1099-MISC / Trickery

What is the name of your state? Texas

I worked for an employer about 10 months in 2002. I received my W-2 from them but also received a 1099-MISC. The 1099-MISC was hand written and was for monthly bonuses I received while working there. The problem is he put the bonuses under nonemployee compensation. When I asked the company about this they said the bonuses where paid out of a different account and that is why they put it there in box 7.

So my question is is this legal for them to do this?

I understand why he did it. This way he did not have to pay half of the SS and MED. I'm responsible for paying the full thing. Thus reducing his bonus to me. If I had big bonuses this could of add a whole lot to my tax liability. Good thing the bonuses add up to a little over $2,000.

What are my options?

Jim

Protest to the IRS. You received the bonuses because of working for him. Therefore they had to be added to your W-2 & he has to pay/withhold employment taxes.

I did call the IRS today. The guy told me to file form SE and pay the SS and Med. on the money. All he said is that the company reduced my bonus by about 300 dollars by doing it that way. Well I went from getting a refund to owing the IRS now. The IRS was no help. Also the 1099-MISC was hand written. If companies can do this they could really screw you by just paying half your wages from a different account and making you pay all the SS and MED taxes at the end of the year and keep you in the dark the whole time and then at tax time it leaves you with a huge tax bill. It has to be wrong????

Jim

Try reporting the bonus on a Form 4797. This way you'll only pay the medicare & social security you would have had withheld if he'd done things properly in the first place.

Did you miss type the form number? Form 4797 is for "Sale of Business Property".

Yep, that's a typo. I meant the form for reporting tips -- 4137.

Update on 1099-MISC

I talked to the IRS again and this time I recieved a diferrent answer. I was told to file a 1099-MISC complaint against the company, I did file one. My question does the IRS have the power to make the company issue me a new W-2 form with the bonuses on it? Here is the response I got when I told the owner I had filed a complaint with the IRS.

"Jim:

You worked for Data Technologies (Data Recovery Labs, Inc.). This corporation paid your salary and issued you a W-2.

You received bonuses under your contract from Data Recovery Services, Inc. Data Recovery Services, Inc. did not employ you on salary so it issued you a 1099 for your bonuses.

Do you understand that you received monies from two separate corporations so you cannot receive a "corrected W-2 from Data Recovery Labs, Inc.?

We will be only too pleased to respond to the IRS as soon as they contact us.

Terry Anderson"

Any thoughts on this?

TexJim