Submitted by annielikes t3_y4iy0r in personalfinance
I don’t know if this is the right place for this, but long story short, the small ( <5 employees) company I (25F) worked for as a W2 worker was sold to a new owner and he would like to pay us as 1099 workers with a slight pay increase ($1 more). I feel like I’m going to end up making less than I did as a W-2 worker once I pay my taxes at the end of the year, but I told myself I was willing to take the L since I hadn’t planned on staying there for much longer (<1 year) and the new owner is currently in a tough spot financially. The only problem is that I’m still in college and my mom pays for my tuition (~$1000 this current calendar year), and since she doesn’t ask me to pay rent, I let her file me as a dependent so she can get tax deductions for my education, but I’m unsure if she can still file me as a dependent and get those education tax deductions if I file as a 1099 worker.
My new boss is pretty adamant about paying me as a 1099 worker and I worry it’s gonna cost my mom and I thousands of extra dollars in taxes. I could really use some advice from people who know more about accounting and taxes than I do, as I’ve never been a 1099 worker before and I don’t entirely know what that implies and how that affects me as a whole, aside from having to pay more taxes.
Any advice would be greatly appreciated! If there is a compromise to be made between all parties I’m sure they’d be agreeable, but right now it just feels like I either save my mom money or my boss, who seems to be falling on tough times and whom I feel bad for. It makes me want to quit and withdraw from the situation, but then I’d be out of a source of income.
I don’t know if this information helps, but she filed my aunt and I as dependents & I have a brother who she filed as a dependent in the past but since he didn’t go to school last year and had a job she let him file as an independent. This year my brother is in school, taking more credits than me and is not working, so she plans to file him as a dependent.
I live in Hawaii, if that helps! Thank you!
Edit: this gained a lot more traction than I thought it would and I thank everyone for taking the time to offer me advice. I now realize the real issue is about how I’m being misclassified as an independent contractor when I am most probably not, and not so much about my mom’s ability to claim me on her taxes. I’m going to talk to my boss on Monday and see what recourse I have.
Edit: I realize I may have left some important information out and since people are still reading this post I figured I’d add it on:
Since it’s a small company my coworker and I know that there’s a problem with cash flow because we are in close contact with our biller. I don’t know if this makes a difference in the misclassification but not only are we doing regular MA duties but we’re doing things on the management side as well. My boss has also bought my coworker and I a sculpting machine to offer aesthetic services in the future, of which he said we could split the profits 70-30 with him.
Would the sculpting (in the near future) and management work that we do for him affect my status as a 1099 or w-2? Also, given these other responsibilities, if I were to have a contract drawn, would this make things legal?