My question involves independent contractors in the state of: Illinois
I previously worked for this media company in Chicago as a chief designer for 8 years. I was a full-time employee with all benefits during this period.
When I left, they asked me to continue performing an aspect of my job (designing a section of a periodical and managing a pool of about four other freelancers) for "six months or so."
Six months turned into years, and I have been performing this service since 2008.
We have adjusted the pay as my duties fluctuated over that time, but it has ranged from $2,000 down to $1,500, where it was most recently.
I am paid monthly the month the work is published. For example, I will submit a designed section for the September issue in July; they pay me for the work I did in July in September when the periodical is published.
Over the years, their payments have been erratic. They will skip payments one month only to catch back up the next with a double payment. Sometimes, they will just skip a month and make a double payment several months later to cover what was missed.
About two years ago, they stopped noting my invoice numbers on their payments. I complained because that seemed to create a scenario for confusion, but was told "that's just how the new system works." They did start paying me electronically at the time, so I (probably naively) said "ok, that's fine then."
I have a full-time job in Cleveland (where I live) in addition to my arrangement with the Chicago company (no relationship between companies). My total workload has become too much, and I have been planning for about six months to end my relationship with the Chicago company without leaving them hanging. We worked that out, and I just submitted my last contribution a week ago.
A couple days later, I had a conversation with my contact, and he said, "Beth in accounting thinks you are all caught up, and she isn't making any more payments." My contact acknowledges to me that she is incorrect (we had an email exchange recently where he agreed to what was due), but he said the financial situation of the company is tenuous and he thinks she is "playing dumb" and is going to dig in her heels.
I'm not worried about demonstrating what I'm owed because of:
- Math. There are only so many months that I've worked since this arrangement began and so many times I've been paid.
- I can easily go back to when they stopped putting invoice numbers on payments (or to the beginning of the relationship) and show what's owed.
- The email from a few weeks ago from my contact agreeing to the months still due. (It was very clear, "we owe you $1,500 for September, October and November or a total of $4,500.")
- I'm paid monthly the month the work is published; I have received no payment for September or an advance payment for October or November; they skipped September, and October and November have not happened yet; therefore, I'm owed payment for September and will be owned for October and November as time goes by.
My questions are:
- What is the best way to handle bad debt? If they never pay, is $4,500 worth suing over or are there better tactics?
- Can I write all costs related to chasing this bad debt off my Schedule C?
- If I don't collect this money until 2017, do I file an amended 2016 return?
- I didn't think about this until I read a few other posts on here, but is there any possibility that I should have been classified as an employee of this Chicago company the past eight years?
Thanks. Not getting this money won't ruin me, but it is important that I end this relationship in a satisfying manner. Going away feeling stiffed doesn't do that.
I previously worked for this media company in Chicago as a chief designer for 8 years. I was a full-time employee with all benefits during this period.
When I left, they asked me to continue performing an aspect of my job (designing a section of a periodical and managing a pool of about four other freelancers) for "six months or so."
Six months turned into years, and I have been performing this service since 2008.
We have adjusted the pay as my duties fluctuated over that time, but it has ranged from $2,000 down to $1,500, where it was most recently.
I am paid monthly the month the work is published. For example, I will submit a designed section for the September issue in July; they pay me for the work I did in July in September when the periodical is published.
Over the years, their payments have been erratic. They will skip payments one month only to catch back up the next with a double payment. Sometimes, they will just skip a month and make a double payment several months later to cover what was missed.
About two years ago, they stopped noting my invoice numbers on their payments. I complained because that seemed to create a scenario for confusion, but was told "that's just how the new system works." They did start paying me electronically at the time, so I (probably naively) said "ok, that's fine then."
I have a full-time job in Cleveland (where I live) in addition to my arrangement with the Chicago company (no relationship between companies). My total workload has become too much, and I have been planning for about six months to end my relationship with the Chicago company without leaving them hanging. We worked that out, and I just submitted my last contribution a week ago.
A couple days later, I had a conversation with my contact, and he said, "Beth in accounting thinks you are all caught up, and she isn't making any more payments." My contact acknowledges to me that she is incorrect (we had an email exchange recently where he agreed to what was due), but he said the financial situation of the company is tenuous and he thinks she is "playing dumb" and is going to dig in her heels.
I'm not worried about demonstrating what I'm owed because of:
- Math. There are only so many months that I've worked since this arrangement began and so many times I've been paid.
- I can easily go back to when they stopped putting invoice numbers on payments (or to the beginning of the relationship) and show what's owed.
- The email from a few weeks ago from my contact agreeing to the months still due. (It was very clear, "we owe you $1,500 for September, October and November or a total of $4,500.")
- I'm paid monthly the month the work is published; I have received no payment for September or an advance payment for October or November; they skipped September, and October and November have not happened yet; therefore, I'm owed payment for September and will be owned for October and November as time goes by.
My questions are:
- What is the best way to handle bad debt? If they never pay, is $4,500 worth suing over or are there better tactics?
- Can I write all costs related to chasing this bad debt off my Schedule C?
- If I don't collect this money until 2017, do I file an amended 2016 return?
- I didn't think about this until I read a few other posts on here, but is there any possibility that I should have been classified as an employee of this Chicago company the past eight years?
Thanks. Not getting this money won't ruin me, but it is important that I end this relationship in a satisfying manner. Going away feeling stiffed doesn't do that.
Payment Disputes: Payments and Classification
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