My employer never had me sign a w-2 or w-4 and paid me under the table for 4 months. I kept asking her to set things up right so neither one of us would have problems. She said she would worry about it in 2016 and get things set up correctly. Now as taxes

I worked for a girl cleaning houses for the past four months. She paid me under the table and when I told her on week two that I felt she needed to set up things correctly so that there wouldn't be any problems she stated that she has had so many different people working for her the past year that it would be too much trouble. She also stated that she would set up things right for 2016 and do a payroll system with her accountant. Well the end of 2015 came and she is mad because she owes so much in taxes. She never had me fill out any employment forms such as a w-2 or w-4 and we never discussed a 1099. Now she is wanting me to file as an independent contractor. I have never provided my social to her. We had a meeting with her accountant at which I was told they will send in a 1099 on me anyway. Do I have any recourse? I know I should have never accepted payment under the table and I probably due owe taxes which I will handle. However can I report her? I also have three other people who worked for her and quit but she isn't going after them. Can I sue her?

3 answers  |  asked Jan 26, 2016 7:02 PM [EST]  |  applies to Florida

Answers (3)

Phyllis Towzey
Another option for you is to report this matter to the Department of Labor. It appears from the information provided that you should have been an employee, not an independent contractor - but, as Mr. Schofield noted, this is a fact-specific inquiry.

If you contact the Department of Labor, an investigator will look into this matter for your protection and the protection of any other misclassified employees. If you were working more than 40 hours per week, you may be entitled to receive unpaid overtime.

The Department of Labor has recently been working hand in hand with the IRS to to after employers who are misclassifying workers as independent contractors, and failing to pay proper withholdings. .

posted by Phyllis Towzey  |  Jan 28, 2016 09:50 AM [EST]
Neil Klingshirn
One difference between an independent contractor and an employee is self-employment tax, which is the contractor paying the employer's portion of the social security and medicaid taxes. The total is over 7%. It is a big, hidden tax on independent contractors.

I am not sure, but I believe that employees who are improperly classified as independent contractors can file a complaint with the IRS, which will then credit the employee's social security account for the wages earned that year, and pursue the unpaid social security tax from the employer.

Either way, though, Arthur is right about ordinary income taxes. You owe ordinary income tax on the amounts paid under the table and have an obligation to report that income and pay the tax on it.

posted by Neil Klingshirn  |  Jan 27, 2016 09:05 AM [EST]
Arthur Schofield
Whether you were an IC or an employee would require a greater factual analysis then you provided. Much of the question turns on the level of freedom you are given: who sets the rates, who sets the hours, who sets the rules when you are working. As an IC she can issue a 1099, as an employee she had withholding obligations. Either way you have a tax obligation on the income. Only difference being whether you paid it per check through withholdings or at the end of the year based on the income reported to the IRS. This will be her issue and will have to deal with the State and the IRS. Your issue will be only to pay the tax on the income.

posted by Arthur Schofield  |  Jan 27, 2016 06:45 AM [EST]

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