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I was employed as a W2 employee, part way through the year my former job began paying us in cash. I have just received my W2 and a 1099, never agreed to be a contractor.

My former employer just sent me a w2 and 1099, even though i never agreed to be an independent contractor, mid yea last year she began paying cash but it seemed like taces were still being deducted yet my 1099 only shows non employee wage. Will i be screwed into paying 

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1 Reply
IsabellaG
Expert Alumni

I was employed as a W2 employee, part way through the year my former job began paying us in cash. I have just received my W2 and a 1099, never agreed to be a contractor.

You may still wind up paying Self Employment tax on this income. You can object to this, though, when you file your tax return.

After you enter your 1099-MISC, you will answer questions that follow. On the screen Does one of these uncommon situations apply? check "Your employer reported this extra money on a 1099-MISC, but it should have been reported on a W-2."

On the next screen, you will see information about filing form 8919 to report this income. One of the indications noted in the Learn More link is "You formerly worked for this company as an employee and you are performing services in a substantially similar capacity and under substantially similar direction and control."

You will still have to pay what would have been your share of Social Security and Medicare taxes withheld from normal wages.

See this link to the IRS discussion of Employee vs Independent Contractor: https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-o...


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