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So, I recently finished a job with a friend who runs a business through his Sole Proprietorship (sp), and the sp is in his name (we both live in Pennsylvania). The job cost $6000 total, which we split two ways, 3000 a piece.

He wants my social security number and address so he can claim me on his taxes as an employee. Does that sound right? I just want to make sure I'm not giving out my social if not needed.

Also, how do I claim him on my taxes and do I need his social as well in order to do so, or can I just list him as a sole proprietorship or something?

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If you were paid in 2017, he is required to issue a 1099-MISC (or W-2 if he's treating you as an employee, but this is unlikely) to you by January 31, 2018. This will include his EIN/SSN which you will put on your taxes. Until then you should not need his information, he just needs your SSN so he can report the payment to the IRS.

You are required to pay estimated taxes for your income at least quarterly. For income between January 1 and March 31, 2018, for example, the due date is April 17, 2018. If you owe too much in taxes when you file your tax return next year you will be charged a fee. Then you will include the information from the 1099 he sends you on your tax return next year, and you will also list the estimate taxes you paid.

(I'm making some assumptions here about the work, but it should apply.)

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(Assumed United States Jurisdiction)

If the client made the check out to him, then he paid you half. He would need your SSN or EIN (Tax ID) to show the payment on his taxes to you as a 1099 payout. If he were to not do this, it would appear he made the entire $6k and would owe tax on all of it. He's correct in wanting to claim the payout to you to decrease his tax liability.

You would need his SSN/EIN to show where your $3k came from. If he cut you a check, he paid you. The client did not pay you. He actually should issue you a 1099 form with his information on it.

If he's claiming you as an "employee" then he needs to issue a W2 to you for your taxes. And he's also on the hook for Unemployment, social security, etc, surrounding your employment position. It's doubtful he wants to claim you as an "employee". I suspect either you used that word incorrectly or he did.

If you both received money from the client, then you would both file taxes independently on the funds using the client's tax ID as an identifier of the income source.

As with all matters regarding taxes, you really should speak to a tax professional. While other freelancers may have some experience with similar matters, only tax professionals will be in a position to provide direct advice. I am not a tax professional.

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  • thanks @scott he said that he wasn't sure if I would need his SSN, but that since the sole prop was registered in his name, I probably wouldn't need his social, just need to put down his name on my taxes? Does that sound right? Doesn't sound right to me, so figured I would follow-up.
    – mckel
    Feb 22, 2018 at 8:59
  • You need his TAX ID. That is often a person's SSN, but it can also be an EIN. (Employer Identification Number)
    – Scott
    Feb 22, 2018 at 17:06

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