IRS 
Department of the Treasury      Commonly Asked Questions 
Internal  Revenue  Service
   www.irs.gov                  When IRS Determines Your 

                                Work Status is “Employee”

1. What should I do now?
What you should do depends on whether or not you have led a tax return reporting the income you 
earned and how the income was reported.  You may be due a refund, you may reduce an existing tax 
liability, or you may owe additional tax as a result of the change to your status.  You do not need to 
wait for corrected pay documents from the employer in order to le or amend your return(s) to reect 
your new status.  Please consider the following instructions and select the one that applies to your 
circumstances.

•	 If you haven’t led a federal tax return yet, you must le Form 1040, U. S. Individual Income 
   Tax Return, for the affected tax year(s), reporting the Form 1099-MISC income reported to you 
   by your employer as wages on line 7.  Since no social security or Medicare tax (FICA tax) was 
   withheld from these wages, you must compute and pay the employee portion of these taxes 
   with your return.  For tax years prior to 2007, use Form 4137, Social Security and Medicare 
   Tax on Unreported Tip Income, to compute FICA tax and ensure that you receive credit for 
   this income with the Social Security Administration (SSA).  For 2007 and later, use Form 8919, 
   Uncollected Social Security and Medicare Tax on Wages.  See question 9 for instructions on 
   computing FICA tax.

•	 If you have already led a federal tax return, but did not report the Form 1099-MISC, 
   Miscellaneous Income, you must le Form 1040X, Amended U. S. Individual Income Tax 
   Return, for the affected tax year(s) to include the additional income as wages and re-compute 
   your federal income.  You must also compute your portion of FICA tax on this income.  For tax 
   years prior to 2007, use Form 4137 to compute FICA tax and ensure that you receive credit for 
   this income with the SSA.  For 2007 and later, use Form 8919.  For instructions on amending 
   your return, see question 11.

•	 If you have already led a federal tax return and reported the income but did not 
   compute the FICA tax on the income, you must le Form 1040X for the affected tax year(s) 
   to compute the FICA tax due on this income.  For tax years prior to 2007, use Form 4137 to 
   compute FICA tax and ensure that you receive credit for this income with the SSA.  For 2007 
   and later, use Form 8919.  For instructions on amending your return, see question 11.

•	 If you have already led a federal tax return, but reported your Form 1099-MISC income 
   as self-employment income and not wages, you must le Form 1040X for the affected tax 
   year(s).  You do not owe Self-Employment (SE) Tax, but you must compute and pay your 
   portion of FICA tax on the income.  For tax years prior to 2007, use Form 4137 to compute 
   FICA tax and ensure that you receive credit for this income with the SSA.  For 2007 and later, 
   use Form 8919.  See question 6 for additional information.  For instructions on amending your 
   return, see question 11. 

2. What is the time limit for ling an amended return?
Generally, a Form 1040X must be led within 3 years after the date you led the original return or 
within 2 years after the date you paid the tax, whichever is later, if your amended return will decrease 
your tax.  You generally have 3 years after the date you led the original return if your amended return 
will increase your tax.  A return led before the due date is considered led on the due date.  If an 
amended return is received after the statute for ling it has expired, the amended return will not be 
accepted.

3.  What if I already paid my portion of FICA tax with my original return using Form 4137 or 
Form 8919?
If you already reported the income on your tax return and computed your portion of FICA tax using 
Form 4137 or Form 8919, you will not need to amend your return as a result of the determination 
changing your status to employee.  The determination letter should be kept with your tax records to 
substantiate the way you led your return.  But see question 6 if you deducted expenses on 
Schedule C.

4.  What if the employer provides me with a corrected Form W-2 that reects payment of my 
portion of FICA tax?
If the employer pays your portion of FICA tax on the income, that additional amount becomes income 
to you in the year it is paid.  If you already paid FICA tax on the income, you can amend your return to 
request a refund of this tax at that time.  If you do not receive a Form W-2 from the employer, you can 
assume that it did not pay your portion of the FICA tax, and you remain responsible for it.  

5. How do I get money back if I already led my return?
You must le Form 1040X to receive a refund or credit toward any unpaid taxes.  Generally, a refund 
is only possible if you initially calculated and paid SE Tax on the income or if your employer issued 
you a corrected Form W-2 showing the employer paid your FICA tax.  See question 11 for instructions 
on amending your return. 

