Hello Everyone!

I have been an employee for a construction co. for the last 6 years and they have recently fell into financial trouble. From Sept. 2008 until December 2008 the employer paid us by check without withholding the proper payroll tax... Well, guess what I received in January? You got it! A 1099-misc. with some $5,000's listed in the nonemployee compensation box. I have always been an regular fulltime employee and not a contractor.

The employer has since switched from paying us by check to all cash and still not withholding any of the payroll taxes. That's when we get paid because we have gone up to 5 weeks without getting paid. Also, he has been promising to pay these back taxes since September but I don't see that happening.

Besides finding a new job (which is in the works), how should I handle this 1099-misc. since he's responsible for it? Can I just not file it? To this date, He's still promising to pay but I don't see it happening.

By the way.. I also received a W-2 and boy is Turbo tax confused!

Thanks in advance!

1099-misc income: You are independent contractor. You will report your income and expenses on schedule C or C-EZ (Form 1040). This income is subject to SE tax at 15.3%. Read: Your U.S. Tax Return: Tax Filing by Self Employed Sole Proprietor or Independent Contractor (http://taxipay.blogspot.com/2008/04/tax-filing-by-self-employed-sole.html)

No... Mukata!

My post reads:

"I have always been a regular fulltime employee and not a contractor."

Thanks though!

N2Duke

You may want to review Form 8919. I believe you will have to pay the Social Security/Medicare that should have been withheld, but not the employer's part - at least at first. The IRS may come back for the other 1/2 should they determine that you are in fact an independent contractor.

Thanks MLSNC!
There was never any paperwork or discuss about being a independent contractor. Employer always made the proper deductions until he fell into financial trouble.. then it all stopped. First paying us by check then by cash without withholdings.

I'm after him to pay these taxes but may end up in court if not settled soon. There's no doubt I'm an employee so sure how to handle this 1099?

First you pay most of the taxes yourself anyway, they are just held out of the check before you get them.

So when you started getting checks without taxes held out I would guess ( of course you didn't) start putting the tax amount into a savings account.

But if they paid you the part you got after tax and just keep the tax part thierself? Then they did fraud and broke the law. ** OK they really most likely broke the law by changing your pay status but that is another story.

So you at this point have to pay the taxes, you report the income, and it is considered pay as a independent contractor. But no once they started paying you as a 1099 worker you became a contractor, good news, all your expenses are not tax deductable.
Bad news the extra part of the social security tax that company normaly pays.

n2duke:
Relax. This is very common problem.

Also you may not lose by getting 1099-misc. You will pay 15.3% SE tax instead of 7.65% taxes. But there is a big advantage that you can direct deduct your business (work related) related expenses on schedule C. A W2 employee can only deduct as itemized deduction.

You can file Form SS-8 with IRS. Form SS-8. Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding. Firms and workers file Form SS-8 to request a determination of the status of a worker for purposes of federal employment taxes and income tax withholding.

Thanks again!
In Sept. the employer starting paying just our net pay only by check/cash.. not sure if that makes a difference but that's what happened.

N2Duke

These funds are listed as nonemployee compensation.. so I can deduct this as work-related expenses?

I really appreciate everyone's advice! Thanks a bunch.

N2Duke

Bump