Department of the Treasury
       Internal Revenue Service

Notice 989
(Rev. August 2015)
Commonly Asked Questions When IRS 
Determines Your Work Status is “Employee”

The issue of worker employment status is generally ad-               Use Form 8919 to compute FICA tax and ensure that you 
dressed under the SS-8 program or as part of an employ-              receive credit for this income with the SSA. For instructions 
ment tax examination of a firm. Under the SS-8 program               on amending your return, see question 11.
the IRS issues determination letters to firms and workers 
on the proper employment status of a worker for purposes             If you have already filed a federal tax return and re-
of federal employment taxes and income tax withholding.              ported the income but did not compute the FICA tax 
The worker will generally be considered an employee if a             on the income, you must file Form 1040X for the affected 
firm has the right to control what will be done by the worker        tax year(s) to compute and pay the FICA tax due on this 
and how it will be done. A firm may be an individual, busi-          income. Use Form 8919 to compute FICA tax and ensure 
ness, organization, state or other entity for which a worker         that you receive credit for this income with the SSA. For 
performed services. If you are a worker who was treated as           instructions on amending your return, see question 11.
a independent contractor (or in some other nonemployee 
status) by a firm and the IRS changes your employment sta-           If you have already filed a federal tax return, but report-
tus to employee, you may have questions concerning your              ed your Form 1099-MISC income as self-employment 
responsibilities as a taxpayer.                                      income and not wages, you must file Form 1040X for the 
                                                                     affected tax year(s). You do not owe Self-Employment (SE) 
You can request a reconsideration of the prior determination         Tax, but you must compute and pay your portion of FICA 
regarding your Form SS-8, Determination of Worker Status for         tax on the income. Use Form 8919 to compute FICA tax 
Purposes of Federal Employment Taxes and Income Tax With-            and ensure that you receive credit for this income with the 
holding by sending a letter to the address provided to you by        SSA. See question 6 for additional information. For instruc-
the examiner. You must have additional information concerning        tions on amending your return, see question 11.
the relationship that was not part of the original submission, or 
identify facts that you think were not fully considered. Attach      2. What is the time limit for filing an amended return?
copies of the last correspondence you received from the exam-        Generally, a Form 1040X must be filed within 3 years after the 
iner and the SS-8 determination to your request                      date you filed the original return or within 2 years after the date 
                                                                     you paid the tax, whichever is later, if your amended return will 
1. What should I do now?                                             decrease your tax. You generally have 3 years after the date you 
What you should do depends on whether or not you have filed a        filed the original return if your amended return will increase your 
tax return reporting the income you earned and how the income        tax. A return filed before the due date is considered filed on the 
was reported. You may be due a refund, you may reduce an             due date. If an amended return is received after the time limit for 
existing tax liability, or you may owe additional tax as a result of filing it has expired, the amended return will not be accepted.
the change to your status. You do not need to wait for correct-
ed pay documents from the employer in order to file or amend         3. What if I already paid my portion of FICA tax with 
your return(s) to reflect your new status. Please consider the       my original return using Form 8919?
following instructions and select the one that applies to your       If you already reported the income on your tax return and com-
circumstances.                                                       puted your portion of FICA tax using Form 8919, you will not 
If you haven’t filed a federal tax return yet, you must              need to amend your return as a result of the determination 
file Form 1040, U. S. Individual Income Tax Return, for the          changing your status to employee. The determination letter 
affected tax year(s), reporting the income from Form 1099-           should be kept with your tax records to substantiate the way 
MISC,  Miscellaneous Income provided to you by your                  you filed your return. But see question 6 if you deducted ex-
employer as wages on line 7. Since no social security or             penses on Schedule C.
Medicare tax (FICA tax) was withheld from these wages, 
you must compute and pay the employee portion of these               4. What if the employer provides me with a corrected 
taxes with your return. Use Form 8919, Uncollected Social            Form W-2 that reflects payment of my portion of FICA 
Security and Medicare Tax on Wages to compute FICA tax               tax?
and ensure that you receive credit for this income with the 
Social Security Administration (SSA). See question 9 for             If the employer pays your portion of FICA tax on the income, 
instructions on computing FICA tax.                                  that additional amount becomes income to you in the year it 
                                                                     is paid. If you already paid FICA tax on the income, you can 
If you have already filed a federal tax return, but did not          amend your return to request a refund of this tax at that time.  
report the Form 1099-MISC Income, you must file Form                 If you do not receive a Form W-2 from the employer, you can 
1040X, Amended U. S. Individual Income Tax Return, for               assume that it did not pay your portion of the FICA tax, and you 
the affected tax year(s) to include the additional income as         remain responsible to pay it.
wages and re-compute your federal income. You must also 
compute and pay your portion of FICA tax on this income.  