6. What if I reported my Form 1099-MISC income on Schedule C and claimed expenses?
Schedule C can not be used to report your income since wages earned by an employee are reported 
on line 7 of Form 1040.  You must le an amended return to reect the correct amount of tax under 
your status as an employee.  When you originally led, if you reduced your income by expenses, 
the change to employee status may increase your tax because you will now compute FICA tax on 
your gross wages instead of computing self-employment tax on the net income.  Furthermore, the 
expenses you deducted from the income on Schedule C must now be deducted as miscellaneous 
itemized deductions on Schedule A, subject to a 2% limitation.  Some of the expenses may no longer 
be deductible.  Publication 529, Miscellaneous Deductions, will help you determine which expenses 
can be claimed on Schedule A.    

Self-employed individuals are also allowed a deduction on Form 1040 in an amount equal to one-
half of SE tax.  As an employee, you lose this deduction and any other deduction you were allowed 
because you treated yourself as self-employed, such as the self-employed health insurance 
deduction and the deduction for contributions to a Keogh-type retirement plan. Your taxable income 
is affected by these changes, and as a result, the income tax due is adjusted.  See question 8 for 
additional information.  

7.  What if I still have other unrelated business income to report on Schedule C?
If your Schedule C included income from a source unrelated to your determination as an 
employee, you remain responsible for SE tax on that income and should continue to report 
the income on Schedule C.  File an amended return to make the changes described in 
Question 6 above, but also complete a new Schedule C that reects the unrelated income 
and the expenses attributable to that income.  You must also complete a new Schedule SE, 
Self-Employment Tax, to compute self-employment tax on the new net income.  In addition, 
on page one of Form 1040X, you will need to adjust any deductions you may have taken 
for one-half of the self-employment tax, the Keogh retirement plan deduction, or the self-
employed health insurance deduction as they relate to the remaining Schedule C income.                                                                                                                                                                                                                                                                                   
                                
8. Will I get back all the Self Employment Tax I paid?
No. The amount of your refund or decrease in tax is affected by the changes you make on your 
amended return.  These changes may include:
A. The amount of FICA tax you owe compared to the self-employment tax you originally computed. 
B. Whether or not any of the business expenses you originally reported on Schedule C can be            
  transferred to your Schedule A since you can no longer use Schedule C to report the income.  
C. The removal of deductions you were entitled to as someone treated as a self-employed individual    
  such as the one-half of SE tax deduction, self-employment health insurance deduction, or a 
  Keogh-type retirement plan deduction.    
D. Changes (increase or decrease) to any tax or credit computed on your adjusted gross income          
  such as the alternative minimum tax, earned income credit, or credit for child and dependent         
  care expenses since some of the changes mentioned in A through C of this question affect             
  your adjusted gross income and/or your taxable income.  
 
9. Why must I complete a Form 4137 to calculate FICA tax for years prior to 2007 when I didn’t 
have any tip income?  What form do I use to calculate FICA tax for 2007 and after?
The IRS accepts Form 4137 for years prior to 2007 to compute the employee’s portion of FICA tax 
on income not treated by the employer as wages.  Form 4137 is also used to ensure that you receive 
credit for this income with the SSA.  To compute your portion of FICA tax, complete Form 4137.  
Cross out the word “TIP(S)” and replace it with the word “WAGE(S)”.  Be sure to attach your Form 
4137 and a copy of your determination letter to your original return or amended return.

Beginning in 2007, individuals whose employment status is in dispute or who have been determined 
to be employees by IRS can use Form 8919 to calculate FICA tax on the income that has been 
determined to be wages.  Completion of Form 8919 will also ensure that you receive credit for this 
income with the SSA.  You should attach it and a copy of the determination letter to your original 
return or amended return.

10. What if I’m getting bills for my taxes that will be affected by my new status as an 
employee?
The IRS will continue to send bills until you le an amended return or until you pay the amount due.  
When your amended return has been processed, your tax and any interest or penalty charges will 
be changed as appropriate.  Our determination of your work status will not stop the billing process 
or change your tax due.  File your Form 1040X, Form 4137, or Form 8919, and a copy of your 
determination letter with the Campus (formerly known as Service Center) specied in the Form 1040X 
instructions.  Also, please inform the IRS ofce that has been sending you bills that you have led the 
amended return.  If you are on an installment plan, you should continue making payments until your 

amended return has been processed and you have been notied by IRS whether there is any balance 
due.  

11. How do I amend my tax return?
To complete your amended return, you will need a copy of your original return and a copy of any 
amendments made since you originally led your return.   If amendments have been made, you 
should use these gures instead of the gures from your original return.  Use these gures in column 
A of your Form 1040X.  In Column C of your Form 1040X, ll in the correct information to reect your 
status determination as an employee.  To arrive at these gures you may nd it helpful to complete a 
new Form 1040.  

