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Convert 1099-MISC to W-2 California

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  • Convert 1099-MISC to W-2 California

    My previous employer classified me as an independent contractor however I believe I meet the status of an employee.

    After quite a few discussions, the employer has basically told me they will do a 1099 or a W-2 and I should choose however they recommend I just stay a 1099. Obviously they say this as I'm sure going back and changing me to a W-2 will be a headache for them. My issue with the 1099 is I will end up paying more in taxes because I will have to pay the employer portion of taxes also.

    The employer told me if I wanted to switch to a W-2, I will have to send them all the taxes due from the employee.

    My question is, couldn't the employer just issue me a W-2 that states $0 for taxes paid I and I pay them when I file?

  • #2
    Yes and no. It is mechanically possible for the employer to change the classification, and if you really are legally an employee then the employer is required to do so. HOWEVER, if you really are an employee, then the employer is legally required to get all taxes fixed, not just the ones you requested. Worse, the deposits were not made in time, so the employer needs to refile the federal and state quarterly and annual reports, plus WC reporting, plus maybe other things.

    If the worker classification is wrong, then a lot of things are wrong. If the employer is going to admit that they were wrong, then they need legally to fix everything, not just a few things as requested.
    "Reality is that which, when you stop believing in it, doesn't go away".
    Philip K. **** (1928-1982)

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    • #3
      Originally posted by Waxman31 View Post
      My previous employer classified me as an independent contractor however I believe I meet the status of an employee.

      After quite a few discussions, the employer has basically told me they will do a 1099 or a W-2 and I should choose however they recommend I just stay a 1099. Obviously they say this as I'm sure going back and changing me to a W-2 will be a headache for them. My issue with the 1099 is I will end up paying more in taxes because I will have to pay the employer portion of taxes also.

      The employer told me if I wanted to switch to a W-2, I will have to send them all the taxes due from the employee.

      My question is, couldn't the employer just issue me a W-2 that states $0 for taxes paid I and I pay them when I file?
      While it would be possible for the employer to show 0 taxes for regular federal and state income taxes, it would not be possible for the employer to show 0 for social security and medicare taxes. The employer would have to collect that money from you.

      If you are still working for the employer its also quite possible that the employer will find a way to let you go.

      There is another option to resolve the problem that would buy you some time (at least six months) to find another job. You can file a form SS8 with the IRS asking THEM to make the determination as to whether or not you are an employee, and then you can use form 8919 to report your income on your tax return, using the 1099. That way you will not have to pay the employer portion of the social security and medicare taxes, unless the IRS later determines that you are NOT an employee.

      This is the method that the IRS actually prefers that you use. This way the IRS has the opportunity to find out that the employer is treating employees as contractors, and can make sure that it stops.

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      • #4
        Thank you both for your answers.

        This company is a temp / recruiting company. This is actually my girlfriends situation and I am helping her figure it out.

        She works for the company she was placed in so I am not too worried about the fallout with this recruiting company. I'm not sure the company she is with now will use this recruiting company again either.
        Just to be sure, if we can agree to a W-2 I can only give them the employee share of social security and medicare and nothing else?

        The other option I was thinking of was to file the 1099, pay all the taxes due for employer and employee, file SS8 and DE 1870, and let the IRS make a determination. If the IRS determines she is an employee, she would get a refund correct? Plus I would like the IRS to investigate the company for other occurrences.

        This is the first I have heard of the form 8919 so thank you for bringing it to my attention. Do I actually file this now with 2009 taxes and not pay the employer share? What happens if she does get classified as an independent contractor? Would she have to pay the additional taxes through an amended return or on next years taxes? Any penalties associated with this?

        Sorry for all the questions but I want to be as informed as possible when dealing with this company.
        Last edited by Waxman31; 02-15-2010, 04:00 PM.

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        • #5
          Originally posted by Waxman31 View Post
          Just to be sure, if we can agree to a W-2 I can only give them the employee share of social security and medicare and nothing else?
          Not legally. If the worker is an employee, then the employer is legally required to correctly handle all employment related taxes.
          "Reality is that which, when you stop believing in it, doesn't go away".
          Philip K. **** (1928-1982)

          Comment


          • #6
            Much like employment exemptions there are many factors that play into qualifying someone as an independent contractor. One of which is the person must be able to come and go from work as he or she pleases (this could use some more detail, but I am dozing as I type).

            I have rarely seen an employer be able to truly qualify an employee as an independent contractor.

            So, to answer your question, it sounds as though there is no chance that the IRS is going to rule that you owe both sides of the taxes.
            Not everything in America is actionable in a court of law. Please remember that attorneys are in business for profit, and they get paid regardless of whether or not you win or lose.

            I offer my knowledge and experience at no charge, I admit that I am NOT infallible, I am wrong sometimes, hopefully another responder will correct me if that is the case with the answer above, regardless, it is your responsibility to verify any and all information provided.

            Comment


            • #7
              Originally posted by Waxman31 View Post
              Thank you both for your answers.

              This company is a temp / recruiting company. This is actually my girlfriends situation and I am helping her figure it out.

              She works for the company she was placed in so I am not too worried about the fallout with this recruiting company. I'm not sure the company she is with now will use this recruiting company again either.
              Just to be sure, if we can agree to a W-2 I can only give them the employee share of social security and medicare and nothing else?

              The other option I was thinking of was to file the 1099, pay all the taxes due for employer and employee, file SS8 and DE 1870, and let the IRS make a determination. If the IRS determines she is an employee, she would get a refund correct? Plus I would like the IRS to investigate the company for other occurrences.

              This is the first I have heard of the form 8919 so thank you for bringing it to my attention. Do I actually file this now with 2009 taxes and not pay the employer share? What happens if she does get classified as an independent contractor? Would she have to pay the additional taxes through an amended return or on next years taxes? Any penalties associated with this?

              Sorry for all the questions but I want to be as informed as possible when dealing with this company.
              Correct, you file the 8919 now and therefore will not have to pay the employer share of the taxes. If she does not get classified as an employee, then she would have to amend her return and pay the additional taxes due. The money gets reported via the 8919, so don't double up on it.

              However, based on what you have described, I very much doubt that she would be classified as an independent contractor.

              Comment

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