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Lev
Lev, Tax Advisor
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Experience:  Taxes, Immigration, Labor Relations
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A company that I worked for sent me a w2 rather than a 1099-Misc.

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A company that I worked for sent me a w2 rather than a 1099-Misc. I supplied my own tools and was paid a percentage of the tuition paid by customers (not wages). I want to lump this income with other income that I got from other companies that did send me 1099-Misc forms. I want to claim all income as a business and deduct all expenses for the business. In TurboTax in the business income section it doesn't allow for entering w2 income. Please help!
Submitted: 5 years ago.
Category: Tax
Expert:  Lev replied 5 years ago.

If you was an employee - all business related expenses should be deducted on the schedule A and are subject of 2% floor limitation.

see - http://www.irs.gov/pub/irs-pdf/f1040sab.pdf line 21.

 

You also might be required to file the form 2106 - http://www.irs.gov/pub/irs-pdf/f2106.pdf

see instructions here - http://www.irs.gov/pub/irs-pdf/i2106.pdf

 

You may not deduct expenses related to your employment as self-employed business expenses.

If you think you was classified incorrectly as an employee instead of self-employed contractor - you need to contact the company and ask to change classification.

 

Customer: replied 5 years ago.
I have already asked them to reclassify me as a contractor. They refuse. I am clearly a contract employee. The store charges for customers to take my class. The store requires me to make my samples and use my own supplies Etc to teach. After the class, I get 90% of what ever the store charges the customer. I have to drive to the store and do not get reimburesed for any expenses that I incure. What if I claim all the expenses (miles, supplies Etc) on the business with the income from the 1099-Misc (this will show a huge business loss for this first year) and then just file the W2 income from the store as regular income? Next year I will demand that I am paid as a contractor. Will I get in trouble?
Expert:  Lev replied 5 years ago.

Facts that provide evidence of the degree of control and independence fall into three categories:

-- Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
-- Financial: Are the business aspects of the worker's job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
-- Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

 

If, after reviewing the three categories of evidence, it is still unclear whether a worker is an employee or an independent contractor, Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding can be filed with the IRS. The form may be filed by either the business or the worker. The IRS will review the facts and circumstances and officially determine the worker's status.

 

Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22655
Experience: Taxes, Immigration, Labor Relations
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