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Chad CFP ®
Chad CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional
Category: Tax
Satisfied Customers: 615
Experience:  Managing Director at Caros Group
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I am retired and receive social security benefits. I work

Customer Question

I am retired and receive social security benefits. I work part time for a property management company and receive a 1099-MISC. Currently I earn $1500 a month. In my 2014 taxes I inadvertently entered the income as W-2 income. At that time I was making a lower income and didn't owe taxes. Because of that I didn't file and again in 2015 I didn't file. This year I reworked my taxes using my 1099-MISC and found that as an independent contractor owed almost $2000. I also filed for 2014 and 2015 and in total owe almost $5000 in back taxes. Had I received a W-2 for last year, my tax liability would have been $291. If I convince my boss to pay a salary rather than independent contractor, which is actually a salary anyway, and will pay his liability for taxes owed, can I refile for 2014-2016? Will there be large penalties for him for not filing as salary?
JA: The expert will know how to help. Is there anything else the expert should be aware of?
Customer: Just wanting to know if there is a way to reduce my liability.
Submitted: 2 months ago.
Category: Tax
Expert:  Chad CFP ® replied 2 months ago.

Hello, My name is***** am a Certified Financial Planning ® Professional. I am also registered with the IRS and have obtained a valid Preparer Tax Identification Number.

You are able to refile your previous years taxes with a 1040X.

In general the "rule of thumb," is to make the corrections and pay any outstanding tax as soon as you are aware of the mistake.

Also the The amount of your failure-to-pay penalty will not exceed 25% of your back taxes

I would be happy to extend my answer if you have any further questions. A positive 5 star rating is appreciated so I am credited for assisting.

Customer: replied 2 months ago.
Are there big penalties for my employer to change previous years to W-2 income? He is also a close personal friend.
Customer: replied 2 months ago.
Getting to be expensive already. Please cancel
Expert:  Chad CFP ® replied 2 months ago.

Penalties are complicated for failing to pay payroll tax

Expert:  Chad CFP ® replied 2 months ago.
Expert:  Chad CFP ® replied 2 months ago.

Failure to file For Form 941 and similar forms: 2% 1-5 days late, 5% 6-15 days late, 10% more than 16 days late or within 10 days of first notice from the IRS, maximum 15%.