1099s and W-2s

I've posted and tweeted a few times about how I'm still awaiting my W-2s. I actually completely forgot about the job I had last summer (my boss was such a jerk, it's better off forgotten). I finally remembered yesterday and sent a email to HR, requesting my W-2. They sent an email back, telling me I wasn't on the payroll, I was an independent contractor, and as such they were sending me a 1099.

That was news to me. I was NEVER informed I wasn't being placed on the payroll. Moreover, I'm almost certain they took taxes out of at least some of my checks. I know that after awhile, my take-home pay increased and it confused me, but I didn't want to question it - I liked having a bigger paycheck! I didn't think of the implications of it... because isn't it HR's job to inform you that they've taken you off the payroll and WHY?!

I'm peeved by this whole situation, and I feel they're being very shady. I'm going to go through my old paystubs and make sure that taxes were taken out of at least some of the checks. From there, I guess I'll contact HR again... But I'm not really sure what the end result will be. Will they have to send me a W-2 AND a 1099? And does this mean I'm going to owe a lot of taxes?!

Ugh. Frustrating.


Jessica said...

If you do get a 1099 you will probably owe a whole bunch of taxes. Getting a 1099 means that you are an independent contractor, which the feds view as you owning a business. That means you get to pay business tax, plus both your employer's and your share of the income taxes.

I was 1099 for a summer. I'll never do it again. I made just over $7K that summer. Plus I had a regular W2 job during the academic year and made about $15K from that. I thought the tax return on the $15K would cover whatever was owed on the $7 especially because I was a full-time student. I was wrong. Not only did my entire return from the $15K get eaten up but I still had to write a check for about $2K to the feds. Not a fun day.

Definitely review your stubs and argue the decision. I remember reading about a form you can fill out disputing your status as an independent contractor, you should look into that.

Revanche said...

Here's the thing, though: You can both reduce income by the same 7.65% before calculating your taxable income and take a 50% deduction for self employment tax when you do your Schedule SE (either long or short form, depending on your income amt).

Read Flexo's article on the rest of the SE tax related stuff if necessary.

BUT! First check and make sure you're truly legally a contractor -- they can't just shift you from one to the other status without satisfying the legal definitions of a contractor versus employee. For example: if you get to dictate how and when you do your work, they can call you a contractor. If they get to call the shots, they probably cannot call you a contractor. They can totally get in trouble for dodging their tax responsibility, and I'm pretty sure they're required by law to get 1099s out by January 31st as well.

With any luck, you have two ways you can get them called out.

Do your research and let us know what you find!

me in millions said...

Ugh! This sounds like it could be a nightmare. Good luck and keep us posted.

DogAteMyFinances said...

You will get a 1099 (actually you should have already by the end of January), and you will owe a bunch of taxes because it wasn't withheld.

Now do your research and decide if you can complain to the IRS! They can't just call you a contractor, that actually means something.

ashley said...

I never heard of that before, but that seems incredibly shady! I'm sorry that happened, but hopefully you won't have to pay too much.

Unknown said...

This sounds super shady. I had a 1099 a couple of years ago where I was classified as a independent contractor and I had to pay self employment tax, but I was doing freelance writing so I was okay with it. Hope this situation works out.

eemusings said...

:( That really sucks. If you do end up owing, how long will you have to pay?

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