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  1. #1

    Default FICA Back Taxes For An Employee

    Hi,

    Please help as I need some expert advice. I was working as an employee who received commission/bonus income. Unfortunately my employer did not pay fica for the commission/bonus income. The first commission I received he did not issue any tax documentation and I went to tell him that I planned to pay my income taxes and wanted to know where I was supposed to put it. He told me to place it under "other income". I did pay income taxes on this and did pay a penalty for not withholding enough taxes. After this I received both w-2s & 1099s. I paid income taxes on all of this money and continued to put the commission under "other income", however I did not pay fica except for 2006. (When I realized I was supposed to put the 1099 income unto a schedule c, I did for that for 2006.) I filed an SS-8 for all these years. The IRS determined that I was not an independent contractor & was an employee for all of the years. The IRS has asked me to fill out unreported tip paperwork for all of the years. Do I have any recourse to limit my fica & penalties? I am trying to do what was right for everyone, but I don't want to be penalized excessively for my employer trying to skip out on his tax obligations. I appreciate any insight that anybody can provide. Thank you.

  2. #2
    Join Date
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    Default Re: FICA Back Taxes For An Employee

    You mean, other than begging and pleading with the IRS?

  3. #3
    Join Date
    Nov 2007
    Posts
    28

    Default Re: FICA Back Taxes For An Employee

    Please provide more details about the bonuses, commissions, and/or tip income. Which is it? If you were reporting as an independent contractor the IRS should owe you money. You did pay self employment taxes (SE tax) on the self employment income, right? If it has been determined that you are an employee then the IRS will get 1/2 if the FICA from the employer, and your 1/2 of the FICA will come from the SE tax you paid. The remaining SE tax paid in should be refunded to you with interest. You did pay SE tax on your self employment income, right? You were consistent in you position with respect to the SE tax matter, right?
    If you were not consistent, and did not pay SE tax, nor FICA, then see the above. You can ask that the government wave the penalties, but they are unlike to do so. It does not hurt to ask.

  4. #4
    Join Date
    Oct 2006
    Posts
    16,093

    Default Re: FICA Back Taxes For An Employee

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    Hi,

    Please help as I need some expert advice. I was working as an employee who received commission/bonus income. Unfortunately my employer did not pay fica for the commission/bonus income. The first commission I received he did not issue any tax documentation and I went to tell him that I planned to pay my income taxes and wanted to know where I was supposed to put it. He told me to place it under "other income". I did pay income taxes on this and did pay a penalty for not withholding enough taxes. After this I received both w-2s & 1099s. I paid income taxes on all of this money and continued to put the commission under "other income", however I did not pay fica except for 2006. (When I realized I was supposed to put the 1099 income unto a schedule c, I did for that for 2006.) I filed an SS-8 for all these years. The IRS determined that I was not an independent contractor & was an employee for all of the years. The IRS has asked me to fill out unreported tip paperwork for all of the years. Do I have any recourse to limit my fica & penalties? I am trying to do what was right for everyone, but I don't want to be penalized excessively for my employer trying to skip out on his tax obligations. I appreciate any insight that anybody can provide. Thank you.
    You need help from a tax professional. Based on what you have said so far I am not quite sure what the IRS is actually suggesting that you do. Take all of your paperwork and go see a tax professional.

    You don't necessarily need a high priced CPA or Tax Attorney, an Enrolled Agent can probably help you with this.

  5. #5

    Default Re: FICA Back Taxes For An Employee

    Hi,

    Thanks for all of your replies. For clarification in:

    2004 I put my bonus income under line 21 as "other income" (I received no tax documentation of this income, went to my employer and told him I would be declaring my bonus income and he asked me to put in there and note that it was a bonus). So for the bonus that I received in 2004, I only paid income taxes on it.

    2005 I received a W-2 for my base salary & a 1099 for my bonus income, however, I continued to put my bonus income on line 21. So I once again only paid income taxes on my bonus income for 2005.

    2006 I received a W-2 for my base salary & a 1099 for my bonus income. This year I notice that 1099s are for the self employed and called the IRS for guidance. They told me I needed to fill out an SS-8 for all of these dates. In the meantime they suggested that I fill out my 2006 forms as if I was self employed for the 1099 income to be on the safe side until a determination is made. So I paid FICA & income taxes on my bonus income from 2006. I asked if I should amend all of my previous returns that way as well & they told me to wait until a determination was made because there was a possibility that I would not be liable for FICA on the previous returns.

    I recently received a letter from the IRS saying that my employer was trying to avoid taxes by issuing the 1099. It was determined that I am an employee and was never an independent contractor. I was asked to amend my 2005 & 2006 returns by putting my bonus income on Form 4137 "social security & medicare tax on unreported tips".

    I would like to know if there are any cases of employers being liable for both their portion & the employee portion in this case of misclassification. I realize that my situation is confusing but I appreciate your reading this. Thank you again for the replies.

  6. #6
    Join Date
    Oct 2006
    Posts
    16,093

    Default Re: FICA Back Taxes For An Employee

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    Hi,

    Thanks for all of your replies. For clarification in:

    2004 I put my bonus income under line 21 as "other income" (I received no tax documentation of this income, went to my employer and told him I would be declaring my bonus income and he asked me to put in there and note that it was a bonus). So for the bonus that I received in 2004, I only paid income taxes on it.

    2005 I received a W-2 for my base salary & a 1099 for my bonus income, however, I continued to put my bonus income on line 21. So I once again only paid income taxes on my bonus income for 2005.

    2006 I received a W-2 for my base salary & a 1099 for my bonus income. This year I notice that 1099s are for the self employed and called the IRS for guidance. They told me I needed to fill out an SS-8 for all of these dates. In the meantime they suggested that I fill out my 2006 forms as if I was self employed for the 1099 income to be on the safe side until a determination is made. So I paid FICA & income taxes on my bonus income from 2006. I asked if I should amend all of my previous returns that way as well & they told me to wait until a determination was made because there was a possibility that I would not be liable for FICA on the previous returns.

    I recently received a letter from the IRS saying that my employer was trying to avoid taxes by issuing the 1099. It was determined that I am an employee and was never an independent contractor. I was asked to amend my 2005 & 2006 returns by putting my bonus income on Form 4137 "social security & medicare tax on unreported tips".

    I would like to know if there are any cases of employers being liable for both their portion & the employee portion in this case of misclassification. I realize that my situation is confusing but I appreciate your reading this. Thank you again for the replies.
    If you amend your returns using form 4137, then you will be paying your half of the social security and medicare taxes. That means that you will owe money for 2005, and get a refund back for 2006. You really should be amending 2004 as well.

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