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Employee Gets A 1099?

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gogo589

Member
What is the name of your state (only U.S. law)? Minnesota. I did work for a contractor last year. When I took the position, I was told he was looking to hire a jobsite foreman, and I would be paid $25 per hour. I took the job. Of course, I was told where and when to go, how to do the job, I got some training, he supplied all the materials, construction equipment, work phone, company vehicle, etc...

My checks were always just made out to my name, with no taxes ever taken out. It struck me as odd, so I had a talk with the owner. He then proceeds to tell me that I am a subcontractor and that he will be giving me a 1099 at the end of the year.

I quickly told him I was NOT a subcontractor, I had NOT ever represented myself as one, nor did I wish to be a subcontractor. He said he would set up a meeting with his accountant, so I could talk to him, because the accountant had found a "loophole" in the system where he could legally pay me as a subcontractor, even though I wasn't.

The meeting was never set up. He told me he would have to pay me less if I did not want to be a subcontractor. After he lowered my pay, I had one more conversation with him and then stopped working for him completely.

After looking on the IRS website, I am convinced that what he is doing is completely illegal, and I want no part of it. I was treated like an employee, told I was being hired, and never represented myself otherwise, so do I report this contractor for this? On the IRS website, it hints around to a contractors reason for doing this is to avoid paying payroll taxes. Would this be considered tax evasion?

I'm scared and don't want the IRS to think I am doing something illegal. Please give me your opinions or thoughts. Thank you.What is the name of your state (only U.S. law)?
 


LdiJ

Senior Member
What is the name of your state (only U.S. law)? Minnesota. I did work for a contractor last year. When I took the position, I was told he was looking to hire a jobsite foreman, and I would be paid $25 per hour. I took the job. Of course, I was told where and when to go, how to do the job, I got some training, he supplied all the materials, construction equipment, work phone, company vehicle, etc...

My checks were always just made out to my name, with no taxes ever taken out. It struck me as odd, so I had a talk with the owner. He then proceeds to tell me that I am a subcontractor and that he will be giving me a 1099 at the end of the year.

I quickly told him I was NOT a subcontractor, I had NOT ever represented myself as one, nor did I wish to be a subcontractor. He said he would set up a meeting with his accountant, so I could talk to him, because the accountant had found a "loophole" in the system where he could legally pay me as a subcontractor, even though I wasn't.

The meeting was never set up. He told me he would have to pay me less if I did not want to be a subcontractor. After he lowered my pay, I had one more conversation with him and then stopped working for him completely.

After looking on the IRS website, I am convinced that what he is doing is completely illegal, and I want no part of it. I was treated like an employee, told I was being hired, and never represented myself otherwise, so do I report this contractor for this? On the IRS website, it hints around to a contractors reason for doing this is to avoid paying payroll taxes. Would this be considered tax evasion?

I'm scared and don't want the IRS to think I am doing something illegal. Please give me your opinions or thoughts. Thank you.What is the name of your state (only U.S. law)?
Here is what you can do to fully protect yourself.

File a form SS8 with the IRS to ask them to determine whether or not you were an employee or a subcontractor.

When you file your tax return, report the income from the employer on form 8919. You will still be responsible for income tax on the money and your half of the social security and medicare taxes, but you will not have to pay the employers half of the social security and medicare taxes.

If the IRS agrees that you were an employee, that will be the end of it as far as you are concerned. If the IRS determines that you were not an employee, then you will be assessed the remaining half of the social security and medicare taxes.

The IRS really WANTS to catch employers treating employees as subcontractors when they are not. That is why the SS8 and the 8919 system are in place.

A tax professional can help you with this. Just make sure that you get someone who is familar with forms SS8 and 8919.
 

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