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<blockquote data-quote="dmac1" data-source="post: 3354957" data-attributes="member: 60252">It doesn&#039;t really matter if you no longer have a business. The income is from employment, and subject to employment taxes.&nbsp; Being on the &#039;west coast&#039; you might have also been determined to be an employee in California. I seem to remember a ruling in the 9th circuit that applied to CA as well as Oregon. I know Oregon state court also made a decision that forced fedex to settle the case before it went to court.It is likely that if you were ruled an employee, and went back and recomputed your taxes, the Social Security portion would be nearly a wash, since fedex should have been paying 7.75% on your total income, instead of you paying 15.6% on your net income. Unless your expenses were much over 1/2 your gross income, you wouldn&#039;t owe much, and in my case, my three drivers were also ruled as fedex employees in a state case(I had given them 1099s) so fedex would owe taxes on what I paid them with NO deductions, and the drivers would owe their share. I am sure that I SHOULD count the settlement as employment income, but in my case, the amount I might owe would be tiny, and if pushed, I could probably dig up paperwork showing that I overpaid SE taxes during years I was actually an employee. I am going to ignore the FICA tax aspect and hope that my income is so low that the IRS doesn&#039;t waste their time even looking at it. If I had gotten $200k or something big, I&#039;d be more concerned.</blockquote>

[QUOTE="dmac1, post: 3354957, member: 60252"] It doesn't really matter if you no longer have a business. The income is from employment, and subject to employment taxes. Being on the 'west coast' you might have also been determined to be an employee in California. I seem to remember a ruling in the 9th circuit that applied to CA as well as Oregon. I know Oregon state court also made a decision that forced fedex to settle the case before it went to court. It is likely that if you were ruled an employee, and went back and recomputed your taxes, the Social Security portion would be nearly a wash, since fedex should have been paying 7.75% on your total income, instead of you paying 15.6% on your net income. Unless your expenses were much over 1/2 your gross income, you wouldn't owe much, and in my case, my three drivers were also ruled as fedex employees in a state case(I had given them 1099s) so fedex would owe taxes on what I paid them with NO deductions, and the drivers would owe their share. I am sure that I SHOULD count the settlement as employment income, but in my case, the amount I might owe would be tiny, and if pushed, I could probably dig up paperwork showing that I overpaid SE taxes during years I was actually an employee. I am going to ignore the FICA tax aspect and hope that my income is so low that the IRS doesn't waste their time even looking at it. If I had gotten $200k or something big, I'd be more concerned. [/QUOTE]

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