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Posted by johnstacco on February 26, 2007, 12:35 am
Please log in for more thread options shed...@bloomington.com wrote:
> You do not need the EIN, as the 1099MISC is not attached to
> your 1040 unless there was Fed Inc Tax Withholding-which is
> very rare in my experience. You just report the income,
> probably on line 7 of the Form 1040. If you are a
> misclassified worker (you were really an employee of their's
> not an independent contractor, you report the income on the
> Tip Income Form 4137 and just pay your half of the Soc Sec
> Tax-which the 4137 does for you. You do not file Sch C, as
> this transfers to Form SE which computes double the Soc Sec
> Tax. This Form 4137 filing is allowed under Rev Proc 85-18.
> A "misclassified worker" is someone who is not "holding
> themselves out to the public as being in the business of
> performing the services rendered", which is usually
> indicated by just having 1 Form 1099MISC.
>
> If you had little or no significant investment in tools of
> the trade, except small hand tools, and you had no
> significant investment in advertising, letterhead, bus
> phone, insurance, and they supplied most everything, such as
> supplies, materials, desk, lighting, heat, etc., or they
> paid you by the hour or were able to tell you when to be at
> work, what to do at work, in which order to do the work, or
> could fire you ... you were probably an EMPLOYEE.
>
> If you had no way of loosing money without this work, you're
> probably an employee. Sure, you may not make any money
> without them ... but would you LOOSE money, such as paying
> for insurance, office rent, etc? If you were, in-fact an
> employee and were misclassified as an independent
> contractor, Sec 530 of the 1976 tax act and Rev. Proc. 85-18
> say that you are an employee even if your employer
> misclassified you, and thus only required to pay your half
> of the Soc Sec tax. This is done on Form 4137. Near the top
> of the page, in the blank lines below your name and SSN, you
> enter "FILED UNDER REV. PROC. 85-18" on the next line enter
> "SEC 530-WORKERS INCOME RECLASSIFIED AS WAGES". On the third
> line, you enter the employer's name. The Form 4137
> automatically only computes your half of the Soc Tax. The
> IRS never seems to investigate the employer for the
> misclassification, as they seem to have no way of capturing
> the information provided. Additionally, Sec 530 allows
> certain employers to legally misclassify workers in the
> trucking, construction, hair/ barber/beautician and other
> industries and under other limited situations. Ironically,
> one of the conditions allowing the employer to legally
> misclassify, is that they issue 1099MISC's to those earning
> over $600. OOPS. Not your problem...you just pay your half
> of the Soc Sec Tax (and of course the income tax, Fed and
> State). TaxCut should handle this on the 1099MISC input
> sheet, where you tell it to apply the 1099MISC amount to
> Form 4137. It'll do the rest, except you'll manually enter
> the 3 lines of info memtioned above. If the program won't do
> it automatically, just go to Form 4137 and enter the
> 1099MISC amount on Line 1, then enter and the 3 lines of
> info memtioned above. As a check number, line 12 should be
> 7.65% of Line 1, the 1099MISC amount. The Line 12 amount
> flows to line 59, Form 1040 and the 1099MISC, Box 7 amount
> goes to Form 1040, Line 7, and increases any amount already
> there.
>
> Confused? Don't feel bad, most tax preparers don't even know
> how to handle this one correctly.
Thank you for your insightful analysis Steve!
So I did a little follow-up research, it looks like I am
indeed misclassified. However, I discovered IRS form SS-8
"Determination of Worker Status for Purposes of Federal
Employment Taxes and Income Tax Withholding", and it seems
like you can't simply "reclassify" yourself but need to file
form SS-8 first, then wait for their ruling.
Or am I wrong about this?
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