This is useful, thanks. XXXXX am still confused about the process of reporting my taxes. I understand that I should include the W-2 I was given, and that I have to report the other income I was paid. If I understand you correctly, it sounds my employer cannot escape this payment when declaring company-bankruptcy, and he will be personally liable for the error. But it is still his responsibility for the money that was not withheld for the IRS, not mine?
In other words, when I calculate my taxes, can I pay "as if" the checks I received were given to me "after taxes", like paychecks are normally given, with the same withholding ratio that payroll usually takes, or do I have to count the checks I received as being payment "before taxes", making me liable for paying extra taxes? The checks were less than my usual salary after-taxes, and the verbal understanding from the employer was that they were an after-tax payment (and that the company would straighten up the their tax obligations and that wasn't my problem).
This is a great answer, but I was confused when you said the employer was treating me as though I were self-employed. Because if I filed in accordance with that, I would need to pay the self-employment tax and then I'd be paying the employer's side of the taxes (e.g. the second half of social security) on top of personal taxes. This would seem to leave the employer completely off the hook since the IRS would be getting all the money from me. Can I still pay taxes as though it were a salary income? Then the employer would be liable for the unpaid matching taxes owed by the employer?
Alternatively, if I did file my taxes accepting these checks as self-employed income, would the employer still face any payroll investigations from the IRS? It seems like if I did accept this interpretation of the checks (which would be costly for me), that the employer would not be delinquent to the IRS for any unpaid payroll taxes; is that right?