5. How do I get money back if I already filed my re-             tax deduction, self-employment health insurance deduction, or 
turn?                                                            a Keogh-type retirement plan deduction.
You must file Form 1040X to receive a refund or credit toward    D. Changes (increase or decrease) to any tax or credit comput-
any unpaid taxes. Generally, a refund is only possible if you    ed on your adjusted gross income such as the alternative min-
initially calculated and paid SE Tax on the income or if your    imum tax, earned income credit, or credit for child and depen-
employer issued you a Form W-2 showing the employer paid         dent care expenses since some of the changes mentioned in A 
your FICA tax. See question 11 for instructions on amending      through C of this question affect your adjusted gross income 
your return.                                                     and/or your taxable income.

                                                                 9. What form do I use to calculate FICA tax?
6. What if I reported my Form 1099-MISC income on 
Schedule C and claimed expenses?                                 Individuals whose employment status is in dispute or who have 
                                                                 been determined to be employees by IRS can use Form 8919 
Schedule C cannot be used to report your income since wages      to calculate FICA tax on the income that has been determined 
earned by an employee are reported on line 7 of Form 1040.       to be wages. Completion of Form 8919 will also ensure that you 
You must file an amended return to reflect the correct amount of receive credit for this income with the SSA. You should attach 
tax under your status as an employee. The change to employee     it and a copy of the determination letter to your original return 
status may increase your tax because you will now compute        or amended return.
FICA tax on your gross wages instead of computing self-em-
ployment tax on the net income. Furthermore, any expenses        10. What if I’m getting bills for my taxes that will be 
you deducted from the income on Schedule C must now be 
deducted as miscellaneous itemized deductions on Schedule        affected by my new status as an employee?
A, subject to a 2% limitation.  Some of the expenses may no      The IRS will continue to send bills until you file an amended 
longer be deductible. Publication 529, Miscellaneous Deduc-      return or until you pay the amount due. When your amended 
tions, will help you determine which expenses can be claimed     return has been processed, your tax and any interest or penalty 
on Schedule A.                                                   charges will be changed as appropriate. The determination of 
                                                                 your work status will not stop the billing process or change your 
Self-employed individuals are also allowed a deduction on        tax due until you correct or file your Form 1040. File your Form 
Form 1040 in an amount equal to one- half of SE tax. As an       1040X, and Form 8919, and a copy of your determination letter 
employee, you are not entitled to this deduction and any oth-    (or other documentation showing you were determined to be 
er deductions you were allowed because you treated yourself      an employee), with the Campus specified in the Form 1040X 
as self-employed, such as the self-employed health insurance     instructions. Also, please inform the IRS office that has been 
deduction and the deduction for contributions to a Keogh-type    sending you bills that you have filed the amended return. If you 
retirement plan. Your taxable income is affected by these        are on an installment payment plan, you should continue mak-
changes, and as a result, the income tax due is adjusted. See    ing payments until your amended return has been processed 
question 8 for additional information.                           and you have been notified by IRS whether there is any balance 
                                                                 due.
7. What if I still have other unrelated business income 
to report on Schedule C?                                         11. How do I amend my tax return?
If your Schedule C included income from a source unrelated to    To complete your amended return, you will need a copy of your 
your determination as an employee, you remain responsible for    original return and a copy of any amendments made since you 
SE tax on that income and should continue to report the income   originally filed your return. If amendments have been made, you 
on Schedule C. File an amended return to make the chang-         should use these figures instead of the figures from your origi-
es described in Question 6 above, but also complete a new        nal return. Use these figures in column A of your Form 1040X. 
Schedule C that reports the unrelated business income and the    In Column C of your Form 1040X, fill in the correct information 
expenses attributable to that income. You must also complete     to reflect your status determination as an employee. To arrive 
a new Schedule SE, Self-Employment Tax, to compute self-em-      at these figures you may find it helpful to complete a new Form 
ployment tax on the new net income.  In addition, on page one    1040.
of Form 1040X, you will need to adjust any deductions you 
may have taken for one-half of the self-employment tax, the      If you are recalculating your taxes on a new Form 1040, report 
Keogh retirement plan deduction, or the self- employed health    the full amount of the 1099-MISC income as wages on line 7 
insurance deduction as they relate to the remaining Schedule     and compute the employee portion of FICA tax using Form
C income.                                                        8919. If you deducted expenses against this income on your 
                                                                 Schedule C when you originally filed, you may be able to move 
8. Will I get back all the Self Employment Tax I paid?           the expenses to Schedule A if they meet the employee busi-
                                                                 ness expense criteria. Report these expenses on Form 2106, 
No. The amount of your refund or decrease in tax is affected by  Employee Business Expenses, as miscellaneous deductions on 
the changes you make on your amended return. These changes       Schedule A (see question 6 above). Please note that you can 
may include:                                                     take the standard deduction instead of using Schedule A, if it is 
A. The amount of FICA tax you owe compared to the self-em-       to your advantage (the standard deduction may be higher than 
ployment tax you originally computed.                            your Schedule A deductions).

