I’m an employee and my employer is treating me like an independent contractor. Is this going to mess with my taxes?

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I’m an employee and my employer is treating me like an independent contractor. Is this going to mess with my taxes?

I’m working for commission at a nail salon where they didn’t have me do any paperwork at all. They’re going to give me a 1099 at tax time and I’m wondering if I need a business set up for tax purposes. I looked at the IRS rules for employee vs independent contractor and I’m definitely an employee.

Asked on October 29, 2018 under Employment Labor Law, Mississippi

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 2 years ago | Contributor

There are two different issues here:
1) Your own taxes: you have to make sure that all the taxes, including the "self employment tax" (that portion of Social Security and Medicare which would be paid for the employee by an employer, but which a contractor has to pay for him/herself) is fully paid, and likely need to make estimated payments ahead of time. Speak to a tax preparer or CPA about this, to make sure you are paying the correct amount(s), at the correct time, to avoid penalties.
2) If you are correct and you should be characterized and paid as an employee (e.g. have the self-employment tax paid for you by the employer), then the employer may owe you back tax payments it should have made for you, possibly benefits which you would have received as an employee, etc. Employers must follow the law in regards to how is an employee and who is a contractor, and have to pay compensation and/or penalties when they don't. You may wish to contact the department of labor to inquire into fiing a complaint or claim for misclassification.


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