I finally asked my accountant about the 1099 vs W-2 debate after reading a Reddit thread

That thread said most people misclassify workers just to save on taxes but my guy in Austin showed me the IRS penalties can hit $5,000 per form, has anyone else run into trouble with this?

2 comments

2 Comments

ray2102d ago

Honestly, how did your accountant find out about the penalties in the first place?

vera_roberts2d ago

The accountant caught it because they pulled a full transcript from the IRS to verify everything before filing. @ray210, most people just hand over their W-2s and call it a day, but a good tax pro will dig into the IRS's records if something looks off. In my experience, penalties show up on those transcripts when you've missed estimated tax payments or had a weird prior year adjustment that didn't get resolved. Your mileage may vary, but once they see that transcript, they can trace the penalty back to a specific code and figure out what triggered it.