B. Whether or not any of the business expenses you originally    Column B of the Form 1040X is the difference (increase or de-
reported on Schedule C can be transferred to your Schedule A     crease) between columns A and C. If you are moving expenses 
since you can no longer use Schedule C to report the income.     from Schedule C to Schedule A, be sure to attach your Sched-
C. The removal of deductions you were entitled to as someone     ule A and Form 2106 to your amended return. If you must cal-
treated as a self-employed individual such as the one-half of SE culate your share of FICA tax, please also attach Form 8919.

12. How do I get return forms?                                    To get a reconsideration of the case, please send a letter to 
                                                                  the unit (at the address previously provided to you by AUR) re-
You can easily find and download the forms you need by 
                                                                  questing a reconsideration. Please attach copies of the Notice 
searching our web site, www.IRS.gov., or by calling IRS toll-
                                                                  CP2000 and the SS-8 determination to your request.
free at 1-800 TAX-FORM (1-800 829-3676).
                                                                  16. What if I filed the request for a determination as a 
13. Where should I send my return(s) or amended re-
                                                                  result of an audit on my tax return?
turn(s)?
                                                                  If you requested this determination to address a self-employ-
You should send your tax return(s) or your amended return(s) 
                                                                  ment tax deficiency matter brought to your attention through 
to the IRS Campus where you normally file your returns. The 
                                                                  an IRS audit of your Form 1040, you should submit the results 
instructions to Form 1040 or Form 1040X will provide you with 
                                                                  of the determination to the examiner for his or her consider-
the address.
                                                                  ation. Even if the audit is closed, the examiner can reconsider 
                                                                  the outcome using the new information. This could result in an 
14. What if I did not receive a reporting form from my            adjustment to your tax liability.
employer to assist with the amendment process?
If you did not receive a reporting form such as Form W-2 from     To have an examiner reconsider the audit case, please send 
your employer, or the amount on the reporting form you re-        a letter to the address provided to you by the examiner and 
ceived was incorrect and you have not been successful in ob-      request a reconsideration. 
taining a correct one from your employer, you may complete 
Form 4852, Substitute for Form W-2, Wage and Tax Statement,       17. What are the benefits of correcting my returns to 
or Form 1099-R, Distributions From Pensions, Annuities, Re-       reflect my status as an employee?
tirement or Profit-Sharing Plans, IRAs, Insurance Contracts, 
                                                                  By taking the initiative to correct your account, if necessary, 
etc. and use it as a substitute for Form W-2 to send with your 
                                                                  you may be able to reduce or avoid any otherwise applicable 
return(s). Estimate your income as accurately as possible if you 
                                                                  interest or penalty charges on any additional tax due or you 
do not have evidence of the actual amounts paid to you. If you 
                                                                  may receive a refund of any overpayment of tax. Additionally, 
have proof that the employer withheld taxes from this income, 
                                                                  if you did not initially pay FICA or self-employment tax on the 
you should include that on Form 4852 and attach the proof to 
                                                                  income, paying it now will ensure that you get credit for the 
the form before you mail it in.You may also contact IRS Cus-
                                                                  income with SSA.
tomer 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 employ-  18. What if I have more questions?
er’s responsibilities to provide a correct reporting form and the You can search our web site, www.IRS.gov., or you can call 
penalties for failure to do so. The representative will send you  IRS toll-free at 1-800 TAX-FORM (1-800 829-3676).
Form 4852 for completion (as discussed above) so you can at-
tach it to your return(s).

15. What if I filed the request for a determination as a 
result of contact from the IRS Automated Under-Re-
porter (AUR) Operation?
If you requested the SS-8 determination to assist you in re-
sponding to an inquiry from the IRS Automated Under-Report-
er (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.

    Notice 989 (Rev. 8-2015)  Catalog Number 15302T  Department of the Treasury  Internal Revenue Service  www.irs.gov