I work in S.C. for a retail pool store. I am the sole employee. I'm paid by the hour as well as paid a commission on certain items that I sell. I do pool service work after hours for which the store pays me with a 1099. I have set up my own buisness for this purpose and have an Employee Identification Number with the IRS. Last year, 2005, my employer paid to me, my commissions, a paid week off, and a year-end bonus but did this as a 1099 payment rather than deducting the appropriate amount of payroll taxes and having it show as income on my W-2. I ended up paying taxes at a higher percentage on income earned through the 1099 than I did with the W-2 income.

Does this make a difference, am I confused or did I get the short end of the stick? By the way, this is not the first time my employer has evaded his tax obligation (this is verifiable not hearsay but that's between him and the IRS).

Any suggestions or advice would be appreciated. Thank you.

Ken

Yes, it does make a difference, and not only did you get the short end of the stick, but what the employer did was illegal. My recommendation would be to contact the IRS and state that your W-2 was incorrect (as well as your 1099) because wages were included on the 1099 in error. Make the company explain to the IRS why they think they were right. They won't be able to.