I work for someone who did not take taxes out on me and will send me a 1099.....?

Question

but they overstated my income by a large sum. I made a substantially less amount than stated on the 1099. What should I do?

Jeff, I was told what, when and how to do the job specifics. I was paid an hourly wage and did not have any say whatsoever in handling jobs (bids, cost, or overhead expenses)

also, I do not mind paying the taxes, I just want to pay what I owe. I do not feel that I should pay for the company's expenses. I have no investments nor will I be liable for profit or loss of the company. I just want to take the legal steps and not have to worry about being audited or sending in fraudulent/wrong info.

Answer 1

First of all, the question is whether you are an independent contractor or an employee. Your employer can only file a 1099 if you are truely an independent contractor. This is a legal question depending on the specific facts of your employment. Many employers attempt to catorgorize an employee as an independent contractor so that they don't have to withhold taxes. Whether you are truly an independent contractor or an employee is a question of control over your work by your employer. This depends on your specific facts. Now, on to the next question. If your "employer" has overstated you "income" you need to have copies of all of your payments for services rendered. Employers sometimes overstate wages to increase their tax deduction. If you can show your actual income you need to file the correct amount on your tax return and attach copies of your paychecks to show the correct amount. I hope this helps.----Tax attorney in Orlando, Florida. You can contact me for additional information.

Answer 2

First step: Download a copy of Form SS-8 http://www.irs.gov/pub/irs-pdf/fss8.pdf from the IRS website, fill it out, and mail it in. Do this TODAY! It's highly likely that you are an EMPLOYEE, not self-employed. If you only worked for one firm, it's nearly a certainty that you are an employee unless you were a real estate agent, a broad-line insurance agent, or a milk delivery driver. You have PLENTY of time before the filing deadline to get the determination from the IRS.

Next step: While that's being processed, gather together your records and itemize all of the funds you received from the firm and send them a detailed letter showing what you actually received (send photocopies of any billing statments you sent them and copies of the bank deposit slips with your account number redacted) and request that they correct their records and send you a corrected Form 1099.

Thrid step: Based upon how the IRS rules on the SS-8, prepare and file your return.

1. If you are determined to be an employee, your employer will send you a Form W-2 showing the amount you were paid. There won't be any withholdings on it, but you will pay less tax in the end. Attach Form 8919 to your return to pay the Social Security and Medicare taxes that were not withheld from your pay. Mark reason code 'A' as the reason for filing the form.

2. If you are determined to be self-employed, prepare your return using the corrected Form 1099 and your financial records. Calculate your net business income on Schedule C or C-EZ and calculate your Self-Employment tax on Schedule SE.

Final step: Either way, be prepared for a shocker of a tax bill. Hopefully you set aside 30% - 40% of your income to pay the bill. Unless you made the required quarterly estimated payments on Form 1040-ES there will probably be penalties and interest for late payment of taxes or underpayment of estimated taxes on top of whatever tax is due on your income.

Answer 3

Was it agreed upon beforehand? Even so, did you have set hours, have to do the job as told by the employer? If you are bound by rules and limitations set forth by an employer you are technically an employee and they are responsible for deducting taxes from your wages.

If you came and went as you pleased - were given tasks but not told how to do them, then you would be a subcontractor - thus, receive a 1099.

If you received far less than they are stating, do you have proof? Check copies, deposit records, bank deposit records?

You have a number of avenues to explore - but your best bet is to go to irs.gov and look up the laws regarding subcontractors - I'm willing to bet you don't even fit the profile for a subcontractor based on the fact that you stated "I work for someone..."

Answer 4

Immediately notify the 1099 issuer of the error and ask them to issue a corrected 1099. A copy of the 1099 is filed with the IRS and they use it to compare with what you report, so it is important that they have the correct amount.

You should have a record of what you earned from them. Check stubs, or invoices if you billed them. Let them know the correct amount so they can verify it rather than have them calculate another wrong amount.

Answer 5

Contact them and ask for a corrected 1099. Remember it should be stating your gross income before deductions, withholding, FICA, insurance, dues, etc. and then listing the deductions also.

Answer 6

Why is there a discrepancy?
How do you know that your numbers are more accurate?

Were there business expenses that were reimbursed?
Fringe benefits?