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Are agencies allowed to use 1099 forms for their aides?

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It does matter who cuts the check. An "agency" by law cannot cut an independent contractor check by law. They are required to provide w4 forms and take appropriate taxes out. On the other hand, a fiscal intermediary or a client can set up a subcontractor agreement in which taxes are not taken out. Also, if it was a legitimate subcontractor agreement, there would be a w9 filled out and a copy of a general liability policy would need to be on file.
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Actually, it doesn't matter who cuts the check. If she is considered an independent contractor, then she will get a 1099. That means the employer doesn't take out taxes, doesn't have to offer benefits, etc. It also means the employer cannot claim the employee for any benefits for themselves. My daughter is an IC in another field. The agencies cut her checks, but she receives a 1099 at the end of the year and files her taxes. It is really an easy way out  for "employers". Call the Dept. of Labor in NY and double check, though.
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You call your Department of Labor and file a claim which states you believe you are misclassified as a 1099 contractor rather than an employee. What did your contract you signed say? You will be asked how you did not notice taxes were not taken from your check.
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The check is from the agency -- they are your employer. They should have given you a W2. This is not your fault. It is the agency that is handling this inappropriately.

Who is the person you told you that should be getting a W2? Is that a person who can help you straighten this out?

I really don't know how you go about correcting this. Does anyone else on this board know?
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I am new to this country and did not understand. I work 3 days straight every week including overnight for a lady for the past 6 months - I never missed one day. The lady pays the agency and the agency send me a check. Then they gave me 1099 form & told me to do my taxes & they say I am independent contractor. Then somebody tell me in NY they don't think agency can have a regular worker as independent contractor. It's confusing.
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There really isnt enough information given to make any determination. The agency could just be a headhunter. We dont know if its one client or several, the contract or who the check is actually from.
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jeannegibbs is correct. The way they are handling you means they don't have to pay OT and are probably skirting other labor laws. Honestly, a lot of these agencies are truly out for the $$, paying employees so little to begin with. If they are taking out taxes, you should be getting a W-2. Look at your contract.
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Does your check come from an agency, a client or a fiscal intermediary?
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I have done contractor work in the IS field for many years. Sometimes I did it as an independent, estimated and paid my taxes quarterly and paid the employer portion of the SS tax. Sometimes I worked through an agency, as their employee. I was never considered an independent contractor when I worked through an agency, and that is why this seems very odd to me.

You really don't meet the legal definition of independent contractor when you work through an agency. The agency should not be treating you this way. It is cheaper for them, of course, to make you responsible for paying the employer portion of the SS tax and to place the burden of tax reporting on you. They also can then get by with not complying with various labor laws, claiming they are not employers.

Here is a good article explaining this: http://www.nelp.org/content/uploads/Home-Care-Misclassification-Fact-Sheet.pdf If the url gets removed, find it by searching for Independent contractor classification in home care.
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Read the contract you signed with the agency. If you agreed you are an "independent contractor" you get a 1099. If you were an employee, you would have gotten a W-2. Either way you declare the income and pay taxes.
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I wouldn't think so. Did they withhold taxes from your wages? Did you fill out a W-4 form, indicating how many dependents you have, etc.? 1099 forms are for independent contractors. Is that what you understood your status to be?
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