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Getting a 1099 instead of W2

#1
I am getting a 1099 instead of a W2. I clearly am an employee, I work regular hours at a company office, have a lunch break, get told what to do, have company business cards with my name on it. I have been living in the U.S. for 3 years now after living abroad most of my life (I'm a U.S. citizen) and when I first got here I wasn't really aware of the 1099 issue and being an employee, but after paying 3 years of my employers 7.65% of taxes it's starting to get on my nerves. The employer has other people on 1099s as well and has no intention on going on to a W2. I basically have to report everything on a Schedule C. I don't want to end up having problems with the IRS because of this. What are my options here? Simply get another job? There are some benefits of working here... I work from 9-5 when in the same industry they work from 8-5/6, it's pretty laid back, the boss is mostly nice, I can bring my kid to work when he has no school, I get an hour of lunch most days, music is played in the background when in other places it's complete silence (I've worked in another place here on a W2 last year and it was a toxic place, I ended up coming back to the 1099 even though it was less money). Of course there are no health benefits or any other kind. What do you recommend?
 
#2
Well, the details of your job and how much control the employer has over how and when the work is performed matters as to whether you are really an employee or independent contractor. See IRS Publication 15-A which has a full discussion of the factors that used to determine whether someone is an employee for federal tax purposes.

If you are an employee, you may submit Form SS-8 to the IRS to ask it to make a classification determination. The problem with that is that your employer will get a copy of that if the IRS contacts the employer in its investigation and the employer will know that you are the one who got the company under the IRS microscope. That might get you fired. But it could result in reclassifying everyone doing the same work you do as employees.

You can of course always look for another job, too. That's your choice. Consider all the factors when deciding to change jobs. Is the new employer paying at least as much (taking into account that it is paying half the FICA taxes that you now pay) as you are getting now on a per hour basis? Are the working conditions as good? Will the work environment be as a good? It sounds like your job is ideal now but for the fact that you are treated as an independent contractor.

You won’t get in trouble with the IRS over a misclassification issue as long as you pay the taxes owed as a result. The person who might get in trouble over this if the IRS were to examine the issue is the employer.
 

LdiJ

Senior Member
#3
I am getting a 1099 instead of a W2. I clearly am an employee, I work regular hours at a company office, have a lunch break, get told what to do, have company business cards with my name on it. I have been living in the U.S. for 3 years now after living abroad most of my life (I'm a U.S. citizen) and when I first got here I wasn't really aware of the 1099 issue and being an employee, but after paying 3 years of my employers 7.65% of taxes it's starting to get on my nerves. The employer has other people on 1099s as well and has no intention on going on to a W2. I basically have to report everything on a Schedule C. I don't want to end up having problems with the IRS because of this. What are my options here? Simply get another job? There are some benefits of working here... I work from 9-5 when in the same industry they work from 8-5/6, it's pretty laid back, the boss is mostly nice, I can bring my kid to work when he has no school, I get an hour of lunch most days, music is played in the background when in other places it's complete silence (I've worked in another place here on a W2 last year and it was a toxic place, I ended up coming back to the 1099 even though it was less money). Of course there are no health benefits or any other kind. What do you recommend?
My personal opinion is that employers will keep misclassifying people as long as they can find people who will accept being misclassified. Therefore I urge people like you to find another job, and then file the SS-8 and form 8919 with your tax return so that you can avoid paying the employer's share (the 7.65%). I know of many people who have successfully challenged a misclassification.

There is also more to the story than just the employers share of the social security and medicare taxes. There is also no worker's compensation insurance if you are injured on the job. There is no unemployment insurance if you have to be laid off, and no other benefits of any kind either.