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surfmalibugirl · Mar 16, 2006, 12:50 PM

Hi - I'm a single mom, head of household. I have not done my taxes for 2003 yet because the wage information I have seems wrong and I did not have any extra money to hire a professional. My old employer sent me a 1099 for over thirty thousand dollar which I need to claim - however, there had been a major downsizing of the staff and some filed for unemployment ( even though they had also been considered consultants) Long story short here, unemployment services contacted ME and said that after looking at my ex employers information that we were all actually employees - so we all qualified for unemployment. Basically they had tried to pass us off as independent consultants for their own financial reasons - when in actuality we were full time employees. I noticed when I tried to do my own taxes ( after a few threatening lessons form Mr. Busch -ow scary) that if I enter my income from that year as a 1099 I owe a LOT of money. I barely feed me and my son now! I'm petrified. Anyway - because I did all my work at the ex employers business - I have no real write offs - because as I said they discerned I was really an employee. Anyway I would so appreciate any thoughts or help. Blessings! Linda

ScottGem · Mar 16, 2006, 02:10 PM

I think your best bet here is one of two options. Many communities have volunteer tax pros who give sessions at libraries, or other community centers. I would check to see if there is anything going on in your area and find someone willing to help you.

In lieu of that, go to your nearest IRS office and sit down with an agent and explain exactly what happened.

I think one of the main issues is is not how your employer reported your income but how he paid you. If he did not withhold taxes, then you will owe that money. If he did (and I hope you have your paystubs), then you need to get that info so you can file a correct return.

But I urge you not to wait. Despite their rep, the IRS is not a vindictive organization. They will try to work with you as long as you work with them.

Fr_Chuck · Mar 16, 2006, 02:40 PM

Ok, the very basic of this is this, if you were an employee, they should have withheld taxes, and paid a portion into your social security.

If they did not withhold any taxes you will of course owe all of the taxes for the money earned ( which if you have no money to hire a tax person, you are really going to be in trouble not having the money to pay the tax due on the money you earned.

If they withheld taxes, you can use the information off your last check to determine about how much they should have paid.

Of course if your employer will not give you a W2 you will have little option but to file, but including perhaps a copy of the determination letter from the department of employment security and also a letter staing that the 1099 was in error and should have been a W2.

As long as you are honest, if this gets audited there is nothing to worry about snce you are merely telling the truth.

Even if you can't pay all of the tax money you will owe if they did not withhold anyhting you need to still file on time ( or get a request for an extenstion and file it.

But do file, but you really need an expert to advice you on this.
Atlanta tax may hop in her on this soon and I am sure he will have some great insight.

AtlantaTaxExpert · Mar 16, 2006, 02:52 PM

Fr Chuck has anaylzed it well.

In my opinion, you can make the argument that you were in fact an employee and the Social Security and Medicare taxes should have been withheld.

The determination letter from the Department of Employment Security is the key. If the IRS accepts that as the determining factor in deciding whether you were an employee instead of a contractor, then you are "off the hook" for the Social Security and Medicare taxes; the IRS will pursue the employer, not you.

Your best option is to take everything to the IRS and sit down and discuss it with an agent. I agree with Fr Chuck; the IRS is not the beast it was in the 80s and 90s. They do try to get everyone to pay their taxes, but they are neither vindictive or predatory.