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  1. #1
    Join Date
    Jun 2009
    Posts
    5

    Default 1099 vs W2 Issue

    I was working for a consulting company in New York. They had me under a 1099. Back then I didnt know the difference between the two and didnt file taxes for three years. I remember back in 2008 they all of a sudden switched me to w2 stating the changes were done because of tax issues. Now the IRS is hitting me with a hefty bill. i feel as if during those three years i should of been on a W2. What are options and how can I go about this.

  2. #2
    Join Date
    Sep 2005
    Location
    Behind a Desk
    Posts
    98,846

    Default Re: 1099 vs W2 Issue

    You can pay your taxes. You are free to try to make the case that your employer should have classified you as an employee, should have withheld taxes from your pay and should have paid matching taxes. But from what you've told us, the root of your problem is that you owe taxes because you received income and failed to pay your taxes.

  3. #3
    Join Date
    Dec 2007
    Posts
    2,357

    Default Re: 1099 vs W2 Issue

    Agree. Although legally, the employer CAN be held responsible for not withholding taxes that should have been withheld, including having to pay them over even though they didn't deduct them, you'd face an uphill battle. File the returns, pay the tax due, and move on.

  4. #4
    Join Date
    Jul 2007
    Location
    Florida
    Posts
    2,344

    Default Re: 1099 vs W2 Issue

    You would file form SS-8 to ask the IRS to make a formal determination of your status. However, you have a problem because either way you failed to report your income on your tax return, which the law requires you to do. You should prepare correct tax returns for any years involved, correctly reporting your income and deducting any legitimate business expenses in order to minimize your tax liability and penalties.

  5. #5
    Join Date
    Oct 2006
    Posts
    16,391

    Default Re: 1099 vs W2 Issue

    Quote Quoting Bubba Jimmy
    View Post
    You would file form SS-8 to ask the IRS to make a formal determination of your status. However, you have a problem because either way you failed to report your income on your tax return, which the law requires you to do. You should prepare correct tax returns for any years involved, correctly reporting your income and deducting any legitimate business expenses in order to minimize your tax liability and penalties.
    You can also go ahead and file the tax returns using form 8919 to report the income as wages and to shift the employer share of the social security and medicare taxes back to the employer. You can then use form 2106 and Schedule A to deduction any unreimbursed job related expenses.

    However, that won't necessarily produce the best results, depending on the level of expenses that you had. Therefore you should run it both ways. (Schedule C vs filing an SS-8 and then using forms 8919, 2106 and Schedule A).

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