My boss classified me as a 1099. I have worked 9 months, I have received built up vacation time. I work Monday thur Friday 8-5 pm, Weekends off, I receive overtime. I work from the office on his computers. I answer the phones, do the payroll, accounting, invoicing. I have my own business cards provided by him with the title COO. I am now getting laid off and i was stupid not to look into 1099 status until now and i see that i can not receive unemployment since i have not paid into it. Should i open up a SS-8 on the employer? If i file unemployment will they research that i am an employee? My boss does give me a lot of freedom but i work like everyone else doing daily tasks and jobs that he sometimes lays out for me and i pick up his son on occasion. All business related expenses are covered by the company. (Mileage, Parking, etc). I will have made about 24000 , what will my estimated tax amount be? THANKS for ANY and ALL help. I have learned to do some research before had.
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You do not pay unemployment insurance, your employer does.
The way it sounds, he has certainly not treated you as 1099 status, and it sounds tome he was trying to get away with not paying social security or unemployment on your behalf (it saves him big bucks).
I believe what he has done is illegal and could get him into serious IRS trouble. You can still go to your unemployment office, and make a claim, and if he has treated you as an employee (in my opinion, you meet every criteria as an employee, not an independent contractor), he is responsible for paying unemployment and all other taxes on your behalf. You may NOT be screwed in that area, but your boss sure is. You can always make a free call to the IRS to get clear on their guidelines for employees/contract employees are.
Your tax liability is huge -- as a 1099, you have to pay both employee and employer social security tax -- about 17% right now, I think, on top of your income taxes.
Your boss may reconsider laying you off if he knows you are going to unemployment...or dialing the IRS -- he (or his accountant) has GOT to know that, if nothing else, what he has done constitutes a big, nasty IRS mess (can we say really big fines and back taxes?)
Get thee down to unemployment. Start dialing.
JUST ADDED: I just added the IRS web page that defines employee, contractor, etc. Yup, I'd say you were an employee, and not a contractor.
The consensus here is that you were an employee. I agree.
If you do not protest your status via the SS-8 route, this is what happens:
1. Tax on all your wages
2. Approximately 15% of your pay to payroll taxes.
If you succeed in getting yourself classified as an employee, you still owe
1. Tax on all your wages
2. 7.65% of your pay to payroll taxes.
So the difference to you is 7.65% of your pay, or $1,800.
As you have discovered, if you are not an employee, you cannot collect unemployment benefits.
So, to save yourself about $1,800 in payroll taxes, and to collect unemployment benefits, you will need to file the SS-8 with the IRS and to file a complaint with your state labor board.
Your boss classified you as a consultant therefore you were never an employee. I would check the IRS guidelines to see if you met the parameters of a contractor.
Without looking at your income and expenses it is hard to say what taxes you will be paying. I assume no payroll taxes were taken out previously and you did not pay estimated taxes from your income so will have to pay plus penalty.
Consult the IRS and your tax accountant to verify your status and tax payments.
Good luck.
when you are a private contractor you pay all of your ssi taxes yourself. in other words if you were an employee, single, they would take out about 25 percent of your pay for all taxes. when you are a private contractor you will be paying out anywhere from 33 to 40 percent in taxes. also you will have to file and pay quarterly estimate taxes to both the federal and state.
It sounds to me like you were an employee and the employer is trying to circumvent the payment of payroll taxes. Whether you pursue unemployment or not depends on how you feel about your employer. I would.
How much tax you will be owing will vary by state and your deductibles. The reimbursements you received for mileage, etc are not taxable and will not be included on your 1099. He claims those as an expense for his company and while he reports the money given to you it is not "income". You should owe 6-8k if you did not pay quarterly. I hope you at least saved, otherwise you have a bigger problem then loosing your job.
You can't claim unemployment, you were not employed by them. It is pretty cut and dry. The EDD will know instantly, as there will be no money in your account for them to pay you with.
How did you not notice that you were not having Federal or State taxes taken out over the past nine months.
If you have had taxes withheld, then you are an employee not a contractor. (even if he did not withhold for disability etc).
I suggest pursuing unemployment either way however until you find another position.
If you look like an employee, act like an employee, work like and employee and are laid off like an employee....you are probably an employee
I would contact a labor lawyer or the fair labor board to identify your rights, responsibilities and options.
Good luck