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Diego Chavez

Why do businesses keep sending me W-2 forms when I'm a small business owner, not their employee?

I'm totally confused and frankly a bit annoyed right now. I run my own small consulting business and have several regular corporate clients I do projects for. I've been operating as an independent contractor for about 3 years now, have my business license and everything. The problem is that a couple of these companies just sent me W-2 forms for the 2024 tax year instead of 1099-NEC forms. I'm definitely NOT their employee - I set my own hours, use my own equipment, have multiple clients, and they don't withhold taxes from my payments. I thought this was obvious, but apparently not! I've already received 3 W-2s when I should be getting 1099-NECs instead. When I called one company's accounting department, they seemed confused about the difference. Do I need to educate them? Will this mess up my taxes? I file Schedule C for my business income, not as an employee. Has anyone else dealt with this? I'm worried this is going to cause problems with my tax filing and potentially trigger an audit if there's a mismatch. Should I just return these W-2s? Do I need to have them reclassify me somehow?

This is a pretty common misclassification issue, and you're right to be concerned about it! If you're truly operating as an independent contractor (setting your own hours, using your own equipment, working for multiple clients, etc.), then these companies should definitely be issuing you 1099-NECs, not W-2s. This matters because W-2s indicate employee status, which means the company should be withholding income taxes, Social Security, and Medicare. As a contractor receiving 1099-NECs, you're responsible for paying self-employment taxes through Schedule C and quarterly estimated payments. You should contact each company's payroll or accounting department right away and request they correct this by voiding the W-2s and issuing 1099-NECs instead. Be prepared to provide documentation that proves your contractor status - your business license, contracts that specify your independent contractor relationship, etc. If they refuse to correct it, you might need to file Form 8919 "Uncollected Social Security and Medicare Tax on Wages" with your return. But it's definitely worth pushing them to fix this before tax filing deadline.

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Sean O'Brien

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Thanks for the info! Quick question - if I can't get them to issue me 1099s before the filing deadline, would it be better to file for an extension or just go ahead and file with the W-2s they gave me? Also, could this trigger an audit?

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Filing an extension is definitely a good idea if you're working on getting the forms corrected. This gives you until October to resolve the issue without any late filing penalties. Yes, this discrepancy could potentially trigger an audit, especially if you report the income on Schedule C while the IRS has received W-2s from these companies. This creates a mismatch that automated systems will flag. That's why it's important to either get the forms corrected or properly document the situation with Form 8919 if they won't make the correction.

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Zara Shah

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I had a similar situation last year and discovered taxr.ai (https://taxr.ai) after going back and forth with a company that misclassified me. Their document analysis tool helped me identify exactly what was wrong with my classification and generated a professional letter I could send to the companies explaining why I should receive a 1099-NEC instead of a W-2. What was really helpful was how it analyzed my specific situation - looking at my contracts, invoice history, and business setup - to provide documentation proving I wasn't an employee. Within a week of sending their professionally worded explanation, two companies reissued the correct forms. The third one was stubborn until I forwarded them the tax code sections the tool highlighted. I also used it to identify potential audit risks from the misclassification and document everything properly just in case. Saved me so much stress during tax season!

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Luca Bianchi

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That sounds interesting but I'm curious - how does it actually determine if you're properly classified as a contractor vs employee? Like what documents do you have to provide?

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Is it really worth paying for a service like this? Couldn't you just google the IRS guidelines and write your own letter? Not trying to be rude, just wondering if it's actually helpful enough to justify the cost.

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Zara Shah

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It analyzes things like your contracts, work arrangements, and business documentation to apply the IRS's specific tests for worker classification. You upload your contracts, invoices, business formation documents, and communication with clients, and it identifies the specific factors that support your independent contractor status. The real value was that it cited the exact sections of the tax code and relevant case precedents that applied to my situation. Much more persuasive than me just telling companies they made a mistake. I'm not exactly a tax expert, so trying to DIY this would have meant hours of research I didn't have time for during my busy season. It also identified potential red flags in my existing contracts that could cause classification issues in the future.

