How to repot income improperly reported to the IRS

[tigerdaddy]

My wife worked part time for a company called EZ Rampz. EZ Rampz's business is to setup and operate ramps and portable elevators for disabled people when they go to vote at schools during elections. The bookkeeper of EZ Rampz mucked everything up because she embezzled money and took off. My wife received a 1099-NEC instead of a 1099-MISC.  It listed the money she actually received, but did not list the money that was withheld for taxes.  We don't have any records showing what was withheld for taxes.  Further the company is missing records.  I understand that bookkeeper did not report to the IRS what was being withheld from any employee and pocketed the money that was supposed to have been sent to the IRS.  I understand that the company is not making any effort to figure out the correct amounts because the bookkeeper also took her laptop which had all the records.  My question is that the 1099-NEC appears to state that my wife ran her own business, when she was actually an employee of the company.  I concede we are screwed and have to pay the unreported taxes on the income she actually received.  But, how should we report her income so it reflects that she was an employee and someone running her own business?

[ee-ea]

See this info

https://ttlc.intuit.com/community/accessing/help/how-do-i-file-a-substitute-w-2-using-form-4852/00/2...

https://www.irs.gov/pub/irs-pdf/f4852.pdf

[Mike9241]

My wife received a 1099-NEC.

an NEC may be proper though a MISC wouldn't change things.   we can't say whether she should have been treated as an employee and taxes withheld or as an independent contractor. 

It listed the money she actually received, but did not list the money that was withheld for taxes. 

if taxes were withheld, a W-2 is what she should have received - not an NEC not an MISC. this is something she should try to straighten out with the company she worked for. that's what the IRS wants you to do before filing  - get the correct tax form.  however, if unsuccessful read the instructions at the top of form 4852 because the IRS want's to know about any misfiling. then you would submit your return with form 4852 to best estimate what the w-2 would actually be.

https://www.irs.gov/pub/irs-pdf/f4852.pdf 

warning if the IRS concludes she was actually an independent contractor, it will send you a bill. the withholding claimed on the 4852 will be disallowed. in addition, she'll owe self-employment taxes on her net income.  plus the penalties and interest.

consider if you want to handle this yourself or use a tax professional.

[AnnetteB6]

Receiving a Form 1099-NEC indicates that the company did not consider your wife an employee.  They considered her an independent contractor.  The Form 1099-NEC replaced Form 1099-MISC for reporting non-employee compensation.  Form 1099-MISC would not have shown any taxes withheld either.  Receiving a W-2 would indicate that she was an employee and it would have shown taxes that were withheld.  

If taxes had been withheld from your wife's paychecks, then there should be check stubs showing that information.

That being said, since you have Form 1099-NEC, the IRS will expect to see if being reported on Schedule C for Business Income and Expenses.  If there were any expenses related to your wife's work that she had to pay, be sure to include those as well.  

Where do I enter Schedule C?

It sounds like the business in question may not even still be in business, but if you want to have the IRS check into the situation you can consider filing Form SS-8 on its own (not with your tax return).  Take a look at the following for more information:  Independent Contractor (Self-Employed) or Employee?