How your employer pushes taxes onto you with a simple form

On Behalf of | Jan 3, 2022 | Employment Law

Regardless of what you receive as your base salary or hourly wage, a significant portion of your income will go straight to the government as taxes.

Most employees can count on their employers to withhold taxes from their income, but some workers aren’t technically employees. If your employer had you fill out a 1099 instead of a W-2, they treat you as an independent contractor.

Although you may not have realized it at the time, this is a way for your employer to pass on some of their tax obligations to you as an individual worker.

Independent contractors pay their own employment taxes

As someone earning income, you have to pay tax on that money. As the business benefiting from your labor, your employer has to pay certain taxes too. Typically, your employer will split your responsibilities for certain taxes, like your Social Security contributions. They will also have to pay into unemployment insurance and carry workers’ compensation coverage to protect you.

If you are an independent contractor, those responsibilities all fall to you. If you want workers’ compensation coverage, you have to pay for it yourself. You won’t have unemployment protection. You will also have to pay more in employment taxes than you would as a standard employee.

If your employer doesn’t really treat you like a contractor but rather like an employee, this arrangement is patently unfair to you as the employee.

The company receives all the benefits, but you assume all the risk

When an employer tries to claim that an employee is really self-employed, they pass all of their liabilities as an employer on to that worker. You will pay more in taxes. You will be at greater risk if you get hurt on the job. You will have fewer protections if you get laid off or fired unexpectedly. You also have to pay quarterly taxes in addition to paying more taxes on your income.

Fighting back against this kind of conduct can help you recover some of the money you have had you unfairly contribute for your own employment taxes. Learning more about your rights as an employee will make it easier to stand up for yourself against company misconduct.