Question 1

What happens if the IRS reclassifies me from 1099 to W2?

Accepted Answer

If the IRS reclassifies you from 1099 contractor to W2 employee, you may owe: back FICA taxes (employer's portion), penalties for underreported income, interest on unpaid taxes, and potentially amended returns for multiple years. However, the employer typically bears primary liability for employment taxes, not the worker.

Question 2

Am I responsible for back taxes if my employer misclassified me?

Accepted Answer

Generally, no - the employer is liable for unpaid employment taxes from misclassification, not the worker. You already paid self-employment tax as a 1099 contractor. The IRS typically seeks the employer's portion of FICA from the employer. However, you should verify your tax filings were correct based on the income you received.

Question 3

How does the IRS determine 1099 vs W2 classification?

Accepted Answer

The IRS uses a multi-factor test examining: behavioral control (does the company direct how work is done), financial control (does worker have business expenses/investment), and relationship type (written contracts, benefits, permanency). No single factor is determinative - the IRS looks at the totality of the working relationship.

Question 4

Can I appeal an IRS worker classification decision?

Accepted Answer

Yes, you can appeal using IRS Form SS-8 determination appeals or through the standard tax court appeals process. You can request reconsideration by providing evidence of independent contractor status such as: multiple clients, business expenses, lack of benefits, control over work methods, and written independent contractor agreements.

Question 5

What should I do if I receive an IRS notice about worker reclassification?

Accepted Answer

When receiving an IRS reclassification notice: don't ignore it, contact a tax attorney or CPA immediately, gather evidence of contractor relationship, review IRS Form SS-8 if filed, understand whether notice targets you or your employer, and respond within the deadline (typically 30-90 days depending on notice type).

IRS says I should have been W2 not 1099 - now I owe $18K in back taxes??

Related Resources