[DaniceK]

I started working as a full time W-2 employee for a small business owner in 2003. I'm the only full time employee. Four years being W-2 my shady boss moves her business in her home. She did not have a permit to run her business from her home and started to get in trouble so she changed me to 1099 so it wouldn't look like she had an employee working from her home. She did give me a raise to help pay for the taxes I would be responsible for. I did not have a choice in this matter and she told me I could not do any other work for another firm, also I did not sign a contract. I've been 1099 the last 2 years and nothing has changed. I work at her house 8-5, I get paid twice a month and I use the computer/printer/fax at work, my business cards has her company name with info. The only difference is I get paid as a 1099.
My question is, with this hard economy and lack of clients I'm worried I could get laid off. Would I be able to get unemployment if I prove these things? What is the process and what would happen to my boss? I hate to get a bad reputation in the industry but I feel like my rights were taken away and I should be able to receive unemployment if needed.

[AtlantaTaxExpert]

You are definitely an employee, NOT a contractor. However, the state will view you as an independent contractor, so you are NOT eligible for unemployment compensation should you be laid off.

At least you got a pay increase to pay the extra taxes; most employer do not even do that.

You can appeal your status to the IRS, and you would probably succeed in getting reclassified as an employee, but that is a formula to get terminated permanently instead of just getting laid off.