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Old 01-12-2012, 02:50 PM
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Non-employee compensation filed but was an EMPLOYEE!

My husband worked for a "L" company for part of a year. When we filed taxes and entered the information from the 1099-MISC we received from the company, the tax software asked a lot of questions about being self-employed. We filed right at the deadline that year and, not knowing what to do, we just omitted that form and finished the rest of the taxes and submitted. We knew we would not receive any of the return due to taxes my husband owed fromt he previous year when we are not married because "L" company does not hold out any taxes. We received a letter from the IRS stating that not only do we not get any of the refund, we also owe almost $3000 when he only made $7,700 that year from "L" company. Upon reading the paperwork, we were charged a self-employed tax due to the 1099-MISC submitted by "L" company. My husband was NOT self-employed. He was paid an hourly wage, received 2 raises over the course of his employment AND a Christmas bonus. He did not utilize any work equipment other than what was provided by the employer and doesn't advertise for a business he doesn't have. Unfortunately, he did not receive pay stubs and was paid each week with a check from "L" company (the amounts each week varied by how many hours he worked!). We knew we would owe some taxes on what he made and there is no dispute in that. We do not feel we should have to pay for a self-employed tax. The other issue is that "L" company is owned by his uncle! Advice???? PLEASE HELP!!!!



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Old 01-13-2012, 03:51 AM
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“ We do not feel we should have to pay for a self-employed tax.”---> Using a 1099-MISC for an EE is A VIOLATION OF LAW unless your husband, the EE, is an independent contractor . Even If he worked as an employee for even one minute, then a W-2 is required.If you believe that your husband was hired as an employee of the L company, and not an independent contractor, but was given a 1099-MISC instead of a W-2, then he must file Form SS-8 to request that the government decide whether he was really an employee or an independent contractor. If the government decides that he was an employee, then the ER will be required to give your husband a W-2 .But remember; filing the FORM SS-8 may have the effect of souring the relationship between you , as an EE and your ER.I guess this is also your(partially) fault;asyou said,QUOTE,” When we filed taxes and entered the information from the 1099-MISC we received from the company, the tax software asked a lot of questions about being self-employed. We filed right at the deadline that year and, not knowing what to do, we just omitted that form and finished the rest of the taxes and submitted.” Basically, if he were truly considered an employee,but received 1099MISC Form , then you or your husband, since the ER has determined that an employer-employee relationship, needed(had to) to start off by asking his boss why he was choosing to file him as 1099. It may be financial breaks on his part not claiming him as his EE and in the process your husband could be losing benefits such as workman's comp and unemployment. If an ER makes a payment to an EE other than the wages, and the ER does not ask the EE to account for the expenses, then they issue 1099-Misc. Such income is reported on schedule C / Sch SE and Form 1040-- Profit or Loss from Business ,Sole Proprietorship. This is where IRS wants the employee to report such income. And, on this form the EE can directly deduct his expenses to earn the 1099-Misc income. I guess you need to contact the IRS or more information.



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