Question about Employment Taxes in US

[lost87]

ok....so I have been looking for a job for a while and finally found one...not at all a glamorous one (i'll be cleaning the homes of extremely, disguistingly wealthy people) but at this point work is work till I finish up my nursing degree. I have some questions regarding taxes though, and I'm not sure what I should do.

I was hired as an "independent contractor" but I think that I should be an employee instead. I've been reading through IRS stuff all morning and if I am interpreting it correctly then i am not at all a private contractor. I almost feel like this company is classifying me as an independent contractor to avoid paying taxes themselves...which isn't honest at all, and will end up costing me a lot in the long run. I know I can file the SS-89 form with the IRS and have them determine if I am an employee or contractor, but I'm afraid if I do i'll get fired and I really need the job. So any advice would be great...here are the details on my job:

The company has 4 people who do the cleaning, the owner, and then another employee who does the scheduling. We do not get PTO or holiday pay etc or insurance benefits but all work full time. We do not get paid hourly, but rather we get payed a certain amount for each size of home that we clean. The company privdes all of the equipement we need, even the vehicles we drive to get to each home, the only thing we pay for is our uniforms, which are dictated by the company. We are required to work from 8-5 each day, and the company sets up our schedule and gives us a daily itinerary for which homes we clean. The company is payed directly by all clients. and then we get paid by the company each friday. There is no limit on time in the forms I signed.

Here is what I signed today:

-Independent contractor form stating the company won't be paying any of my taxes

-Form saying I can't do any similar work myself, or with another company during and 2 year after ending work with the company

-confidentiallity agreement saying I won't tell anyone about the houses we work on

If anyone can offer advise as to whether I am correctly classified as an independent contractor or not, and what I should do if I am not than I would very much appreciate it.

[ttribe]

The way you described it, I'm not sure this would pass muster with the IRS. The fact that they simultaneously have you sign a non-compete and treat you as an "independent" contractor is very strange. Here are some resources to consider:

Working as an Independent Contractor FAQ - Free Legal Information - Nolo

Independent Contractor (Self-Employed) or Employee?

Independent contractors

If I am an independent contractor, can I do work for another company that no longer uses my employer? Ohio Employment and Labor

Determining Whether You Are an Independent Contractor or an Employee | Deskin Law Firm

Good luck.

[Just_A_Guy]

I don't know what the IRS would say, but I've seen the type of arrangement you describe pretty frequently--mostly with seasonal jobs, though.

Legalities aside, you've (unfortunately) got the practicalities down more or less correctly: if you want to keep the job, don't make a stink.

[lost87]

I did some calculations and I would end up making about 5.75 an hour after taxes...NOT worth the job. So I am going to submit the ss-8 and if i get fired over it...well, I'm not really in much of a worse place anyhow. Is it wrong to do that to a company though knowing that the fines/penalties for falsly classifying employees will hurt them financially? I just hate being taken advantage of and hate when people are financially dishonest.

[ttribe]

I did some calculations and I would end up making about 5.75 an hour after taxes...NOT worth the job. So I am going to submit the ss-8 and if i get fired over it...well, I'm not really in much of a worse place anyhow. Is it wrong to do that to a company though knowing that the fines/penalties for falsly classifying employees will hurt them financially? I just hate being taken advantage of and hate when people are financially dishonest.

It seems rather unfair to you to stick you with the self-employment taxes (in lieu of the employer's portion) and then constrain you with that non-compete agreement. Not to mention all of this for a low wage. Something stinks.

[marshac]

It seems rather unfair to you to stick you with the self-employment taxes (in lieu of the employer's portion) and then constrain you with that non-compete agreement. Not to mention all of this for a low wage. Something stinks.

Stinks indeed. On the upside, with 1099 income, you can deduct business expenses against it before paying income taxes.

[mnn727]

I agree, you are not an independant contractor, an independant contrator can not be forced to sign a no complete clause - so it wouldn't hold up in court.

Having said that, if you want this job, don't make waves.

Frankly, I'd find another job and turn them into the IRS as you are right, they are doing this to avoid paying employement taxes

[ryanh]

As I'm sure your research told you, the factors you pointed out are the tests the IRS would apply in determining contractor vs employee classification. It does sound like a potential issue to me.

One thought - if the job isn't worth the money, it might not be worth the hassle of getting into a fight either. Even if you file for determination at then end of the year so that you have a job in the mean time, but don't pay SE taxes next April, do you really want to get in the middle of a dispute between the company and the IRS?

No chance of getting your CNA in the mean time and finding work in that line?

[marshac]

Just do this- money problems solved

[ttribe]

A recent article on this very issue - Auditors crack down on 'independent contractors' - Mar. 29, 2010