BulldogTom Posted January 22, 2023 Report Share 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 Link to comment Share on other sites More sharing options...
Lee B Posted January 22, 2023 Report Share 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 Link to comment Share on other sites More sharing options...
BulldogTom Posted January 22, 2023 Author Report Share 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 Link to comment Share on other sites More sharing options...
Lee B Posted January 22, 2023 Report Share Posted January 22, 2023 I assume if the employer has amend 941s, then the employer will also have refile W2s. Quote Link to comment Share on other sites More sharing options...
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