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Offline wasteman

1099 vs W-2
« on: Oct 25, 2017, 10:40 »
Searched, couldn't find much clear info.  I've always been a W-2 employee.  Have a company wanting me to work on a 1099. How much more should I ask for?  What are the pitfalls?  How does per diem work out (can they still pay it tax free or do I have to report and deduct expenses)? can I pay my own unemployment ins.?  What about if injured on job?  I have no clue if it's worth it on 1099. Any info / experiences would be much appreciated.  Thanks, wasteman!!

Offline bsdnuke

Re: 1099 vs W-2
« Reply #1 on: Oct 25, 2017, 01:55 »
There are a few differences to be aware of.  A 1099 means you are an independent contractor or subcontractor to a company and are self employed. To be a contractor and not an employee there are a number of questions to be answered regarding control and other things. A good place to look at that is here: https://www.dol.gov/whd/workers/misclassification/

Financially, the 1099 means you will pay the employer's share of FICA and Medicare as well as your own. You will not pay any SUTA or FUTA so that when you are done with the job this event may not permit you to collect unemployment. As a 1099 you can deduct business expenses where as an employee those deductions are harder to get or require a threshold (exceeding 2% of adjusted gross under miscellaneous deductions). 

One of the big issues is Worker's Compensation. If you are injured and are a 1099, there is no Worker's compensation for you.

Per diem works the same, the maximum you can get is based on locality. Instead of getting it tax free, you can receive it and take it as an expense. There are some publications on the IRS website that you should look at including Publication 334 https://www.irs.gov/forms-pubs/about-publication-334.

You will pay estimated taxes quarterly as no taxes are withheld.

Good luck. Let me know if you have a question.

Offline SloGlo

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Re: 1099 vs W-2
« Reply #2 on: Oct 25, 2017, 02:16 »
consult yore financial guy. iffen yins dew knot have a guy, get won. if yew are going two bee working multiple states, a c.pa. oar a tax lawyer wood bee best. they get the big bux, butt have the defensible answers. plus, the fees are deductible.
quando omni flunkus moritati

dubble eye, dubble yew, dubble aye!

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Offline GLW

Re: 1099 vs W-2
« Reply #3 on: Oct 25, 2017, 02:25 »
You should probably be sure you get paid enough to cover the cost of a good accountant for the items delineated in the above post,...

rules of thumb,...

for every 1000 hours you work your CPA will need 10 hours,...

for every change of job location your CPA will need 2 hours (consider it a change order fee),...

for every quarterly filing your CPA will need 4 hours,....

the above rules of thumb assume you pay state income tax to at least one state and you expense all allowable deductions and you carry self-insured health, life and disability,....

if you do not not follow the above assumptions you should not 1099,...

you can get "per diem" as a 1099, you should let your CPA advise you on how to pay taxes on that stipend and how to deduct expenses against it,....

if you typically work for 40 bucks an hour, you should 1099 for no less than 80 bucks an hour, NOT including compensation needed for living expenses,....

been there, dun that,... the doormat to hell does not read "welcome", the doormat to hell reads "it's just business"

Offline SloGlo

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Re: 1099 vs W-2
« Reply #4 on: Oct 25, 2017, 02:45 »
using g.l.w. thumb rules (wit witch aye agree) a pro will cost ~2% .
quando omni flunkus moritati

dubble eye, dubble yew, dubble aye!

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Offline traveltax

Re: 1099 vs W-2
« Reply #5 on: Feb 18, 2018, 11:21 »
1099 work is now more lucrative under tax reform as you will only be taxed on 80% of the net.

Try to get at least 20% more than salary
Joseph Smith EA/MS Tax
Enrolled Agent, Admitted to Practice Before the IRS
TravelTax TravelTax Canada
www.traveltax.com info@traveltax.com

 


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