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Form 8919, Uncollected Social Security and Medicare Tax on Wages

Form 8919, Uncollected Social Security and Medicare Tax on Wages

Being a CPA since living memory, I've seen the accounting landscape undergo countless transformations.

One thing that has remained constant, however, is the murky distinction between employee and independent contractor status, and the subsequent tax implications that come with it.

Thankfully, the IRS has provided some clarity on the issue with Form 8919.

In this article, we'll dive into what this form is, when you should use it, and how to fill it out like a pro.

Employee vs. independent contractor: difference in employment status & tax impact

Before we dive into the nitty-gritty of Form 8919, let's first address the elephant in the room: the difference between being an employee and an independent contractor.

In simple terms, an employee is someone who works for a company and receives a W-2 at the end of the year, while an independent contractor is self-employed and receives a 1099. The distinction might seem trivial, but it has significant tax implications.

As an employee, your employer withholds taxes from your paycheck, including federal income tax, Social Security, and Medicare. You're also entitled to certain benefits, such as health insurance and retirement plans.

On the other hand, as an independent contractor, you're responsible for paying your own taxes, including self-employment tax, which covers Social Security and Medicare.

You also don't receive benefits from an employer, which means you'll have to pay for them out of pocket.

What is Form 8919 and when to use it?

Okay, so now that we know the difference between being an employee or an independent contractor, let's dive into the juicy stuff: Form 8919.

This nifty little form is used when you've been classified as an independent contractor, but you should really be classified as an employee.

You know, when your boss treats you like an employee, but they slap that "independent contractor" label on you to save some bucks on taxes.

So, when do you whip out Form 8919?

Well, if you think your boss has misclassified you as an independent contractor, this form can help you set the record straight with the IRS.

Just keep in mind that you need to have a darn good reason for your claim, like a court ruling or a government agency's determination that you're an employee.

Plus, you need to have actually tried to get your boss to correct your classification, but they refused.

Why bother with all this?

Because when you use Form 8919, you're not only making sure you're paying the right amount of taxes, but you're also holding your employer accountable for misclassifying you.

Plus, the IRS can slap penalties on your boss for doing so.

So, it's a win-win situation - you get the employee status and benefits you deserve, and your boss learns that it doesn't pay to mess with the taxman.

How to complete Form 8919 (step by step)

Here's how to complete the form:

  1. Fill out your personal information in the top section of the form, including your name, address, and Social Security number.
  2. In Part I of the form, provide information about the company you worked for and the job you performed.
  3. In Part II of the form, select the appropriate box to indicate why you're filing the form. You'll either be filing because you're a statutory employee, because you received a Form W-2 but weren't treated as an employee, or because you're a retiree working part-time.
  4. In Part III of the form, calculate the amount of Social Security and Medicare taxes that were not withheld from your pay as a result of being misclassified as an independent contractor.
  5. In Part IV of the form, calculate any additional income tax that you owe as a result of being misclassified.
  6. Finally, sign and date the form, and attach it to your tax return.

Form 8919 preview



Form 8919 vs Form 4137

Now that you know how to complete Form 8919, let's take a look at how it compares to Form 4137.

Form 4137 is used to calculate the Social Security and Medicare taxes owed by employees who received tips but weren't reported to their employer. While both forms deal with Social Security and Medicare taxes, they differ in their purpose and who they apply to.

Form 4137 is specifically for employees who receive tips, while Form 8919 is for workers who have been misclassified as independent contractors.

Additionally, Form 8919 is used to report the correct employment status to the IRS, while Form 4137 is used to calculate the Social Security and Medicare taxes owed on tips.

To sum up

Form 8919 and Form 4137 are both important tools for navigating the complex world of employment status and taxes.

If you believe that you've been misclassified as an independent contractor, Form 8919 can help you report the correct employment status to the IRS and ensure that you're paying the correct amount of taxes.

If you receive tips as part of your job, Form 4137 can help you calculate the Social Security and Medicare taxes owed on those tips. As always, if you have any questions or concerns about your taxes, don't hesitate to consult with a tax professional.

Ines Zemelman, EA
Founder of TFX