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LawTalk
LawTalk, Attorney
Category: California Employment Law
Satisfied Customers: 35320
Experience:  I have 30 years of experience in the practice of law, including employment law and discrimination law.
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My husband is a salaried employee and and as of mid-year last

Customer Question

My husband is a salaried employee and and as of mid-year last year started getting paid for his overtime hours. His employer is 1099 all of this money. Is this legal? When I went to have our taxed done, my accountant informed me that we had to pay a self employment tax on this money. We are not self-employed.
Submitted: 1 year ago.
Category: California Employment Law
Expert:  LawTalk replied 1 year ago.
Good afternoon,
I'm Doug, and I'm very sorry to hear of your situation. My goal is to provide you with excellent service today. I am a GA licensed attorney.
While it is nice that the employer started paying your husband overtime, your husband is either an independent contractor or an employee---for all wage issues under the law.
I suspect that the employer, knowing that overtime is not due to a legitimately salaried exempt employee, perhaps wanted to do something nice but also avoid all the tax consequences of making the payments and so decided to use an illegal shortcut and not pay taxes or withholding of any kind on the overtime. That again though is illegal. The employer should have withheld taxes as well as paid the employer's share of the taxes. (Self-employment tax is about twice what normal employee social security withholding is.)
Your husband should talk with the employer about this illegal policy and if the employer will not make things right, your husband can file the following form with the IRS and they will deal with the issue for him---and all other employees that this is happening to at the workplace: http://www.irs.gov/pub/irs-pdf/fss8.pdf
And finally, here is a website explaining the process:
http://biztaxlaw.about.com/od/employmenttaxforms/qt/formss8.htm
You may reply back to me using the Reply link and I will be happy to continue to assist you until I am able to address your concerns, to your satisfaction.
Kindly, remember to rate my service to you. That is how I am credited for assisting you.
I wish you and yours the best in 2015,
Doug

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