If you are recalculating your taxes on a new Form 1040, report the full amount of the 1099-MISC 
income as wages on line 7 and compute the employee portion of FICA tax using Form 4137 or Form 
8919 (see question 9 above for clarication).  If you took expenses against this income on your 
Schedule C when you originally led, you may be able to move the expenses to Schedule A if they 
meet the employee business expense criteria.  Report these expenses on Form 2106, Employee 
Business Expenses, as miscellaneous deductions on Schedule A (see question 6 above).  Please 
note that you can take the standard deduction instead of using Schedule A, if it is to your advantage 
(the standard deduction may be higher than your Schedule A deductions).  

Column B of the Form 1040X is the difference (increase or decrease) between columns A and C.  If 
you are moving expenses from Schedule C to Schedule A, be sure to attach your Schedule A and 
Form 2106 to your amended return.  If you must calculate your share of FICA tax, please also attach 
Form 4137 or Form 8919. 

12. How do I get return forms?
A. You may call the IRS toll-free at 1-800-TAX-FORM (1-800-829-3676).
B.  An IRS ofce in your area may carry the forms you need.
C. Some forms are available at your local library or a commercial tax service.
D. Forms are also available by computer:
      - Telnet: iris.irs.gov
      - World Wide Web: http://www.irs.gov
      - FTP: ftp.irs.gov

13.  Where should I send my return(s) or amended return(s)?
You should send your tax return(s) or your amended return(s) to the IRS Campus where you normally 
le your returns.  The instructions to Form 1040 or Form 1040X will provide you with the address.

14.  What if I did not receive a reporting form from my employer to assist with the amendment 
process?
If you did not receive a reporting form such as Form W-2 from your employer, or the amount on the 
reporting form you received was incorrect and you have not been successful in obtaining a correct 
one from your employer, you may complete Form 4852, Substitute for Form W-2, Wage and Tax 
Statement, or Form 1099-R, Distributions From Pensions, Annuities, Retirement or Prot-Sharing 
Plans, IRAs, Insurance Contracts, etc. and use it as a substitute for Form W-2 to send with your 
return(s).  Estimate your income as accurately as possible if you do not have evidence of the actual 
amounts paid to you.  If you have proof that the employer withheld taxes from this income, you should 
include that on Form 4852 and attach the proof to the form before you mail it in.  

You may also contact IRS Customer Service at 1-800-829-1040.  An IRS representative can assist 
you by contacting the employer on your behalf.  The letter that the employer receives will advise 
him or her of the employer’s responsibilities to provide a correct reporting form and the penalties for 
failure to do so.  The representative will send you Form 4852 for completion (as discussed above) so 
you can attach it to your return(s).

15.  What if I led the request for a determination as a result of contact from the IRS 
Automated Under-Reporter (AUR) Operation?
If you requested the SS-8 determination to assist you in responding to an inquiry from the IRS 
Automated Under-Reporter (AUR) operation, you should submit the results of the SS-8 Program 
determination to AUR for consideration.  Even if your case with AUR is closed, it can reconsider the 
outcome using the new information.  This could result in an adjustment to your tax liability.   

To get a reconsideration of the case, please send a letter to the unit (at the address previously 
provided to you by AUR) requesting a reconsideration.  Please attach copies of the Notice CP2000 
and the SS-8 determination to your request.

16.  What if I led the request for a determination as a result of an audit on my tax return?
If you requested this determination to address a self-employment tax deciency matter brought 
to your attention through an IRS audit of your Form 1040, you should submit the results of the 
determination to the auditor for his or her consideration.  Even if the audit is closed, the auditor can 
reconsider the outcome using the new information.  This could result in an adjustment to your tax 
liability.

To have an auditor reconsider the audit case, please send a letter to the address provided to you by 
the auditor and request a reconsideration.  Attach copies of the last correspondence you received 
from the auditor and the determination to your request.

17.  What are the benets of correcting my returns to reect my status as an employee?
By taking the initiative to correct your account, if necessary, you may be able to reduce or avoid 
any otherwise applicable interest or penalty charges on any additional tax due or you may receive a 
refund of any overpayment of tax.  Additionally, if you did not initially pay FICA or self employment tax 
on the income, paying it now will ensure that you get credit for the income with SSA.

18. What if I have more questions?
If you need help in preparing Form 1040X, you may wish to contact a tax professional, call 1-800-
829-1040 to get IRS assistance, or visit an IRS Taxpayer Service Assistance ofce.  To nd the 
location of the IRS ofce nearest you, look in the phone book under “United States Government, 
Internal Revenue Service” or go to http://www.irs.gov, and click on “Contact My Local Ofce” for a list 
of IRS walk-in sites near you.  If you have questions regarding the determination, write, fax, or call the 
person whose name is shown on your determination letter.