Refiling or Amending 2005 Taxes?

Question

For the whole year of 2005 as well as half of 2006 I worked as 1099. However, the employer I worked for demanded that I work at a specific location mon-fri from 9 to (whenever they would let me leave... sometimes 9, 10pm - sometimes i wouldn't leave).

Reading the IRS's guidelines for how to classify tax filing, they state that if you can't work when you want, where you want to accomplish a "contract," then you are not an independent contractor. You are an employee - and your employer should be withholding tax and sending that into the IRS.

My employer did not do this and I filed as an Independent Contractor. The taxes were very steep. Now I am in a pickle for 2006 because I worked for half the year also as 1099, even though technically I was an employee.

How do I:

a. Refile or Amend for 2005 - what forms, etc.?
b. File as an employee for 2006 even though I had a 1099?

Will my ex-employer be penalized? Preferably, I don't want any harsh action taken. HELP!!!!

Thank you!

Answer 1

I agree that you need to speak with a tax professional who is familiar with this situation. You need to file an SS8, the form that 'tells on' your employer for not filing correctly. You answer the questions on the form and mail it in. The only tax this will get you out of is 1/2 of your self-employment tax, ie Social Security and Medicare. The employer should have been paying that all along.
You'll probably not get far trying to make them pay any of the income taxes that should have been taken out but weren't. I know people who have tried and there's not much to do unless you want to sue the employer.
To your second question: Do NOT attempt to file as employed with a 1099. The IRS will eventually catch this and you'll get a letter, if not an audit.
You can't amend for last year until you get a decision from the IRS on the SS8.
Also, just in case, make sure you're keeping track (or reconstructing records) of mileage, expenses, tools, supplies, or anything you had to buy to do your job. When you're self-employed, you can deduct more than you can as an employee.
If you have further questions, please let me know and I'll be happy to help.

Answer 2

You need to talk to a tax preparer or the person who did your taxes. You are right that you are not self employed and should not have been given a 1099.
You can't file as an employee unless you have a W-2.
This is why you need to talk to someone who can do this for you.
Your ex-employer will be penalized for not deducting taxes from your check.

Answer 3

You can't file an employee since you didn't get a form W-2. Your "ex-employer" can get in trouble if it is determined that you were an employee instead of an independent contractor. Call the IRS. If harsh action is taken, it is THEIR fault based on THEIR actions, not yours.

Answer 4

Regarding question "a", you can use form 1040X to file an ammendment.
Go to www.irs.gov and search for ammended return. There's lots of information there. Or, just call them: 1-800-829-1040. It's free and it will at least get you on the right track if not answer your questions.

Good luck, sorry I couldn't help on the other questions.