Ask Experts Questions for FREE Help !
Ask

Working as Independent Contractor full-time with same company for 2 yrs....

Asked Oct 11, 2011, 10:06 PM — 9 Answers
So I recently got "laid off" working at a company (in California) for which I have been working full-time, for over 2 years. I have been getting paid an hourly rate, and have been filing a 1099 for the first time, for 2 years. Per the company owner's request, I have been sending him an invoice with my hours at the end of every week and receiving the amount in full with nothing removed for social security, etc.

The person who did my taxes last year informed me that legally I should be an "employee". A) due to the amount of time I have been working there AND b) because my job duties and orders, according to the IRS guidlines, qualify me as an employee and NOT an independent contractor.

Obviously I'm currently unable to receive unemployment under these circumstances and I am curious to know what my rights are...I am wondering if I could possibly revise my 2010 tax filing and change it from being an independent contractor. And, if so what would be the consequences, for me, for the company, etc.

I appreciate your advice. Thank you.

Search this Thread
Share |
9 Answers
ScottGem's Avatar
ScottGem Posts: 58,029, Reputation: 28115
Computer Expert and Renaissance Man
  
#2

Oct 12, 2011, 03:33 AM


You "might" qualify as an employee, but that doesn't make you one.

This lists the factors uses to determine:Tax Topics - Topic 762 Independent Contractor vs. Employee


You don't list enough details for me to advise which. But you can't go retroactive here. You can't decide whether you were an employee or contractor in the past, just because its more convenient. You accepted the role of IC by invoicing your employer.
Helpful  (2)
Kev-Cali's Avatar
Kev-Cali Posts: 27, Reputation: 1
New Member
  
#3

Oct 12, 2011, 09:56 AM
I did not know about this until this past April when filing my taxes. It seems to me I have been fooled by the employer into sending invoices and not thinking any more of it. Isn't this wrong on the company's behalf?

Based on the IRS Topic 762:

I definately have been under "Behavioral Control"; I have regularly been directed on how the work is to be done, through instructions, training, and other means, just like a regular employee would be.

In regards to the "type of relationship":

I had been given the title of Manager and have been given company business cards too. Also, the services I performed were a "key aspect of the regular business of the company".
Helpful
JudyKayTee's Avatar
JudyKayTee Posts: 45,356, Reputation: 23513
Uber Member
  
#4

Oct 12, 2011, 11:16 AM
You can report the company to Federal and/or State Wage and Hour - but it appears that you consent to being a 1099 subcontractor until you were terminated/laid off at which point you wanted to be an employee of the company. You are responsible for conducting your own research.

As Scottgem said, you billed your employer for your time. That made you an independent. Were you fooled/tricked, something in between? Possibly. Should your accountant have advised you of the pitfalls of being an independent contractor? Possibly.

Not saying you behaved in this manner BUT it is very easy to be a 1099 and pay only SS taxes. The problem arises when you need unemployment or workers comp or something along those lines and have no coverage. Then no one wants to be an ic.
Helpful
ScottGem's Avatar
ScottGem Posts: 58,029, Reputation: 28115
Computer Expert and Renaissance Man
  
#5

Oct 12, 2011, 11:52 AM


Agree with Judy. There is also the issue that you might have had NO job if you didn't accept it as an IC. If you report it to the IRS, the employer might be fined, but you will not have your status changed or be able to recover anything. And the employer may try to blacklist you.
Helpful
Fr_Chuck's Avatar
Fr_Chuck Posts: 72,597, Reputation: 37026
Expert
  
#6

Oct 12, 2011, 02:29 PM


You can not just "change the way you filed the taxes" it does not work like that. And it should have been told to you that you were a independent contractor, as such you were not covered under unemployment or even workers comp had you got hurt.

Also you were not "laid off" but your contract was discontinued.

A contractor can bill for their work by the hour, so even that does not change things. Also normally a person who is a independent contractor gets a higher hourly amount, since you are having to pay the full amount for all of your taxes such as social security and the such
Helpful
JudyKayTee's Avatar
JudyKayTee Posts: 45,356, Reputation: 23513
Uber Member
  
#7

Oct 12, 2011, 03:01 PM
Good catches, FrChuck. There is no lay off.
Helpful
AK lawyer's Avatar
AK lawyer Posts: 9,918, Reputation: 4207
Expert
  
#8

Oct 13, 2011, 07:23 AM
Quote:
Originally Posted by Fr_Chuck View Post
...
Also you were not "laid off" but your contract was discontinued.
...
Quote:
Originally Posted by JudyKayTee View Post
Good catches, FrChuck. There is no lay off.

Mere semantics.

The "employer" evaded taxes by claiming the "employee" was an "independent contractor".

OP was, de facto, laid off.
Helpful
twinkiedooter's Avatar
twinkiedooter Posts: 12,172, Reputation: 6046
Uber Member
  
#9

Oct 20, 2011, 02:17 PM
No, he was not laid off. His contract was discontinued. Two distinct different scenerios here. He can't collect or file for UE benefits due to the fact no taxes were taken out of his salary. Sure the employer evaded the tax situation but the OP is still an independent contractor period.
Helpful
AK lawyer's Avatar
AK lawyer Posts: 9,918, Reputation: 4207
Expert
  
#10

Oct 21, 2011, 11:54 AM
Quote:
Originally Posted by twinkiedooter View Post
No, he was not laid off.
...
Sure the employer evaded the tax situation but the OP is still an independent contractor period.
"employer"?

Not by your reasoning.

"person with whom the independent contractor had a contract"
Helpful
Not your question? Ask your question View similar questions
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search

Add your answer here.

Remove Text Formatting
 

Undo
Redo
  
Decrease Size
Increase Size
Bold
Italic
Underline
Align Left
Align Center
Align Right
Ordered List
Unordered List
Decrease Indent
Increase Indent
Insert Email Link
Wrap [QUOTE] tags around selected text
Wrap [CODE] tags around selected text
Wrap [HTML] tags around selected text
Wrap [PHP] tags around selected text
Wrap [YOUTUBE] tags around selected text
Notification Type:



Check out some similar questions!

Both employee and independent contractor for same company? [ 6 Answers ]

We have an independent contractor that sells travel - we are a travel agency. She was just hired as an employee now...can she continue as an independent contractor and also be an employee for the same company? I don't think so but our HR department is thinking that she can.

Can an employee also work as an independent contractor for the same company. [ 0 Answers ]

We have a situation where our billing people were offered the opportunity to work on their own time (not during office hours and not receiving wages)to try to collect past due accounts. They signed a contract agreeing that they would each be paid 20% of their collections and a time frame was...

How can an indian work as Independent contractor for US Company? [ 1 Answers ]

I am an indian citizen and a US company is willing to hire me as an Independent contractor where I have to work from India.In that case will I have to pay taxes to only Indian government or only US Government or Both? What are the channels through that I can take payments from them.Or how can I...

I am F1-student working as an Independent Contractor and I would like to work as full [ 1 Answers ]

Time employee as well as Independent Contractor....can I work?...and I want to pay all the taxes.....*** answer me..

Independent Contractor-Accident-Company Vehicle? [ 4 Answers ]

I was an independent contractor for a company and got into an accident-it was ruled my fault and a week later I got terminated which I understand. The company made me pay some of the expenses out of pocket to fix our trailer and would be reimbursed. Once I was terminated, they have not paid me my...

View more Labor Law questions Search