JK Harris Offers Advice to Misclassified Employees

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JK Harris and Company advises the IRS has a new form to help employees who are misclassified as independent contractors.

Employee or independent contractor? If you have been wrongly classified as an independent contractor, JK Harris and Company, LLC, says there is a new form you can file to set the record straight with the IRS.

Form 8919, Uncollected Social Security and Medicare Tax on Wages, can be used if a taxpayer was an employee, but the employer did not withhold the Social Security and Medicare Taxes.

For employees, this form can be a good thing. However, it may be not so good for the employer.

"It's good for the employee because they get out of paying Self-Employment Taxes," said Ralph Havens, Director of Professional Services and long-time Enrolled Agent for JK Harris, the nation's largest tax resolution firm. "But, the employer is going to pay his share of FICA and Social Security taxes, and get fined for filing and paying late. The employer is also going to have to pay the Unemployment Taxes, and get fined for filing and paying late."

Generally, employees receive Form W-2 from their employer. Independent contractors normally receive a Form 1099-MISC. And they must report the income on a Schedule C and pay self-employment tax on the net profit using Schedule SE.

To use Form 8919, the taxpayer must also meet certain criteria, which can include but is not limited to the following:

  • You have received correspondence from the IRS stating you are an employee.
  • You were previously treated as an employee by your employer and are performing services in a similar capacity and under similar direction and control.
  • Your co-workers are performing similar services and are treated as employees.
  • You filed Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding, and received a determination letter from the IRS stating you are an employee.
  • You filed Form SS-8 with the IRS and have not yet received a reply.

"A good thing is, you can file Form 8919 with your tax return, you don't have to wait for a ruling to have the determination made," Havens said. "You do need to send the SS-8 tot he IRS separately. But then you are subject to pay your share of the FICA and Social Security Taxes."

Just keep in mind that even though you submit the forms to the IRS, it doesn't mean the IRS is going to change your status or that your employer isn't going to contest it. If that's the case, you will have to file an amended return and pay the additional tax.

About JK Harris:
JK Harris & Company, LLC, (http://www.jkharris.com) based in North Charleston, S.C., is the nation's largest tax resolution firm and has served over 200,000 customers since its founding in 1997 by John K. Harris. JK Harris consultants are available to meet with consumers in over 425 locations nationwide by appointment only. The company also provides services for student loan debt, fee-based financial planning, tax return preparation, and audit representation.

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