Am I an independent contractor and will I get penalties?

[sblackshadow]

I work for a cleaning company that has labeled me as an independent contractor. The work is on average 3-5 hours per day, 2 days a week, at 40.00$ per job regardless of time worked, paid in cash. I have worked for them for about 4 years now and have not gotten a 1099 from them 3 of those 4 years. My boss is now trying to fire me for false reasons and I want to know what consequences the company can face as well as myself and if i am actually a independent contractor.  

I also never received any hiring information, contract to sign, or anything denoting if I am an employee or not. There was also no application process. The one 1099 that I received was 3 month after the end of filing deadline and incurred a massive penalty for me.

[VolvoGirl]

Have you been reporting the income each year?  How?  On what line on your 1040?
It should be on line 12 as self employed business income and not on line 21 as Other Income.

[Hal_Al · Accepted solution]

The IRS considers undocumented cash income (no W-2 or 1099-MISC), for work performed, to be self employment income. Enter at "Business Income & Expenses" and TurboTax (TT) will complete Schedule C or C-EZ for you and allow you to deduct any expenses associated with this income. You'll also have to pay self employment tax (social security) on any profits greater than $400. You report the income from your own records. If you get a 1099-Misc; it’s still reported the same way.

 You should have been reporting all that income for the last 4 years. 

 Are you an independent contractor? From what you describe, probably yes. It’s a gray area and the topic has been around a long time. See. http://www.irs.gov/taxtopics/tc762.html

 “I want to know what consequences the company can face as well as myself and if i am actually a independent contractor”.  If you haven’t been reporting the income; you’re in big trouble if the IRS finds out about it.. The company will be in trouble for failure to issue a 1099-Misc, but only if they paid you more than $600 in a year.

 There is a  way to contest the “employer’s” classification of you as a contractor. That is to pay your share of the Social security tax, each  year, on form 8919, filed as part of your tax return. You also have to submit form SS-8 and the IRS will determine whether you or the employer pays the employer portion of the SS tax. Even if you shoulda been classified as an employee, you will still owe income tax and half the social security tax