independent contractor vs self employed

Question

I have a contract with my employer.Initially I was issued a 1099 but my CPA advised me that I can not be 1099 any more and we switched to W-2. We did not sign a new contract. However, for years the employer issued me W-2 withheld my taxes and paid their portion of taxes as well. Now, as I am leaving the job they are coming back and saying I was independent contractor and I owe them for the employer liability portion of the taxes. Can they issued W-2 for all these years and now come back and say I was an independent contractor ?

James L. Arrasmith · Answer

It’s important to understand that classification between a W-2 employee and an independent contractor is based on the nature of your working relationship, not just the paperwork. Since your employer issued W-2 forms for several years, withheld taxes, and paid their portion, these actions typically indicate an employee status. Changing from a 1099 to a W-2 without a new contract, based on your CPA’s advice, reinforces that you were treated as an employee during that time. 
 
Employers generally cannot retroactively change your classification if they have consistently treated you as an employee. If they are now claiming you were an independent contractor, it could be challenging for them to prove this if you have documentation showing W-2 filings and tax withholdings. It might be helpful to gather all your pay stubs, W-2 forms, and any correspondence with your employer regarding your classification. 
 
Consider consulting with a tax professional or legal advisor to review your specific situation in detail. They can help you understand your rights and determine the best course of action to protect yourself from any undue liability. Additionally, you might reach out to the IRS for guidance on how to proceed if your employer continues to dispute your classification.

Q: independent contractor vs self employed