I was a W2 employee at a startup. For the first several months of my employment my employer withheld taxes normally. Later, the company experienced financial problems and was unable to make payroll four times. Eventually, the company wrote me a check for the gross salary for three pay periods; no taxes were withheld. This gross salary was not included in the W2 I received today. Do I report this as 1099 income, as "Other Income" on line 21 of Form 1040 Schedule 1, or something else?
Eventually, the company wrote me a check for the gross salary for three pay periods; no taxes were withheld.
At first this looks like you should treat this as 1099 income, but your employer can't just switch you from W-2 to 1099 becasue they want to.
This gross salary was not included in the W2 I received today
Important caveat: if they paid you the triple check in 2019 even if the work was done in 2018, that money would not appear on your W-2 until one was issued in January 2020.
Regarding the lack of withholding, you should contact the state government division of labor for guidance, you should also report this issue to the Federal department of Labor but they might not be investigating during the budget shutdown.
Miss-classifying an employee as a contractor is a violation of the law. The government takes that seriously. They also have labor laws regarding frequency of pay.
The financial issues the company is having that delayed the paying of 4 paychecks was a sign they were in trouble.
Now that they have issued a check for 3 paychecks worth of gross pay shows their problems haven't gone away. They may be in debt to their payroll service, or they are behind in paying sending their withholding to the federal and state governments.
In addition your benefits are in danger. If they were withholding money for health insurance, they may not have paid the coverage bill. They also may not be honoring any paid time off or other benefits.
Start looking for another job, this one might not be around for long.
Yes, this is effectively 1099 income because it sounds like the employer is having trouble paying Paychex or whoever runs his pay stubs.
This is about a 7% penalty for you, as you'll need to pay his half of FICA. Normally FICA is not something you document on your own 1040, your half is withheld and he just pays his half.
However you'll need to look into a 1040-ES form for paying that. You just missed a payment deadline on Jan. 15 but IRS says that's fine if you file your taxes by Jan. 30 and include a check.