I worked as an 1099 contractor for a small company over the previous fall. My fall contracting ended in early December, but my last paycheck never arrived. After I inquired about the status of the paycheck, the company informed me that they had to furlough their remaining employees after I had left (due to clients dropping the firm and not paying), and that my final paycheck (for hours worked before the furlough) was late due to that reason. The company was using a paycheck management platform to pay wages, but is offering to pay my missing wages over a money-transfer platform, not the previously used payroll management platform (which has all the tax information) while they wait for their remaining clients to pay the firm.
What are the tax ramifications for accepting this payment? If I do, how would I go about legally reporting these wages to the IRS as a 1099 contractor?
First you are either a sub contractor being paid on a 1099 OR an employee who is paid wages on a paycheck and gets a W-2 ... those terms are not interchangeable so are you a contractor or an employee ???
So ... if you are an employee the wages are reported in the year the wages are paid.
If you are a contractor and use a cash based accounting method then the income is reported in the year you get the payment NOT when you preformed the labor.
I am a contractor being paid on a 1099. I was receiving payment through paychex management previously. Now the company, for which the labor was performed, wish to pay through a social money-transfer platform.
Are there any ramifications for accepting this payment? Or would the company and myself just have to carefully track both methods of payment?
I understand that the income would be reported when I receive the payment.