BulldogTom Posted January 22, 2023 Report Posted January 22, 2023 If a company hires an independent contractor, and the FTB audits and reclassifies the contractor to an employee, what are the ramifications for the contractor? I know what will happen to the company (back PR taxes, fines, amend 941's). I don't see anything that indicates what the consequences are for the "new employee". Tom Longview, TX Quote
Lee B Posted January 22, 2023 Report Posted January 22, 2023 Interesting Question. I have been involved in 4 or 5 Employment Tax Audits, but I have never been on the losing side. I would assume the reclassified employee would get W 2(s) and would have to amend the Form 1040(s) and the Schedule C losing tax deductions offset by refunded SE Taxes? Quote
BulldogTom Posted January 22, 2023 Author Report Posted January 22, 2023 @cbslee That is my thought too, but I don't think the contractor would lose deductions if they had a legit business and the employer was only one customer. Which is what brought up my question. Do you think the FTB would go after the now-employee and see how many others had hired them? Would be an easy way to find others to audit? Just musing out loud on a Sunday waiting for the games to start. Tom Longview, TX Quote
Lee B Posted January 22, 2023 Report Posted January 22, 2023 I assume if the employer has amend 941s, then the employer will also have refile W2s. Quote
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