Ticked At Boss Over Taxes

Kim has good reason to be mad at her boss for doing a 1099 on her, but should she bother to go after him?

QUESTION: Kim just lost her job. Her employer paid her with a 1099 instead of an employee. She applied for unemployment, but is now running into problems. He is now denying her claim, and while she understands why he did it, she is mad. Her husband wants them to continue going for unemployment. Dave helps her sort through this mess.

ANSWER: He probably hasn’t withheld payroll taxes or Social Security taxes on you, either. He was supposed to be doing all of that. I don’t know how unemployment will be treated in your state with something like this. If I hire a cleaning service to clean my building and this company has their own company that does building cleaning, that’s a 1099. They have other jobs at other places. You were a secretary and an employee, but he treated you like you were a vendor and he didn’t withhold anything on you. That whole process has been done wrong.

He probably didn’t mean to do anything wrong. He was probably just trying to save on the taxes and paperwork and didn’t have a lot of sophistication. You can try and get your unemployment and try to get the state to go back and collect on him over these last 4 years. It’s going to change your taxes and everything. It could be a huge hassle for everyone involved. If you go get a job really quick, it won’t matter anyway.

By being treated as an independent subcontractor, you were underpaid all these years. Your husband is telling you that it’s your money to go after, and on principle he’s right. But the money you could collect versus the hassle you’re about to undergo might not be worth it. It all depends on when you become employed again.

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