I posted last month about how I should go about leaving my office, which was at best dysfunctional and at worst abusive and toxic. After yet another mismanaged deadline where I was made to take the fall for the principal's communication errors, I left. I have an exciting new opportunity on the east coast waiting for me. The new job starts in April. But with April comes tax season, and with tax season comes questions about employee classifications.
Many of you noted in my previous post that I wrote that many "employees" were on 1099 status, and many of you noted how dishonest this was for the firm. This is, as I understand it, a not so uncommon problem in small shops. Nonetheless, I was misclassified. I was called an employee by both principals, given a laptop with software, given a desk to work at, worked a full schedule in the office, and made site visits for the office as well - just like any employee would at an architecture firm. All the while, however, I was misclassified as a 1099, unknowingly receiving their payroll tax burden.
Here is what I know so far: I will need to file an SS-8 form with the IRS, which may very well lead to an audit of the office. In this process the IRS will determine how and if I was misclassified. Depending on that I will be owed the taxes that were not withheld. Is this process correct?
Who else has had to go through this process with a small office? Needless to say, it's my understanding that my identity has to be revealed to the principals in order for this to go forward, unfortunately. They may become litigious against me personally if they feel like I am acting maliciously.
this isn't the kind of thing to figure out yourself based on advice from the archinect committee on legal affairs. find a lawyer - there are many specialized in exactly these situations. presumably they could do a 15 minute call with you that would give infinitely better insight than you will get from a bunch of hack architects.
also if any money is owed you don't seem likely to be comfortable enforcing the demand to your former employer.
Requesting an SS-8 is a reasonable and customary thing that you are completely within your rights to do. You are simply asking the IRS to look at the situation and tell everyone who they see holds the tax liability. The odds of your old firm retaliating against you with a lawsuit of some kind are pretty low. I just don't see what they could sue you for.
I hope you possess written proof of this stuff: "I was called an employee by both principals, given a laptop with software, given a desk to work at, worked a full schedule in the office, and made site visits for the office as well". This evidence will clear up the SS-8 inquiry pretty quickly (although the IRS is understaffed and this whole thing could take a while)
"Depending on that I will be owed the taxes that were not withheld", yes, but don't expect a check from the old firm. If it is found you were misclassified, the employer will owe the IRS their share of your taxes along with interest and penalties. You may still owe some income tax at the lower rates of an employee. To get a partial refund of what you overpaid due to misclassification, you will probably need to amend your tax returns for years you paid self-employment tax.
The services of a small CPA firm can be very effective in getting your taxes straightened out.
A lot of people don't fully understand the additional tax burden they take on by working for someone as a 1099 contractor. The shady employers filling their offices with people as 1099s have no incentive to explain those things.
After Leaving Toxic Workplace, Tax Issues Accrue
Hello Everyone -
I posted last month about how I should go about leaving my office, which was at best dysfunctional and at worst abusive and toxic. After yet another mismanaged deadline where I was made to take the fall for the principal's communication errors, I left. I have an exciting new opportunity on the east coast waiting for me. The new job starts in April. But with April comes tax season, and with tax season comes questions about employee classifications.
Many of you noted in my previous post that I wrote that many "employees" were on 1099 status, and many of you noted how dishonest this was for the firm. This is, as I understand it, a not so uncommon problem in small shops. Nonetheless, I was misclassified. I was called an employee by both principals, given a laptop with software, given a desk to work at, worked a full schedule in the office, and made site visits for the office as well - just like any employee would at an architecture firm. All the while, however, I was misclassified as a 1099, unknowingly receiving their payroll tax burden.
Here is what I know so far: I will need to file an SS-8 form with the IRS, which may very well lead to an audit of the office. In this process the IRS will determine how and if I was misclassified. Depending on that I will be owed the taxes that were not withheld. Is this process correct?
Who else has had to go through this process with a small office? Needless to say, it's my understanding that my identity has to be revealed to the principals in order for this to go forward, unfortunately. They may become litigious against me personally if they feel like I am acting maliciously.
Thanks for any help
this isn't the kind of thing to figure out yourself based on advice from the archinect committee on legal affairs. find a lawyer - there are many specialized in exactly these situations. presumably they could do a 15 minute call with you that would give infinitely better insight than you will get from a bunch of hack architects.
also if any money is owed you don't seem likely to be comfortable enforcing the demand to your former employer.
Requesting an SS-8 is a reasonable and customary thing that you are completely within your rights to do. You are simply asking the IRS to look at the situation and tell everyone who they see holds the tax liability. The odds of your old firm retaliating against you with a lawsuit of some kind are pretty low. I just don't see what they could sue you for.
I hope you possess written proof of this stuff: "I was called an employee by both principals, given a laptop with software, given a desk to work at, worked a full schedule in the office, and made site visits for the office as well". This evidence will clear up the SS-8 inquiry pretty quickly (although the IRS is understaffed and this whole thing could take a while)
"Depending on that I will be owed the taxes that were not withheld", yes, but don't expect a check from the old firm. If it is found you were misclassified, the employer will owe the IRS their share of your taxes along with interest and penalties. You may still owe some income tax at the lower rates of an employee. To get a partial refund of what you overpaid due to misclassification, you will probably need to amend your tax returns for years you paid self-employment tax.
The services of a small CPA firm can be very effective in getting your taxes straightened out.
You never noticed that taxes were not being withheld when collecting paychecks?
A lot of people don't fully understand the additional tax burden they take on by working for someone as a 1099 contractor. The shady employers filling their offices with people as 1099s have no incentive to explain those things.
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