My boss says I'm an independent contractor so that he doesn't have to pay taxes for me. What can I do?

I am an insurance agent who works for an insurance broker. We have to be in the office from 8:50am-5:00pm. We are not given a lunch break and eat at our desks. We are told which companies to write policies with and how to handle customer service. We are told which holidays we can have off and whether or not we can have a day off for personal reasons. We are paid for sick days and we are paid for vacations. The part that really bothers me is that my boss created a fictional entity called the "team" that supposedly makes all of the decisions for myself and the other agents. He says that this relieves him of any liability and that he can't be touched because the "team" decided to do things this way even though he makes all of the decisions. What can I do? Thank you in advance.

Karil

I have a canned explanation to apparently clueless independent contractors and, if you are asking relatively simple questions in this forum, no offense, but you qualify as clueless:

Some employers try to get around paying employment taxes (social security and unemployment) and other employee benefits like workers compensation insurance by improperly classifying employees as independent contractors. The basic issue is the amount of control the employer has over the worker. If you are required to show up for work--personally--at a particular time, punch the clock, use the employerâ€™s equipment and are paid an hourly rate, or another set rate based on time served, you are an employee. If you didn't understand the difference when you posed your question, I would be even more convinced that you are an employee. Also, if you don't have your own sales license, you are definitely an employee.

What is your preference, Slotted or Phillips? Complete an IRS Form SS-8 to get an official ruling on your status. This will help you get unemployment if you get fired. When you file your income tax return, you can attach Form 8919 Uncollected Social Security and Medicare Tax on Wages and only pay the employee's half of social security. You will still have to cough up all the income tax. IRS and the states are stepping up enforcement in this abuse area.

You can file a form SS8 with the IRS to ask for determination of status, employee or contractor. Unfortunately, you could end up out of a job on this one. Your call - there's no real good way when you are working for a jerk. Any chance of just finding another job?

First, line up another job, because when you challenge your employment status and your boss has to pay, you will likely be fired.

Then, file Form SS-8 and then with your tax return, attach Form 8919. These forms are designed to handle exactly your situation.

SS-8 requests that the IRS determine whether you are an employee or not. Form 8919 allows you to pay your share of SS and Medicare but not file as self-employed.

If the IRS denies your application to be treated as an employee, you are no worse off than you are now. You would have to file as self-employed and pay the additional SS and Medicare taxes.

Your boss is a donkey. He can't do that. From your description, you are not selling and are not a statutory employee. Hopefully, you have been sending in estimated tax because the IRS probably already knows whom is working for the company. Every one's going to get nailed if they do not send in estimated tax. That clown of a boss you have is also violating Federal labor laws and the labor laws of the State you are in. Most States state in law that an employer HAS to give you an unpaid 30 minute break after 5 hours max; 20 minute paid break after 4 hours max. And the goon IS your employer. He's going to be held liable by the IRS for your income tax withholding. The State will likely do the same things. You need to talk to your local police to ask how an eye can be kept on him. He's probably getting ready to board a private plane and flee the country:

Caution: If you incorrectly classify an employee as an independent contractor, you can be held liable for employment taxes for that worker, plus a penalty.

Who is an Independent Contractor?
A general rule is that you, the payer, have the right to control or direct only the result of the work done by an independent contractor, and not the means and methods of accomplishing the result.

Example: Vera Elm, an electrician, submitted a job estimate to a housing complex for electrical work at $16 per hour for 400 hours. She is to receive $1,280 every 2 weeks for the next 10 weeks. This is not considered payment by the hour. Even if she works more or less than 400 hours to complete the work, Vera Elm will receive $6,400. She also performs additional electrical installations under contracts with other companies, that she obtained through advertisements. Vera is an independent contractor.

