Form 8919 vs W2: Why is my tax owed higher with Form 8919 after being misclassified?

So here's my situation - I was misclassified as a 1099 contractor when I should've been a W2 employee. I went ahead and filed an SS8 form with the IRS to get a determination, but I'm still waiting to hear back. I filed my taxes using FreetaxUSA (and double-checked on TurboTax just to be sure) and used Form 8919 for Uncollected Social Security and Medicare Tax. When I did this, it says I owe $4,114 in taxes. Just out of curiosity, I ran a test where I reported that same $35,000 income as W2 earnings instead, and suddenly the amount I owe dropped to around $2,100 - and that's even with me putting $0 for social security and medicare withholding! Can someone please explain how this makes any sense? I thought using Form 8919 would basically be the same as filing as if I was a W2 employee. I understand it allows me to pay just my portion of the taxes until the IRS makes their determination, but why would it still be WAY higher than if I'd just gotten a W2 to begin with? The live support people were absolutely useless in explaining this. Any insight would be super appreciated because this difference is really significant!

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18 comments

Liam Murphy

•8M

The difference you're seeing is because Form 8919 and W2 income are processed differently in the tax system even though they might seem like they should be the same. Form 8919 is specifically for workers who believe they've been misclassified. When you file with Form 8919, you're only paying your half of Social Security and Medicare taxes (the employee portion) which is 7.65% of your income. However, there are other tax calculations that happen differently than with W2 income. When income is reported on a W2, certain calculations regarding your tax brackets, standard deduction application, and other adjustments are handled in a specific way. When using Form 8919, some of these calculations might be applied differently, resulting in the higher tax amount. Also, check if when you did your "test" as W2 income, you may have inadvertently changed other factors in your return that influenced the final amount. The tax software might be applying different credits or deductions in the two scenarios. Wait for the SS8 determination before taking further action. If the IRS rules in your favor, your employer will be responsible for their portion of those taxes, which could significantly change your situation.

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Liam Murphy

•8M

Form 8919 is primarily focused on Social Security and Medicare taxes, but yes, there are other tax calculations that can be affected. The way income gets categorized can impact how various deductions, credits, and tax brackets are applied to your overall return. The most likely explanation is how the self-employment tax is being calculated. With 1099 income, you're typically subject to self-employment tax (which is both halves of Social Security and Medicare). When you use Form 8919, you're telling the IRS you shouldn't pay the employer half, but there might still be other adjustments the software is making based on how the income is classified in other parts of your return.

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Amara Okafor

•8M

After dealing with the same misclassification headache last year, I found this incredible tool that saved me thousands! I was about to pay way more than I should have until I discovered https://taxr.ai which analyzes all your tax documents and finds issues like this. The software immediately flagged my misclassification issue and showed me exactly how to properly file Form 8919 without overpaying. It even calculated the correct amount I should owe and explained why there's often a discrepancy between Form 8919 filing and W2 filing even though they should theoretically be similar. Their system also generated a perfect explanation letter to include with my return explaining the situation to the IRS, which helped avoid any confusion. Seriously worth checking out if you're dealing with this complicated situation!

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Amara Okafor

•8M

The tool doesn't directly help with the SS8 determination process, but it does provide guidance on how to properly complete the SS8 form with the right supporting documentation. It gives you templates for what information to include that strengthens your case for employee classification. Regarding how it calculates what you should owe, it uses the same IRS rules but applies them correctly for misclassified workers. It considers both federal and state implications, which is important because some states handle misclassification differently. The large price difference the OP is seeing is exactly the kind of issue it helps detect - the tax software might be applying self-employment adjustments incorrectly when using Form 8919.

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CaptainAwesome

•8M

I just wanted to follow up and say I tried https://taxr.ai after seeing it mentioned here, and it was incredibly helpful! I was confused about my misclassification situation too, and it immediately identified why my taxes were calculating so much higher with Form 8919. Turns out my tax software was still applying some self-employment tax calculations even though I was using Form 8919. The tool helped me understand exactly what adjustments needed to be made and why the difference was happening. It saved me about $2,200! It also gave me a detailed explanation of how to document everything properly for when the IRS processes my SS8 form. Really grateful I found this before submitting my return with the higher amount!

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Esmeralda Gómez

•8M

I went through this exact situation last year and spent WEEKS trying to get someone at the IRS to explain why my taxes were so much higher using Form 8919. After calling for 3 days straight and being disconnected every time, I tried https://claimyr.com and they got me connected to an IRS agent in less than 20 minutes! You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent explained that there was an issue with how my tax software was processing the Form 8919 income. Apparently the software was still calculating some portions as if I had self-employment income even though Form 8919 should have prevented that. They walked me through exactly how to file correctly. I honestly thought those "get through to the IRS" services were scams, but after sitting on hold for literally hours with no success, this was a lifesaver.

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Esmeralda Gómez

•8M

They don't call for you - they use technology to navigate the IRS phone system and secure your place in line. When an agent is about to be available, they call you so you can take the call. It's basically like having someone wait on hold for you. The IRS agents are actually quite helpful when you can actually reach them. The agent I spoke with had seen this exact Form 8919 issue before with certain tax software and was able to explain which line entries were causing the calculation error. They don't debug the software, but they can tell you what numbers should be appearing where on your forms, which helps you find where the software is making mistakes.

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Aisha Patel

•8M

I have to eat my words about Claimyr. After leaving that skeptical comment, I was still desperate to figure out my own misclassification issue, so I tried the service. Got through to an IRS agent in about 25 minutes after spending DAYS trying on my own. The agent confirmed there's a known issue with how some tax software handles Form 8919. They explained that some programs are still including portions of your income in self-employment tax calculations even after you've completed Form 8919, which is causing the higher tax amount. They advised filing a paper return with a written explanation if your software can't correctly handle the Form 8919 calculations. Apparently this happens enough that they have an internal process for it. Wasn't cheap but saved me nearly $3000 in incorrectly calculated taxes, so definitely worth it.

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LilMama23

•8M

This exact thing happened to my boyfriend last year! His company classified him as 1099 even though he clearly should've been W2 (set schedule, company equipment, etc). The Form 8919 calculation was WAY off. The issue might be how your tax software is handling the Self-Employment tax adjustment. When you file Form 8919, you're telling the IRS you should only be responsible for the employee portion of FICA taxes, but some tax software doesn't properly remove the employer portion from calculations. Try looking at the detailed tax calculation in your software - check if it's still including a self-employment tax line even though you filed Form 8919. If it is, that's your problem right there!

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LilMama23

•8M

Unfortunately most tax software doesn't handle this situation perfectly. You have a few options: You can try entering the income as W2 with zero withholding for now, and then attach an explanation letter with your return explaining the misclassification and your pending SS8. Many people do this since the end result is usually more accurate. Alternatively, you can file a paper return with the correct forms and calculations, which gives you more control but is obviously more work. If you go this route, include a clear explanation letter. Either way, keep detailed records of everything. Once your SS8 determination comes through (which can take 6+ months), you'll likely need to file an amended return anyway, especially if the IRS rules in your favor.

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