AboutShirley McAllister, CPP, PHR Expertise I can answer payroll questions, payroll tax questions, 401K questions. No stock option questions please and I have some knowledge of other pensions but am most familiar with the 401K pension.
I can answer U.S.and Canada payroll questions proficiently and have a good general knowledge of UK and South Africa and some knowledge of Australia and New Zealand Payroll procedures.
Please do not ask me homework questions I do not have time to answer them.
Experience 25 years with an international company in the Human Resources, Payroll and Payroll Tax areas.
Organizations SHRM, APA, I.O.M.A.
Publications I.O.M.A. and BNA
Education/Credentials P.H.R., C.P.P., Canadian Payroll Administrator, Successfully passed APA class on UK Payroll Administration.
Boise State University Human Resource Certification
Awards and Honors APA Hotline Citation of Merit for last 8 years.
Question QUESTION: Hi Shirley, I have worked as a law clerk at a law firm for nearly a year. I began my internship as a law clerk in June 2007. I am still in graduate school and work part-time. I was told when I was hired that I would be given a 1099 form instead of a W-2. I had no idea at the time that a 1099 would technically make me an "independent contractor" and that my employer could avoid paying taxes for my services. Even though I received a check with no weekly stub, I am required by my employer to follow a work schedule, to check in and check out from work. I was working full time in the summer on a regular schedule and switched to part-time when school resumed. My question is, do I have the right to ask my employer to give me a W2 instead of a 1099 since I am not an independent contract, have not worked on one assignment, and have been working there as a regular employee? I am a student and cannot even imagine how to cover not only my tax obligations, but the taxes that my employer would usually withhold from my taxes. If I am entitled to a W2, does my employer have the right to treat my income as net income or gross income? I have to approach my employer about this issue as soon as possible and want to know if he has a case for using a 1099 for me. Thank you in advance for your thoughtful consideration of this matter.
ANSWER: It is legal for an employer to pay an intern student as a 1099 independent contractor.
The check you received is called a stipend for doing the intern service. You were told when you were hired that you would be given a 1099 and not a W-2. If you did not understand what that meant the time to ask was then.
The 1099 income will be counted against your income for the year. If you did not earn enough to pay taxes than you do not have to worry about it. If you do need to pay taxes you will be paying on the amount you received. There is no gross or net for you. You received what you did it is the total payment.
If you did talk your employer into changing your status to employee and not independent contractor, which I am sure he will not do, than you would need to pay back the employer the taxes that would have normally been withheld from your check so he can send them in to the goverment. It is just as easy for you to pay them to the government.
I can't imagine that the income from an internship would be so great as to cause you to pay that much in taxes. You may need to check with a tax preparer if you have questions on how to file taxes.
Shirley
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QUESTION: Thank you Shirley. The amount is just under 10,000 for the year. Will the amount that I pay in taxes be significantly greater than I would pay under a W-2 regime?
Answer You will pay the same amount of federal and state taxes because that is based on your income so it is based on the 10,000.00. You are required to file taxes because you are over the exempt amount.
You will have to pay the fica and medicare on the wages and any federal and state taxes due on your income that your employer did not withhold.
You will need to file the 1040 form in order to pay the fica and medicare.
At this stage of the game you have had no taxes withheld so you really cannot go back and file the W-2 form. When filing for an employee on the W-2 the taxes have to be paid each payday or penalties are imposed. You would still have to pay the same amount of Fica, Medicare, state and federal taxes.
