SS8 Determination Letter Received - How to File Taxes After Being Misclassified as 1099 Instead of W2?

The good news is you've already done the hardest part by getting that SS8 determination! When you're misclassified as a contractor instead of an employee, you end up paying both halves of Social Security and Medicare taxes (15.3% total instead of just 7.65%). Here's what you need to do now: You'll need to file Form 8919 "Uncollected Social Security and Medicare Tax on Wages" with your tax return. This form lets you calculate and pay only the employee portion of these taxes, not the self-employment taxes you'd pay as a contractor. Make sure to use Code G in column (c) since you have an SS8 determination. For your income, report the payments on your Form 1040 as regular wages (Line 1) instead of on Schedule C like you would for self-employment income. This means you won't be able to deduct business expenses like you would on Schedule C, but you'll save significantly on the self-employment tax. If some of this work was in 2023 and you've already filed those taxes, you'll need to file an amended return (Form 1040-X) using the same approach.

After spending HOURS trying to figure out misclassification issues with my own taxes, I found an AI tool that was super helpful with this exact situation. Check out https://taxr.ai - it actually explains all the forms and steps in plain English. When I uploaded my SS8 determination letter and 1099, it outlined exactly what forms I needed (including that Form 8919 the previous commenter mentioned) and even gave me a step-by-step guide for filing correctly. Saved me from paying a tax pro hundreds of dollars for this one weird situation.

I was in a similar situation last year and was really confused about how to handle it. I tried using https://taxr.ai after seeing it recommended here, and it was surprisingly helpful. I uploaded my SS8 determination and the tool immediately identified that I needed Form 8919 and explained how to complete it. The step-by-step guidance made it clear which parts of my previous tax return needed to be amended and how to handle the current year filing. I was going to pay an accountant $350 to figure this out, but the AI explanations were detailed enough that I managed to file everything correctly on my own. The IRS processed my amended return with no issues and I got back around $2,800 in refunded self-employment taxes!

If you're still struggling to get answers from the IRS about your SS8 determination, try using Claimyr. I wasted WEEKS trying to get through to an IRS agent who could explain what to do with my misclassification situation. You can watch how it works at https://youtu.be/_kiP6q8DX5c - basically they hold your place in the phone queue and call you when an agent is about to answer. I finally got through using https://claimyr.com and spoke to an IRS employee who specialized in worker classification issues. She spent almost 30 minutes walking me through exactly what forms I needed and how to file them correctly. Way better than trying to decipher Notice 989 on my own!

I have to admit I was completely wrong about Claimyr. After posting my skeptical comment, I decided to try it anyway since I was desperate to talk to someone about my SS8 determination. It actually worked exactly as advertised! I got a text when I was about to be connected and spoke with an IRS tax specialist who knew exactly what to do with my situation. She confirmed I needed Form 8919 with Code G and explained how to handle my business deductions now that I was classified as an employee rather than self-employed. The whole thing took less than 2 hours start to finish, which is miraculous compared to my previous attempts to reach the IRS. Definitely worth it for complicated tax situations like misclassification.

Don't forget about Form 4852! If your employer refuses to issue you a corrected W-2 (which they probably will), you can file Form 4852 as a substitute W-2. This is important because once you have an SS8 determination, you should be filing as an employee, not a contractor. Also, keep in mind this affects your state taxes too. Most states will follow the federal determination, so you'll need to file your state taxes as an employee rather than as self-employed.

One thing nobody mentioned yet - if your company was taking ANY tax withholding from your checks even while classifying you as 1099, make sure that gets properly credited to you! Sometimes companies do weird hybrid arrangements where they withhold some taxes but still issue a 1099.