I have seen this before. It really is a shame. Unless you made a very low income and have a lot of deductions, you are going to owe a substantial amount of income tax. If your dependent is your child and is under age 17 as of December 31, 2007, you can receive up to a $1000 credit, called the Child Care Credit. It's too late for you to launch a business effective in 2007. If you wanted to do a fiscal year arrangement, the IRS would deny you permission or make you do a calendar year first. So you cannot take those deductions nor the large Section 179 deduction. The only thing you can do is start a traditional IRA by April 15. That you can do to blunt the impact of the awful tax bill. A Roth IRA is not tax deductible. If your employer refuses to take out tax, you should send in estimated tax on an IRS Form 1040-ES. You can do it electronically with the IRS. The IRS will allow you to slide for a quarter, but no more. For 2007, you can ask the IRS to forgive the penalty, but there's no chance. I think I saw one time where they forgave the interest, but it was not much interest. I've never seen the Agency forgive the penalty.
Ask your employer to give you your W-2. If they refuse, ask if they are going to mail a 1099-MISC that has box "7" - non-employee income - filled in. That means you have to fill out a Schedule C. Go through your checkbook, your credit card bills, your total mileage for 2007, the miles you drove while you were on the job visiting those families, the equipment you had to buy, etc. What I am saying is that you need to obtain all the legal deductions you can. Begin saving ALL your receipts and keep a diary of your expenses. If you don't know the mileage you drove, look at the State inspection receipts. The mileage is there and you can interpolate. Think of work related cell phone calls, look at your bills, etc.
If you are sent a 1099-MISC with Box 7 filled in, you have to pay what the IRS calls Self-Employment tax. You have to fill out a Schedule SE-Form 1040 and eFile or mail along with the other income tax forms. This is actually social security tax and none of us can out of that tax either, unless you register as a member of a "religious order", as the IRS calls it. If you live in one of the 43 States that have income tax, you have to pay State income tax, also. I know all this because I had clients in this very same situation. Don't give up. Get something to hold your receipts: a shoebox or anything to start. As the years go by, you will become better and better organized.
Complete an IRS Form SS-8 to get an official ruling on your status. This will help you get unemployment if you get fired. When you file your income tax return, you can attach Form 8919 Uncollected Social Security and Medicare Tax on Wages and only pay the employee's half of social security. You will still have to cough up all the income tax. IRS and the states are stepping up enforcement as there is severe abuse.
These people are trying to get out of paying Workers Compensation premiums and their portion of the FICA tax. Social Security payroll taxes are collected under authority of the Federal Insurance Contributions Act (FICA). The payroll taxes are sometimes even called "FICA taxes."
In the original 1935 law the benefit provisions were in Title II of the Act (which is why we sometimes call Social Security the "Title II" program.) The taxing pro-visions were in a separate title, Title VIII. There is a deep reason for this, having to do with the constitutionality of the law (see discussion of the Constitutionality of the 1935 Act). As part of the 1939 Amendments, the Title VIII taxing pro-visions were taken out of the Social Security Act and placed in the Internal Revenue Code. Since it wouldn't make any sense to call this new section of the Internal Revenue Code "Title VIII," it was renamed the "Federal Insurance Contributions Act."
The donkey has insure provide the employees with Workers Compensation if he has more than two employees in most States.
The IRS is aware of this severe and growing problem and began cracking down on it hard about 3 years ago.

no he doesnt have to pay taxes for you.
but he shouldnt call you "independent" contractors either, judging from the way you say it. independent contractors usually dont have fixed hours. they are only required to reach a target quota or deliver the specified goods at the specified time

I am guessing you received a 1099-MISC, it sucks but if your employer employs you as a "contractor", you have to pay the full tax, he is just being a flake. There is nothing you can about it other than get another job.

first of all, tell him that u find his rules to be very unjust. harass him by telling him you can sue him if he dosent pay for your taxes and fix the problem. if this doesnt work, take it to the next level and discuss it with a local law firm and ask him if what your boss is doing is right.
if it is, then im sure there are alot of other jobs that you can apply to and they would be more than happy to take you in

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