On Thu, 08 Dec 2016 08:01:27 -0700 Keith Smith wrote: > David, you have brought up Sec. 1706 of the Tax Code several times > over the years. I am not familiar, however from what you describe it > sounds like it prohibits a programmer from becoming a sole > proprietor, however it sounds like it does not stop agencies from > doing contract work. I was a contract programmer 1984-1998, and by far, BY FAR my toughest problem was 1706. Most companies wouldn't do business with me unless I became their employee, which was the worst of all worlds: No expense writeoffs, no control over my hours, no hourly pay, but no insurance like a real employee would get. Some companies did business with me, and I was forever worried that the government would retroactively reclassify me as an employee and I'd need to pay back all my deducted expenses (software, printers, computers, travel) with penalties and interest. I was careful not to reveal too much of my business relationships in business networking situations: Never know when you're talking to an IRS agent or just some jealous person who might decide to turn you in. Nominally, 1706 didn't apply to me because I worked directly with my customer: Not through a rent-a-pencil company. But everyone was so scared they wouldn't even do business with me. I was contacted about reclassification twice: Once from the state of California, and if I remember correctly, once by the feds. This was the same fear level as losing your health insurance or a major IRS audit: It was hell. Both times I was declared a contractor, thank goodness. Without 1706 I would have gotten a lot more business and that would have enabled me to bid up my rates. It cost me dearly, and is one of the reasons I left software development. Nowadays, when a company hires me to come out and train their technologists in the process and mindset of troubleshooting, I don't need to worry about the IRS saying I'm their employee. 1706 is an abomination. SteveT Steve Litt November 2016 featured book: Quit Joblessness: Start Your Own Business http://www.troubleshooters.com/startbiz --------------------------------------------------- PLUG-discuss mailing list - PLUG-discuss@lists.phxlinux.org To subscribe, unsubscribe, or to change your mail settings: http://lists.phxlinux.org/mailman/listinfo/plug-discuss