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I was super skeptical about taxr.ai but after getting nowhere with two clients who kept insisting I was an employee (despite having 8 other clients!), I decided to try it. Honestly, it was eye-opening. The system found several issues in my contracts that were actually making me look like an employee - like language about "reporting to" a manager and having to work specific hours. The letter it generated explained exactly why I was a contractor under IRS rules and cited the right tax codes. Both companies issued corrected 1099-NECs within 10 days. The coolest part was discovering I could actually deduct expenses I didn't know were legitimate business expenses. Ended up saving about $3,800 in taxes I would have overpaid. Wish I'd known about this years ago!

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Nia Harris

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After dealing with misclassification headaches for MONTHS and getting nowhere with my clients' accounting departments, I finally got through to the right person at the IRS using Claimyr (https://claimyr.com). They actually got me connected to an IRS agent in about 20 minutes when I'd been trying for weeks! The agent explained exactly what documentation I needed to provide to correct the misclassification and even sent me the specific forms. You can see how the service works in this video: https://youtu.be/_kiP6q8DX5c - basically they navigate the IRS phone tree for you and call you back when an agent is on the line. The IRS agent was surprisingly helpful and even followed up with one of the companies directly, which finally got them to correct the W-2 to a 1099-NEC. Saved me so much time and frustration compared to dealing with the company's payroll department that kept giving me the runaround.

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Wait, how does this actually work? Do they just call the IRS for you? Couldn't you just do that yourself and save money?

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Aisha Ali

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Yeah right. No way they got you through to an actual IRS person in 20 minutes. I've literally spent HOURS on hold with the IRS and usually get disconnected. This sounds like BS advertising.

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Nia Harris

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They use a system that navigates the IRS phone menus and waits on hold for you. When they actually get an agent on the line, they call you and connect you directly. So instead of you spending hours listening to hold music, you just get a call when an actual human is ready to talk. I was definitely skeptical too! I've spent literally days of my life on hold with the IRS over the years. The difference is they have some kind of technology that keeps trying different menu options and times of day until they get through. On my own, I kept getting the "call volume too high" message and disconnects. Was it worth it to solve a problem that had been dragging on for months? Absolutely.

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Aisha Ali

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OK I need to apologize to Profile 18 about Claimyr. I tried it this morning after spending ALL DAY yesterday trying to get through to the IRS about my misclassification issue. I was 100% sure it wouldn't work, but I got a call back in 34 minutes with an actual IRS agent on the line. The agent looked up my information and confirmed that I should absolutely be getting 1099-NECs, not W-2s based on my business model. She even explained exactly what to say to the companies and mentioned that I could file Form SS-8 to request an official determination from the IRS if the companies keep refusing. I was able to get this resolved in one morning after fighting with my clients for weeks. Feeling pretty stupid for being so negative before, but seriously impressed with how well it worked.

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Ethan Moore

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This happened to me last year - turns out the company was trying to avoid paying their portion of employment taxes by treating their real employees as contractors, but then messed up and sent W-2s instead of 1099s! Make sure you have written contracts that clearly state you're an independent contractor. Also double check that you meet the IRS criteria for contractor status: - You control when and how you work - You use your own equipment - You work for multiple clients - You're not supervised day-to-day - You can make profit or loss If a company is controlling too many aspects of your work, they might correctly classify you as an employee even if you have your own business.

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Yuki Nakamura

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What if your contract says you're a contractor but the company treats you more like an employee (making you work specific hours, etc)? Does the contract override how they actually treat you?

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Ethan Moore

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The contract doesn't override reality. The IRS looks at the actual working relationship, not just what the paperwork says. This is called the "economic reality test." If a company is controlling when, where, and how you work, requiring you to work certain hours, closely supervising you, providing equipment, and treating you like an employee in practice, the IRS will consider you an employee regardless of what your contract says. Many companies try to save money by misclassifying employees as contractors, but the actual working relationship is what matters.

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StarSurfer

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Has anyone tried filing Form SS-8 to get the IRS to make a determination on worker status? I'm in the same situation and thinking about just going straight to the IRS rather than arguing with these companies anymore.

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Carmen Reyes

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I filed SS-8 last year. Takes FOREVER (like 6-8 months) to get a determination, but when I finally did, the company had to reclassify me and pay all the back employment taxes. They weren't happy lol but it solved the problem permanently.

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