My company paid me like a contractor for my tax year 2014 but I was treated like a full-time employee in every other way, so I don't have small business expenses or services--just the responsibility to save for taxes since they weren't automatically

My company paid me like a contractor for my tax year 2014 but I was treated like a full-time employee in every other way, so I don't have small business expenses or services--just the responsibility to save for taxes since they weren't automatically
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#1

taken out. Online tax form guides lead me to fill out information about my 1099 “miscellaneous income,” and then a host of other things that don’t really apply to me since I am not a small business. Is there a rate I should be paying other than the 15% self employment rate that this leads to? The income is less than $23k.


#2

For what ever reason is become very popular for companies to pay employees as independent contractors. If you worked under the direction of your boss, they paid you by the hour or by the piece, you worked set hours, and you used their equipment, you're an, employee. When you file your tax return, you simply fill out form SS-8, and let the Internal Revenue Service make the determination.  Doing this, will probably get you fired. However, you will only owe one half of self-employment tax at 7.65% instead of 15.3%. It will launch a formal investigation with the Internal Revenue Service and other employees, that are in your same situation will have their wages reclassed as employees as well.  I end up filing about three of these a year with very good success. You not an independent contractor, and shouldn't be subject to employer taxes.  

Craig W. Smalley, E.A.

Admitted To Practice Before The Internal Revenue Service


#3

This is how companies are staying under the 50 ee Obamacare limit in many cases. Don't know about yours. But you are definitely an employee based on what you said. The risk is on them. But the cost is on you - as they are making you pay their share of the FICA costs. That is why you are at 15% plus your income tax.

You have to pay it. If you have a good relationship with your boss - you might want to ask for enough extra to pay for the 7.5% on the FICA you are having to pay, that they would otherwise  be paying.

Maybe you should look for another job? No 401k, no match, you pay the FICA. Not a good situation for you.


#4

There are probably some deductions you are missing. Car expenses, for one. Perhaps a home office deduction if you used your home as your main place of business. Self-employed health insurance. You also can set up a retirement plan through the business. For 2014, you have until 10/15/15 to set up and fund a SEP IRA.

Your company is running a huge risk by paying you as a contractor. If you are injured on the job and are not covered by workmen's comp, they are in trouble. Plus you (and, I suppose, others being treated in the same manner) can report them to the Labor Department and the IRS.

Good luck and I hope this helps!


#5

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