What feels so good now will make you sick at tax time.
Hurrah! My boss said I’m an independent contractor, so no taxes need to be withheld from my paycheck. You will be singing this song every week you look at your paycheck and notice that no taxes are being withheld by your company. That means more cash for you today, true. But in reality it means less money for you over the year. In the end, you have to pay your share of the taxes AND your employer’s share of the taxes!
Misclassifying workers as independent contractors is one of the oldest tricks in the dirty employer’s handbook. Employees are duped into believing they are better off due to no withholding, but they are penalized at the back end.
If you are an employee, your employer must make payroll deductions on your earnings and pay your share of those taxes. If your employer is not withholding taxes, you have likely been classified as an Independent Contractor and self-employment taxes become your burden on Tax Day. Now you have to pay your share and your employer’s share of the taxes. This is one of the top wage scams employers use to keep money in their pocket.
As an independent contractor:
Payroll taxes withheld from an employee’s paycheck are required by law for non-exempt employees. Payroll deductions include:
If your employer pays you incorrectly learn how you can recover up to 3 years of your back pay.
If your employer pays you incorrectly or you aren’t sure if you’ve been misclassified as an independent contractor, order our free book to learn answers to your questions. This free wage and overtime guide will teach you how you can recover your hard-earned wages for up to 3 years back.