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What should I do when filing taxes if my employer improperly misclassified me?

On Behalf of | Aug 9, 2022 | Tax Controversies |

In general, when you work for someone else, you will either be an employee or an independent contractor. Employees are more costly to the employer, so it is very common for them to try to classify workers as independent contractors.

But the requirements for this classification are rather strict. It isn’t uncommon for an employer to misclassify, which will impact tax obligations.

Employee vs independent contractor taxation

The IRS explains employers must pay a portion of taxes for all employees. Independent contractors pay that portion on their own taxes.

Mistakes on your taxes

If your employer classified you as an independent contractor when you are really an employee, you could face some issues when you go to file taxes because you had no withholding from your paychecks. But the error does not mean you do not have to pay your taxes.

Fixing the error

You will need to file a special document, Form 8919, Uncollected Social Security and Medicare Tax on Wages. This form will allow you to pay the money your employer should have withheld from your taxes. However, you will not be responsible for the employer portion of taxes because you were an employee, and that was the responsibility of your employer. The IRS will likely penalize your employer for improperly classifying you and make the employer pay the other taxes.

It is important to be honest when filing your taxes. Paying them is a legal requirement regardless of whether your employer made a mistake. You need to ensure that you pay whatever portion you legally have to pay, or you could face penalties.