What do I do, I received a 1099 verses a W-2?

Question

Help. At the beginning of the year I was working for a company. All of my checks were direct deposits and I filled out a W-4 form when I first began working. Payroll taxes were coming out of my check every week. When I was ready to begin working on my taxes, I noticed that I received a 1099 form rather than a W2. I have no check stubs or anything to show that taxes were being taken out of my check, however I know they were. I received a W2 on last year from this employee and nothing changed on my end. I never signed a 1099 form stating that I was a contract employee and as stated, based on my salary and deposit amounts, I know taxes were still being withheld. What I think has happened is that he did not report or pay employee payroll taxes to the IRS and now he's trying to cover himself by sending me and several other employess 1099's although he was withholding the amount from our checks. HELP, what do I do? I am not prepared to pay back all that money in taxes.

Answer 1

Talk to your payroll department, maybe they just made a simple error, because 1099's are strictly for interest earned, or early withdrawal of monies from IRA's, or investments.

Answer 2

Can you find the other half of the "w-4" form you filled out at the beginning? (The form says to keep the top half and give the bottom half to the employer).
Go to whomever you need to, to get a copy of your last three paystubs. Tell them you never got the copies (so it should be free) and you need it for something. People need three paystubs all of the time for credit, loan, etc stuff. Press them to get it to you asap, and speak with urgency! You should have these stubs even if this turns out a no issue. If the company is small, they may do checks by hand, and you wouldnt get this.
Now, you have your proof. With your proof you will see if they paid taxes on you or not. Then go to the person that made the 1099 form. Maybe it was a mistake and will end there. But, if you go to that person first, the company may hide your paystubs if they are trying to pull a fast one. So, see them after you have the paystub copies.
If at this point there is an issue still, and it wasnt a mistake, I would call the IRS. It will be a long call, so have a book. When you call you can annonomously ask about what your options are and what the laws are. Write it all down. Then, go to your employer, sit down in a private meeting with them, and sweetly say that you were confused why you all of a sudden got a 1099, were extremely concerned by any tax implication or discrepency this may cause for your finances, and called the IRS to ask for advice. (pause for this to sink into their blood!)
Hopefully here they will jump up and say, sorry dear, it was an error, we will send you a w4 asap. Then smile, say thanks "I will look for it in the mail this coming week" and leave. If they want to fight, well, you could try saying that unfortunatly there was some kind of misunderstanding, and that you are not able to be a 1099 employee, and that you need a w4. Say you were not aware of this change, and that it will not work for you. If that doesnt work, try saying that when you called the IRS they gave you two options (if they do). One, to pay a huge amount of back tax $, which you feel you are not liable for since you were unaware of this change...or to file a complaint against the company.
That should do it. A scoudrel tried this on me once....and that did it! He paid the difference and gave me a w4. I was very nice about though, so was able to keep the job.
Worst case is if they paid you the salary they said they would, and didnt take the tax $ out. They would still be in the wrong, but you did get the money. So you may have to meet in the middle on that one. But ask the IRS! BTW, only certain types of work can be considered 1099. Tell the IRS what your work is, maybe a 1099 is not even allowed.

Answer 3

Hmmm... if the employer is trying to pull a fast one, try banding together with other employees in the same boat and "innocently" ask your employer AS A GROUP if he "accidentally" issued 1099s instead of W-2s.

Also, even if you have direct deposit, the employer should STILL give you a pay stub after every deposit detailing the amount paid, amount withheld, etc. I've never had an employer do direct deposit without giving me a stub. It sounds a bit shady to me.

But you at least know what your salary is (don't you?). If it was agreed on in an employment letter or something, then it's documented, and you can figure out how much you were paid by adding up the amount of your direct deposits for the year.

If all your direct deposits add up to your gross salary, then no payroll taxes were withheld. That doesn't make you a contract employee of course, but that also means that the IRS didn't get any money on your behalf for the year.

This really sounds shady. I would definitely try getting some other employees together to figure out what to do collectively, since your employer seems to be trying to pull a fast one. There's greater protection in numbers.

Answer 4

Even if your pay was deposited directly to your bank account, you HAD to have been given a pay stub. All employers give their DD paid employees a statement on payday that shows the numbers just like a check stub does.

If the employer sent you a 1099 in error, call them and demand a Form W2. If they refuse, call the IRS and file a missing W2 complaint.

If you are in fact classified as an independent contractor now, file a Form SS-8 with the IRS. They will determine your status and advise you and the employer. Here's a link to the form: http://www.irs.gov/pub/irs-pdf/fss8.pdf

You may have to file a return as self employed if the IRS hasn't finished their determination by April 17, 2007. Get moving on this TODAY so you might have the determination in hand and your W2 by April 17th. If you have to file and pay the taxes, you can file an amended return once you get the W2 if the determination is that you are an employee. You'll get a refund of any excess taxes paid.

Answer 5

Are you still with the same company? If so, contact the company that does thier payroll if it is an outside firm and ask for a random paycheck copy, there will be a small charge, but it would prove that taxes were coming out. You could also contact the company and see if there was just a mistake made. Generally to get a 1099 you must sign a form stating that you are aware you are responsible for taxes, the company must keep that on file and would have to produce it as proof of your knowledge.