AboutMike Wellman Expertise I was a former Manager with Price Waterhouse, now PricewaterhouseCoopers, the largest accounting firm in the world. I have had clients in almost every industry and of every size.
I will only answer questions dealing with IRS problems such as delinquent tax returns, Offers in Compromise (Tax Settlement), IRS collection matters including installment agreements, liens, levies, seizures, audits, appeals, innocent spouse claims and injured spouse claims. All other will be referred to the question pool.
Experience Over 25 years experience in taxation specializing in IRS collections, examinations and appeals.
Publications New York Times, Wall Street Journal, Your Money.
Education/Credentials BBA, Baylor University.
Awards and Honors IRSOS.com won the Knowledgeweb award for educational excellence for content.
Expert: Mike Wellman Date: 1/24/2008 Subject: 1099
Question QUESTION: My son was hired by a gentleman to work in his buisness. He decided the hourly pay, gave my son a van to drive, & worked him around 40 hours a week. I have been told his boss was supposed to withhold taxes on my son but he didn't. Is my son now responsible to pay those taxes & if so on what form do we file? We have not been given a 1099 & cannot get in touch with the man. I have been told he is in jail. I really don't want a problem with the IRS
ANSWER: Yes, he will be responsible for the taxes. He will need Form 1040, Schedule C and Schedule SE. He does not need the 1099 to file. He can use his last paystub assuming it has the YTD information.
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QUESTION: I was told under the fair labor standards act that the responsibility fell on the employer. Determination of worker status for purposes of federal employment taxes & income tax withholding could be filed on form ss-8 and filed with the IRS
Answer Employers are responsible for withholding and paying over taxes of employees - but not for contractors. The problem is, your son took a check every week that had no withholding on it - so it is not a surprise that he finds himself where he is now.
I am not unsympathetic. He probably should have been classified as an employee. And yes, an SS-8 will result in an investigation of the matter. However, even if he wins - your son will still be responsible for the income taxes and his share of social security. But it is not a sure thing.
He can file using the forms I told you about - or he can file claiming the income as wages using a substitute W-2. One advantage to filing a Schedule C is he can deduct expense he may of had and could actually result in lower taxes overall.
