Something fishy- tax/employment

[Forevryoung]

I work(ed) for a mom and pop business as an employee from Sept 08-Feb 10. March 1st came and they wanted me to work as an independent contractor (most in the field work this way). I agreed to the change and found a new job that started at the end of March.

I have continued to work a few hours a week as an independent contractor for the previous company.

This week they sent me a check that was back pay from Jan that had gotten lost in the shuffle. They didn't take any taxes out of it (as I'm NOW an independent contractor) so I'm responsible for "their portion" of taxes (employee vs self employed). The same thing will happen for Feb and it will be a large chunk of change at that point (they would save money and I will have to pay it in taxes instead).

I sent the payroll person an email asking for clarification but this is really bothering me. Anyone have any ideas?

 

[marlynnp]

Are you now as an independent contractor charging more for your services?

 

[vicki_c]

I work(ed) for a mom and pop business as an employee from Sept 08-Feb 10. March 1st came and they wanted me to work as an independent contractor (most in the field work this way). I agreed to the change and found a new job that started at the end of March.

I have continued to work a few hours a week as an independent contractor for the previous company.

This week they sent me a check that was back pay from Jan that had gotten lost in the shuffle. They didn't take any taxes out of it (as I'm NOW an independent contractor) so I'm responsible for "their portion" of taxes (employee vs self employed). The same thing will happen for Feb and it will be a large chunk of change at that point (they would save money and I will have to pay it in taxes instead).

I sent the payroll person an email asking for clarification but this is really bothering me. Anyone have any ideas?

If you were not an independent contractor during the period that they just paid you for (so January and February coming as well), they need to pay those taxes and take them out of your check. Your being responsible for those taxes only takes effect as of the date you became an independent contractor, so hours worked after March 1.

I'm guessing that they now have you set up in their system as an independent contractor so no taxes come out. Because you are set up that way - the new payments automatically came out that way, even though that is wrong given the dates. Their system may not be set up handle multiple situations with the same exact person/company without setting you up as an entirely separate "new" entity as of March 1. Instead, it sounds like they just changed your classification and so now anything that gets paid to you will be handled that way, because the system doesn't understand that prior to March 1, it was 1 way and after March 1, it's a different way.

I'm guessing they will fix it up once you talk to them about it because legally they owe those taxes prior to March 1.

 

[Forevryoung]

The company establishes the fee for service and they didn't give me a raise when the change occurred which I thought was strange.

I'm "requesting" a significant raise with the idea that I will leave if they say no (significant meaning raising it to the average which is $5 more an hour). I will wait till June to make that request.

Back when these services were provided in Jan (and billed as such) my salary was considerably less than the average, in Feb it increased slightly.

I know I was taken advantage of (first year out of school) BUT that doesn't mean that I can let them continue to take advantage of me.

 

[Forevryoung]

I'm guessing they will fix it up once you talk to them about it because legally they owe those taxes prior to March 1.

THIS is what I needed to hear

If they don't change this, who do I talk to?

 

[Cheshire Figment]

Here is a good place to start http://www.irs.gov/businesses/small/article/0,,id=99921,00.html possibly even providing a copy to the employer. And you can follow some of the links,

 

[meriface11]

i have no idea what you do, but are you sure that the work you are doing passes the test for you to be an independent contractor? your employer might be trying to skirt paying payroll taxes, but if the work you are doing is really that of an employee and not an IC, both you and your employer could be on the hook for back taxes and penalties in the even either of you get audited...just saying.

 

[wdwfan16]

I work(ed) for a mom and pop business as an employee from Sept 08-Feb 10. March 1st came and they wanted me to work as an independent contractor (most in the field work this way). I agreed to the change and found a new job that started at the end of March.

I have continued to work a few hours a week as an independent contractor for the previous company.

This week they sent me a check that was back pay from Jan that had gotten lost in the shuffle. They didn't take any taxes out of it (as I'm NOW an independent contractor) so I'm responsible for "their portion" of taxes (employee vs self employed). The same thing will happen for Feb and it will be a large chunk of change at that point (they would save money and I will have to pay it in taxes instead).

I sent the payroll person an email asking for clarification but this is really bothering me. Anyone have any ideas?

Did they pay you your hourly rate when you were a W2 employee of your new rate as a 1099 consultant?

 

[vicki_c]

Did they pay you your hourly rate when you were a W2 employee of your new rate as a 1099 consultant?

That's an interesting twist to the question that I didn't think of - I was just assuming it was the old employee rate.