Tax Year Prior to 2020: Incorrect 1099: enter as W2 or as Misc Income with Form 8919

[workerbeeworker]

Hello,

I received a 1099 from my employer when it should have been a W2 instead. (Went through the determination list and will be filing form SS-8 before filing my return this year.) I read that if I truly believe the determination will be in my favor, I can file that income as a W2 (instead of waiting for the determination and amending my return next year) and fill out Form 8919.

My question is: Do I enter the income from the 1099 as a W2 OR do I enter it as "Misc Income/Other Income Not Already Reported on A Form W2 or Form 1099"?

When I enter the income as a W2 (and obviously have "$0" under any FICA) the total tax that I owe is substantially less than if I were to enter it as "Misc Income/Other Income Not Already Reported on a Form W2". Does anyone know why the tax owed would be different depending on how I enter this income?

Thanks in advance for any help.

[AnthonyC]

The tax owed is different because you aren't paying your share of the FICA taxes when you just enter the income as only W2 with 0 as .  You are still responsible for your share of the FICA taxes just like any other W2 employee would be and that is the purpose of Form 8919.

Entering your income through the below method will allow you to pay the appropriate employee share of payroll taxes (as well as income), but will alleviate you of the additional burden of the employer share that you would bear as a self employed person.  

This information is entered in a different area of the program then regular W2s.  It is found under Federal (or Personal) Taxes -> Wages and Income -> Less Common Income -> Misc Income -> Other Income Not Already Reported on A Form W2 or Form 1099

The quickest way to get there is to use the search feature in the top right hand corner (magnifying glass icon).  

• Log into your account and click Take Me to My Return (you must click this first or you won’t get the “jump to” link in the next step
• Search for "8919" and then click the jump to "8919" link.
• You will get sent to the Other Wages Received Page
• You will click Yes and proceed until you get to Any Other Earned Income
• Click Yes to this question because you have other income that should be on a W2
• Leave check next to employee compensation that was not reported on a W2
• Next screen will be Employee Compensation that was not reported on a W2
• This screen will explain Form 8919 and SS-8.  TurboTax will prepare and file Form 8919 for you with your return, but you will need to file SS-8 on your own (link below)
• Next screen will have to report your wage information
• Next screen will remind you that a Form SS-8 is required
• Next screen will ask if these wages were reported on a 1099MISC
• That will be the end of this section (program interview may go on to ask about other less common income types)

Form SS-8 Determination of Worker Status - link to form and instructions:

https://www.irs.gov/pub/irs-access/fss8_accessible.pdf

https://www.irs.gov/pub/irs-pdf/iss8.pdf

[workerbeeworker]

Hi Anthony, 

Thanks for your reply, it's very information.

If I enter the income as Misc Income as you suggested, am I paying the full 15% (the 7.65% employee and the 7.65% employer portion of the tax) and then I will receive a refund for the 7.65% of the employer portion later?

Turbo Tax seems to be the only software with a Misc Income section like this, so just want to understand before proceeding.

Thanks again

[AnthonyC]

No, with this method - you would only pay your share of the FICA taxes - not the employer portion.

Now, later on, if you were found to NOT be an employee, the IRS would bill you for the remainder portion. 

[taxmoore]

Anthony,

 I followed these steps in the turbotax software. I received both a W2 and a 1099-MISC from my former employer. They are attempting to avoid paying FICA taxes on bonuses they paid me. It says not to file SS-8 if I choose reason H on form 8919. Is this correct? I feel like filing an SS-8 is the safe way to make sure I am classified as an employee. I was paid a regular salary reported on W2 so it is pretty cut and dry I was an employee. Should I choose reason H?   "I received a Form W-2 and a Form 1099-MISC from this firm for 2018. The amount on Form 1099-MISC should have been included as wages on Form W-2. (Don’t file Form SS-8 if you select reason code H.)"

Also when I print out my return from TurboTax form 8919 shows reason H in column C but  in column E it does not check the box that says I received a 1099 for this income.  The turbotax software is not checking that box even though I chose reason H which states that I did receive a 1099-MISC

Help!

[KarenL]

@taxmoore In your situation, Form 8919 is the correct form to file with Reason H.  However, Form SS-8 is not required since you received a W-2 from the same employer.  It won't hurt to file a Form SS-8, but it might confuse the IRS as it's two separate things.   You are okay that the box isn't checked in Column C because Code H already answers that question.  That is mostly for reporting income that no W-2 was received from the same employer.  You should be good!