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Started By
Message
Contract Work - W2 vs. 1099
Posted on 4/23/14 at 8:29 am
Posted on 4/23/14 at 8:29 am
I am thinking about switching from a full time position to a contract job because I'm currently unhappy where I am and have an opportunity for a contract job with decent pay.
The staffing company is offering me whether I would like to do a w2 through them or 1099. I know what the difference is but I'm looking for some Pros and Cons. If I do the w2 through them I can get health insurance but they do not offer a 401k.
Also, is there some sort of calculator or method of figuring out my net takehome if I do 1099 (after taxes that I need to take out).
Thank you in advance for any insights yall provide.
The staffing company is offering me whether I would like to do a w2 through them or 1099. I know what the difference is but I'm looking for some Pros and Cons. If I do the w2 through them I can get health insurance but they do not offer a 401k.
Also, is there some sort of calculator or method of figuring out my net takehome if I do 1099 (after taxes that I need to take out).
Thank you in advance for any insights yall provide.
6
Posted on 4/23/14 at 8:32 am to jmorr34
The company cannot offer you a "W-2" or "1099" position - you are either an employee or you are not. Just FYI.
Posted on 4/23/14 at 8:38 am to krehn11
let me rephrase - the w2 would be done through the staffing company so im primarily interested in knowing what would be better - a w2 contractor or a 1099
Posted on 4/23/14 at 9:01 am to jmorr34
As a 1099 you won't be offered any benefits. I'm 29 and my health insurance runs $300/month, and any retirement contributions are up to me. You will also have to have the discipline to save for taxes - and pay quarterly if you're a stickler for that sort of thing. I would feel much better as a w2 employee.
Posted on 4/23/14 at 9:07 am to jmorr34
Are taxes not significantly greater for a 1099?
Posted on 4/23/14 at 9:09 am to jmorr34
There is no such thing as a W2 contractor. As stated, you are an employee or you aren't. There are tests they must pass to treat you as a 1099 worker.
These are the common items that go into determining whether someone is an employee or not.
quote:
Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?
These are the common items that go into determining whether someone is an employee or not.
Posted on 4/23/14 at 9:16 am to VABuckeye
they are just offering me the option of w2 or 1099 and I'm trying to figure out which is best.
If im offered the same rate on a w2 as 1099 which would be better and so forth. And if I was offered x rate on w2 could i negotiate more if I do 1099.
If im offered the same rate on a w2 as 1099 which would be better and so forth. And if I was offered x rate on w2 could i negotiate more if I do 1099.
This post was edited on 4/23/14 at 9:17 am
Posted on 4/23/14 at 9:29 am to jmorr34
You should be able to write off a lot more with the 1099... If you have plans to finance any large purchases in the next two years (house) go w-2...
Posted on 4/23/14 at 9:37 am to jmorr34
With a 1099 won't you have to pay both sides of Social Security? I'd check into that.
Posted on 4/23/14 at 9:53 am to PlanoPrivateer
if your question is, co. x wants me to work for them as a contractor. co. x is ok with me going through an agency (w-2 employee) or dealing directly with me (1099).
to answer the question, you absolutely have to pay both social security (employee and employer) for this reason alone, you HAVE TO get a higher rate as a 1099. in addition, an agency has to be paid and this comes out of your share. ex. co. x wants to pay $50 hr. then the agency will take 10 and you get 40. without an agency you get the whole $50. if you found your own job and negotiated your own rate, then there is no reason to PAY an agency since you did their job. 1 would go 1099. also, you have to pay quarterly estimated tax with a 1099.
to answer the question, you absolutely have to pay both social security (employee and employer) for this reason alone, you HAVE TO get a higher rate as a 1099. in addition, an agency has to be paid and this comes out of your share. ex. co. x wants to pay $50 hr. then the agency will take 10 and you get 40. without an agency you get the whole $50. if you found your own job and negotiated your own rate, then there is no reason to PAY an agency since you did their job. 1 would go 1099. also, you have to pay quarterly estimated tax with a 1099.
Posted on 4/23/14 at 10:51 am to jmorr34
What kind of contract work will you be doing for this company?
Posted on 4/23/14 at 10:54 am to BAMAisDIESEL09
IT
Posted on 4/23/14 at 11:01 am to oldschoolgreats
1099 v. W-2 status is generally not something you can elect. The conditions of the relationship between the parties will determine how a worker is classified. That being said there are other issues to consider when figuring out what compensation is required. Among them are:
What happens if you get injured on the job? As a W-2 employee you are covered by worker's compensation. If you go the 1099 route, then you are not, and your health insurance may not cover workplace injuries.
What happens if you cause an accident that injures someone in the performance of your duties? If you are a W-2 employee the employer may be liable as your were only an agent of the employer. If you are a 1099 worker, then you will most likely be personally liable.
What happens if you are dismissed from the job? What are the unemployment compensation repercussions?
When can you renegotiate your compensation arrangements?
Being a 1099 worker really only makes sense above certain compensation levels. Those levels depend on the type of work being done.
What happens if you get injured on the job? As a W-2 employee you are covered by worker's compensation. If you go the 1099 route, then you are not, and your health insurance may not cover workplace injuries.
What happens if you cause an accident that injures someone in the performance of your duties? If you are a W-2 employee the employer may be liable as your were only an agent of the employer. If you are a 1099 worker, then you will most likely be personally liable.
What happens if you are dismissed from the job? What are the unemployment compensation repercussions?
When can you renegotiate your compensation arrangements?
Being a 1099 worker really only makes sense above certain compensation levels. Those levels depend on the type of work being done.
Posted on 4/23/14 at 11:24 am to Poodlebrain
^This^ The bottom line is if you receive a W-2 from a company, you are on their payroll. Your taxes will be withheld and paid throughout the year by the employer. Your FICA will be matched by the employer and they will be responsible for paying your SUTA (state unemployment) and FUTA (Federal Unemployment) taxes. You may be eligible for certain benefits such as health insurance and 401k.
If you elect to receive a 1099, you are considered to be a subcontractor on the company's books. If you receive compensation in excess of $599, the company is required to issue you a 1099 and you will be required to submit a certificate of liablity insurance and, in some cases, proof of workers compensation insurance. You will be required to budget and pay your own taxes at the end of the year including FICA. You will not be eligible for company benefits such as health insurance and 401k. At the end of the year you will file your form 1040 as normal and you will be required to a file schedule C and schedule SE.
If you plan on working for this company in a full time capacity id choose being added to the company's payroll and receiving a W-2.
If you elect to receive a 1099, you are considered to be a subcontractor on the company's books. If you receive compensation in excess of $599, the company is required to issue you a 1099 and you will be required to submit a certificate of liablity insurance and, in some cases, proof of workers compensation insurance. You will be required to budget and pay your own taxes at the end of the year including FICA. You will not be eligible for company benefits such as health insurance and 401k. At the end of the year you will file your form 1040 as normal and you will be required to a file schedule C and schedule SE.
If you plan on working for this company in a full time capacity id choose being added to the company's payroll and receiving a W-2.
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