What happens if my employer sent a 1099 instead of a W2?

[calebdevany]

I should not have been a contract employee.  As such, my employer did not pay the proper payroll taxes.  What can I do on my return to show a W2 if they did not issue one?

[GilbertC · Accepted solution]

If you do not agree with this classification you can speak with your employer to request to be treated as an employee and given a W-2.  If your employer refuses you can file Form SS-8 with the IRS.  This will request the IRS to look at your employment situation and make an official determination as to whether you are an employee or an independent contractor.  The IRS will contact your employer to gather facts from them to make this determination.  If you choose to do this you can enter your 1099-Misc in Turbo Tax and for the reason received select "I got this 1099-Misc for another reason" and then "My employer reported this extra money on a 1099-Misc but it should have been reported on a W-2".

If you decide not to file Form SS-8 then you will be treated as an independent contractor for tax purposes.  This is not always all bad though since you can deduct any unreimbursed out of pocket expenses you may have directly against your income.  As an employee you could take a deduction for these expenses but they would be reported as an itemized deduction subject to a 2% of AGI limit.  This means that if you use the standard deduction or if your expenses were not more than 2% of your adjust gross income then you would not see a benefit from the deduction.  As an independent contractor you can take the expenses even if you use the standard deduction and you do not have a 2% floor on your deduction.