kind that comes out of the stove and has been breaded,lol... It's nice to know that we have someone well versed in taxes here at IPIU. Lord knows we depart with enough of our hard earned dollars as it is...

[James Bone]

I am working for an agency and I am considered contract. The agency carries our license but we are still contract, but we cannot do "side jobs" or the owner will file on us for theft, so is this an employee or contract. We are working on our own agency license as I type this, so shortly it will not matter as we will be the owners.

[Vicki McCarthy -]

I am working for an agency and I am considered contract. The agency carries our license but we are still contract, but we cannot do "side jobs" or the owner will file on us for theft, so is this an employee or contract. We are working on our own agency license as I type this, so shortly it will not matter as we will be the owners.

Hi James,
As long as they don't withhold any payroll taxes from your checks, the IRS considers you an independent contractor, and you are responsible for your own taxes. Be sure to keep receipts for all your unreimbursed expenses, these can be used to offset some of your income on the schedule C.

If you use their license to do the side jobs, yes it is a theft of sorts. Example: A clerk in a grocery store sells stock off the shelf and pockets the money. He is not stealing the stock since he doesn't take the stock out of the store, but he is stealing the income from the sale of that stock. The store (agency) owns the stock (license) and has every right to expect income from the sale (use) of that stock (license).

You will, of course, be more flexible when you have your own license, but the experience and training you are getting now will, I am sure, be of great use to you in the future.

I hope this has helped you, and good luck in your endeavors.

Vicki ;)

[Myra Price]

Great question! That is the most important question I wanted to know - are private investigators contractors? I didn't want to wait to see my first pay check to find the answer. But, then it again, my being a contractor may vary depending on the agency I suppose.

Thanks for the answer!

Myra D. Price

[Vicki McCarthy -]

Great question! That is the most important question I wanted to know - are private investigators contractors? I didn't want to wait to see my first pay check to find the answer. But, then it again, my being a contractor may vary depending on the agency I suppose.

Thanks for the answer!

Myra D. Price

Hi Myra,
Usually you don't have to wait for the check. When they hire you as an employee you have to fill out the W4 for witholding information on payroll.

And welcome to the forum.

Vicki:D

[Vanessa Farley]

Hello Everyone

I am extremely new to the Investigations field and the information posted is extremely helpful in helping me to get started. Thanks a lot

[Vicki McCarthy -]

:D
Hello Everyone

I am extremely new to the Investigations field and the information posted is extremely helpful in helping me to get started. Thanks a lot

Glad to be of help at any time, and welcome to the forum:D

[Melanie Kozik -]

:D
I have always thought of myself as an
*Information Broker* and as such - as an
Information Broker, I do not need a licence to do anything that I do. I provide information.

A P.I. vs Information Brokerage is rather the same type
comparison as a bus-driver is to an airline pilot - one just sounds better...stock-broker - glorified bookie - get my drift? :rolleyes:

Think about it - it really is the truth.

Melanie Kozik
Information Broker since 1998

:D

[Karen Chabert -]

I was told today that i need to get fingerprinted and get a state license here in Louisiana and then, take the 40 hour state course offered here. Anyone know about that? any info would be greatly apppreciated.
By the way, I got a job working as PI for a small firm here in Louisiana. I'm very excited and working today on Thanksgiving, on my first case!

[Vicki McCarthy -]

I was told today that i need to get fingerprinted and get a state license here in Louisiana and then, take the 40 hour state course offered here. Anyone know about that? any info would be greatly apppreciated.
By the way, I got a job working as PI for a small firm here in Louisiana. I'm very excited and working today on Thanksgiving, on my first case!

Below is the link for all states licensing laws. You can find the answer to all your state licensing questions on this link. Just look for your state, and click on.

http://www.ipiu.org/forums/forumdisplay.php?f=31

Welcome to the IPIU, Karen.:)

[Karen Chabert -]

Thanks, Vicky!

[Catherine Haig -]

[QUOTE=David Copeland;25458]The filing of an annual small business tax return is always after the end of the year. The quarterly tax deposits for a small business is to make a projection to the amount of tax that is owed at the end of the year. That is not a "return", but a tax deposit so that the business person does not come up owing at the end of the year.

Just my 2 cents on this topic: the quarterly tax is called AN ESTIMATED TAX. So you would estimate how much to pay the government. My guage is usually if I am making $30K annually (straight-not taxes withheld as a 1099) I usually have to pay in about $5K at the end of the year but that never engraved in stone. Last year I worked that much and I only had to pay $2K in taxes but I never understood "estimated taxes" because usually they are estimated HIGH. They are NEVER ESTIMATED LOW. Hilarious - I rather pay after the year because then I know exactly the taxes I owe and although there are penalities and interest it's not that much and in the long run - I feel like I'm ahead of the government. LOL - which I'm not but it makes me feel that way.

[Catherine Haig -]

Do books also count? I just ordered the Idiots Guide... last night. I would imagine anything that pertains to the job.

Everything counts including your apartment home office space. Say you use a room in your apartment that you rent for your home office space - you can take that off usually 20 percent as an expense. A house with a dedicated room can also be used on your taxes.

If you go on the dreaded IRS site (irs.gov) you'll find a lot of info about what is "allowed". You will have to fill out a SCHEDULE C which is an extension of the IRS document listing all of your outside unusual expenses. Don't go crazy here because if the IRS thinks you are exaggerating on something they will call you on it and audit you. Audit's are HELL and to be avoided at all costs. I've sat through many of them in my career as an accountant/bookkeeper and they are not fun for the person being audited or business.

Lastly if anyone needs a really great accountant - I got one. He has an office in NYC but he has clients nationally and he takes care of multi-industries. He's automated and cool having been in the business as a CPA for many years. :)):D

[Robert Donovan]

if anyone needs a really great accountant - I got one. He has an office in NYC but he has clients nationally and he takes care of multi-industries. He's automated and cool having been in the business as a CPA for many years. :)):D
Please email his name and contact details to brad.foster@ipiu.org , who will inquire about his services on behalf of other PI Members here.