Reply to DH 401K Maxed Out, What about me?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous]Ugh...

Yeah I don't want to get my employer in trouble but I also don't want to be misclassified by the IRS either! I don't want them in my shorts just because he unknowingly misclassified me.  I say unknowingly because he is a very ethical guy so I can only assume this was done in error.

For clarification - he is a financial advisor and I am his marketing and admin person.  All of my work is directly related to his business.  I don't perform any services not related to his day-to-day business. [/quote]

if you never file a complaint, you will not have any legal trouble with the IRS or any other agency, as long as you correctly calculate and pay all of your taxes.  you will be getting screwed to the tune of ~7% of your pay, because you have to pay ALL of your payroll taxes, rather than splitting them with him (as would be the case with a W-2 employee).  if you can live with that, you can keep things the way they are, and the only person who stands to be fined is your boss (and unless a complaint is filed, the chances of that are almost 0.  i am an attorney and once worked for a sole practitioner who classified all of his associates as contractors. he had done this many, many times and been caught and even he was never actually fined by the IRS. they just made him kick in for the payroll taxes.)[/quote]

thanks PP, excellent info.

I want to keep my job and like my employer but I'm not in the habit of paying the IRS and extra 7% in taxes either.  what a mess  :shock:

I think I will just talk with him and let him know that I THINK he is misclassifying me and see what he says.  Knowing him he will want to fix it.  I think he assumed that I was a 1099er because he has a bookkeeper that works for him as well and she is 1099. when he hired me, because I was unfamiliar with how to declare my taxes as I have always been a W2 employee, he told me to talk with her to see how she paid her quarterly taxes and to do whatever she does. She's the one who told me to do it this way....but I guess she's confused because she truly is an independent contractor as does bookkeeping for a few self-employed individuals in the area. We are just one of her "clients".

Re the 401K question, I want to contribute as much as I legally can so will need to really research my options.  Backdoor Roth is not attractive to me as I have a friend who did this and she and DH got audited...turns out they did it the wrong way.  They have been under the microscope for 5 yrs already just because of this error  They are both FT W2, high earners.  She regrets doing it.  [/quote]

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