Received an Irs Form W-2 instead of 1099-MISC
Q.I was employeed full time with company ABC for the first 3 months of Year 2003 and the then became self-empolyeed for 8 months. I was working as a Independent Contractor for the same company ABC. I asked the company to withhold my Federal, State, SS and Medicare taxes. They did this and then at the end of the year they gave me an Irs Form W-2 instead of a 1099-MISC. This is a very complex case (I think). I am not sure if I should file as a self-employeed since I was self-employeed and paying for my health insurance premium and other expenses. OR, do I file as a regular employee since I have an Irs Form W-2. If I file as a regular employee, then I cannot deduct my expenses such as health insurance premiums, travel, meals, car, computer, etc. Has anyone been in the same boat as me. Looking for "bright" ideas.
A.Only because you don't have a clue what the law is. Employee vs. independent contractor is not dealer's choice. It's a question of facts and circumstances. Clearly the payor regards you as an employee, which fits with the withholding of taxes. Payors don't withhold anything from independent contractors, who are responsible for making estimated tax payments. It is possible to structure a working relationship as either, but it has to be done on more than flipping a coin. See IRS Form SS-8 for the common law tests that determine which it is. How did you "become" self-employed? Exactly what changed when that happened (i.e. whose equipment did you use to do the work, what kind of supervision were you under, etc., etc)? And did you work for any company other than ABC? Just because you (and even ABC) call yourself self-employed doesn't mean you are. Employee vs. independent contractor is a facts and circumstances thing, not a "here's what I call myself" or a "here's what my boss calls me" thing. Here's the IRS's (long!) training materials on the matter: http://www.irs.gov/pub/irs-utl/emporind.pdf For something a lot shorter, see http://www.taxprophet.com/apps/active2/indep-mm.html which has the so-called "20 question/factor test" So go through it and see if you were really self-employed at all, before wondering what to do about getting a W-2 vs. a 1099-MISC, as it may turn out you were really an employee all along, regardless of what you want to call yourself.
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