Today is your first day of work. You signed a contract with your employer, which detailed your work responsibilities. Your contract contained information on what time you must clock-in and clock-out; how you should complete your work assignments; when your employer will pay you; and which employment benefits you are entitled to. Today is a good day, and you are prepared to begin your new job.
A year later, tax season rolls around. You get a letter in the mail from your employer containing a form—your employer sends you a 1099 form. Maybe you know a thing or two about taxes. Maybe you know a 1099 form is for independent contractors whereas a W-2 form is for an employee. If you know the difference between an employee and an independent contractor, then you would be upset. To illustrate one difference, an independent contractor has to pay all their Social Security and Medicare taxes out of their own pocket. On the other hand, an employer must pay half of these taxes for an employee. What if your employer does not provide you with a form to file your taxes at all? What if the employer fails to acknowledge that you are an employee of the company, and misclassifies you as an independent contractor, when all the evidence of your work responsibilities indicates otherwise. That is when you need to seek expert counsel, such as the experienced attorneys here at EPGDlaw.
First, you need fill out and file a form called “SS-8” with the IRS. The purpose of a form SS-8 is to determine the worker’s status for purposes of federal employment taxes and income tax withholdings. Once you fill out the SS-8—a worker or an employer may file—it may take the IRS up to six months to determine the worker’s status. However, you should still file your taxes for this tax season; so, there is a second step.
Second, while waiting on the result of the SS-8, you should file a 8919 form directly with the IRS. As mentioned above, one of the crucial differences between a worker being classified as an independent contractor or employee is an independent contractor have to pay all their Social Security and Medicare taxes themselves. If you think you have been misclassified as a contractor, you can avoid having to pay more than half of these taxes yourself by filing IRS Form 8919, Uncollected Social Security and Medicare Tax on Wages. In the meantime, you must await the result of your SS-8. Keep in mind, the SS-8 is an important form that the IRS uses to determine your worker status. Therefore, it is wise to have legal counsel for guidance.
If you are an employer or employee who needs to discuss employment law, employee contracts, and the classification of employees and independent contractors, give us a call today. The IRS imposes harsh penalties—especially on employers—for misclassifying employees. We are located in heart of Coral Gables and can be reached by calling (786) 837-6787 or by emailing us to schedule a consultation with you. – See more blog post on a variety of business law at the following website: https://epgdlaw.com/blog