1099 Nightmare

SFCardiacRN · Mar 4, 2006

Happened to me also. You must get an accountant to help you. I was able to file an "offer in compromise" and get a 12K tax liability lowered to 3K. The lure of big agency money blinded me to all that I was giving up. The "big money" turned out to be no bargain.

Jo Dirt · Mar 4, 2006

What is pathetic about this situation is that there was no big money involved. I was desperate for a job at the time and they had openings. I haven't even gotten a cost of living raise. But fool that I was, I thought I would still be taxed only above a certain amount and I would be able to count my three children as deductions.

AggieNurse2B · Mar 5, 2006

Wow. A nurse needs MY expertise for a change!

There are certain guidelines the IRS uses to determine whether you are, in fact, an independent contractor. The agency doesn't get to decide that. More than likely, you will need a CPA to go to bat with IRS for you, if that's what you decide to do, but in the meantime, you can get the guidelines at http://www.irs.gov/govt/fslg/article/0,,id=110344,00.html.

Hope this helps!

cyberoid · Mar 5, 2006

If you haven't sent in withholding taxes on a quarterly basis, but you have the money in the bank, often the IRS will accept an annualized payment much like your annual income tax payment as an employee, except that you are paying all of your taxes. If you haven't the money, the IRS may consent to an installment payment plan if you meet its criteria. All in all, they're actually pretty nice about these extenuating circumstances, especially if you're confronting the rules for the first time.

fotografe · Mar 5, 2006

Oy, sorry to say that was not my experience with the IRS (siding with the individual). I worked for a company (not nursing) that was supposed to be paying my taxes, but they didn't. I was clearly an employee and not a contractor. At tax time, their accountant sent me a 1099 as they had not paid any of the payroll taxes. I contacted the IRS to find out what to do. Their answer -- pay the taxes. They said that while the company was clearly in the wrong, companies come and go. All they have to do to avoid the liability is close down. I, however, can be tracked until I die (and maybe even after), so they will go after me for the money. I ended up paying it off over 5 years. I didn't know I could negotiate it down. I would try and do that if the reclassification does not work.

This is the first year I have filed a 1099 and it is a shock to say the least. When I signed on with the agency and they informed me I would be an independent contractor which meant they would not take out any taxes I didn't realize there would be many traps that would leave me not owing hundreds but THOUSANDS of extra dollars than if I had been a regular employee. Of course, the agency did not tell me about this.
I've heard I can file a misclassification form that will require the company to front the tax money until the IRS investigates the situation. I have also heard that 9 times out of 10 the IRS will side with the person who filed the misclassification form.
Has anyone had any experience with this?