1099 misc vs W-2

[S T]

This has not been posted I don't think this season.

I have a taxpayer that received a W-2 from an employer and then also received a 1099MISC from the same employer. It is from a contractor, and taxpayer in Calif should not be receiving a 1099 MISC form as he does not hold a contractor's license. T/p should by Calif Employment Dev Dept standards be on W-2 form.

So how to treat the 1099 MISC form?

Sandy

[travis bickle]

And, what is the money on the 1099-Misc for?

I had a client who works in a community leasing office. Whenever she gets someone to "sign on the dotted line" she earns a "bonus".

Her employer just wants to pay her the bonus without taxes, etc. So, they pay her wages on a W2 and pay her bonus on a 1099-Misc [and, they screw that up again because they put the income in Box 7, as opposed to Box 3].

I simply enter the bonus on L21, non-SE and wait for the IRS to send a letter, so far in the last two years, they have not.

So, I repeat - what is the money on the 1099-Misc for?

[S T]

Seems

Seems like the money is pre hire like temporary employee, probation period of employment , then converted to wages. Often the case in Calif construction, so the empoyer doesn't pay payroll taxes or work comp.

There is no travel miles, employee expenses,etc reimbursement. There is nothing that this t/p could use as write off for employee business expense. He reports to the job site and works and that is it.

Sandy

[travis bickle]

In a case like this,

Seems like the money is pre hire like temporary employee, probation period of employment , then converted to wages. Often the case in Calif construction, so the empoyer doesn't pay payroll taxes or work comp.

There is no travel miles, employee expenses,etc reimbursement. There is nothing that this t/p could use as write off for employee business expense. He reports to the job site and works and that is it.

Sandy

your client may have to grin and bear it. After all, he did provide "services rendered" in his trade. And, it certainly seems as if your client was misclassified as an independent contractor v. employee.

The problem that you have now is, "Can this be corrected?" Certainly, IF the employer issues a corrected 1099-MISC and a W-2C. But, if that is not going to happen, I would report it on L21, designating it SE income.

And are you sure there are no expenses? What about the cost of handtools? gloves? welding rods? welders aprons? safety shoes? safety glasses? Did your client make absolutely no purchases of this sort?

Last of all, I recall that an individual can contact the IRS in cases such as this [misclassified as independent contractor v. employee] and complete a RIGOROUS questionnaire so that the IRS can determine the facts of the case. My memory, however, does not include where to go at the IRS website to get that information/form.

It might be worth your client's while to do this -- maybe it will "shock" this employer into setting things right, do not expect to get re-hired there if he does that though.

Finally, if they are doing all this to escape paying the proper taxes [FICA, worker's comp, etc] isn't that considered fraud? Last I knew the IRS office in Fresno was the point of contact for fraud.

Good luck

[David1980]

That questionnaire to determine employee or contractor would be an SS-8. They can send an SS-8 and then fill out 8919 on their tax return putting reason code that they sent SS-8 and haven't heard back.

But you have to ask, do they like their job?