1099 vs W-2

[Coastie]

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Saw this discussion come up on a few other threads, but it was never properly explained.

When looking at job contracts, what is the difference between the two? What are the pros and cons of each?

Thanks!

 

[militarymd]

There are differences, but the most important part is TOTAL compensation package.

Meaning how much of what you earn goes to you in the form of:

1) pay
2) benefits (insurance of all types, 401k or other retirement plan, other expenses, etc.)
3) vacation

 

[coprolalia]

1099 is essentially an independent contractor type position. You "eat what you kill". You have to file certain portions of your taxes quarterly. If you're working hard, not possible to do this type of job without a good accountant. Usually you have to work out your own insurance. And, you usually get no real direct benefits (401k) from anyone.

W-2 means that you work as part of a group and are paid through them (i.e., they have a tax ID number through which you receive payment, SSI is paid, etc.). They often negotiate a lot of other things like vacation time, malpractice coverage, partnership track, etc.

The nicer thing about a 1099 job is that, beyond your contract, you're not really beholden to anyone. The nicer thing about a W-2 job is the security. One's not inherently better than the other. Just depends on what you're looking for.

http://en.wikipedia.org/wiki/1099

http://en.wikipedia.org/wiki/Form_W-2#W-2

-copro

 

[militarymd]

1099 is essentially an independent contractor type position. You "eat what you kill". You have to file certain portions of your taxes quarterly. If you're working hard, not possible to do this type of job without a good accountant. Usually you have to work out your own insurance. And, you usually get no real direct benefits (401k) from anyone.

W-2 means that you work as part of a group and are paid through them (i.e., they have a tax ID number through which you receive payment, SSI is paid, etc.). They often negotiate a lot of other things like vacation time, malpractice coverage, partnership track, etc.

The nicer thing about a 1099 job is that, beyond your contract, you're not really beholden to anyone. The nicer thing about a W-2 job is the security. One's not inherently better than the other. Just depends on what you're looking for.

http://en.wikipedia.org/wiki/1099

http://en.wikipedia.org/wiki/Form_W-2#W-2

-copro

that's not entirely accurate.

My partners and I own a corporation which "employs" me and my partners. The corporate entity "pays" each of us.

I can pay myself 1099 or w-2.....it's just accounting for tax purposes...and depending on how you live your life and spend your money, one way or the other can be more beneficial for you....meaning you can avoid taxes.

Because we own the corporation that employs us, 1099 does not provide tax benefits...so we pay ourselves with w-2's.

Like I said before , the important thing is the TOTAL amount that you get paid, not how you get paid.

 

[coprolalia]

Like I said before , the important thing is the TOTAL amount that you get paid, not how you get paid.

Oh, I agree. I think this other Wikipedia article, though, points a finer picture on what it means to be an independent contractor (which is a legal term for tax purposes and doesn't really have a lot to do, as you say, with how you actually structure your work).

http://en.wikipedia.org/wiki/Independent_contractor

I'd argue that in most instances the 1099 jobs on Gaswork are being advertised as independent contractor type positions where one is to "show up, we'll give you work, but don't expect to become a partner" type deal. Now, there may be exceptions to this, but overall I think the idea behind the 1099 listing is that it's basically a fend for yourself (at least in the insurance and benefits area) type arrangement. And, being paid through a 1099 has a lot of specific tax and legal ramifications.

Still, not disagreeing with everything else you said. Especially the part about having the balls to negotiate yourself a good contract or walking away.

-copro

 

[militarymd]

Oh, I agree. I think this other Wikipedia article, though, points a finer picture on what it means to be an independent contractor (which is a legal term for tax purposes and doesn't really have a lot to do, as you say, with how you actually structure your work).

http://en.wikipedia.org/wiki/Independent_contractor

I'd argue that in most instances the 1099 jobs on Gaswork are being advertised as independent contractor type positions where one is to "show up, we'll give you work, but don't expect to become a partner" type deal. Now, there may be exceptions to this, but overall I think the idea behind the 1099 listing is that it's basically a fend for yourself (at least in the insurance and benefits area) type arrangement. And, being paid through a 1099 has a lot of specific tax and legal ramifications.

Still, not disagreeing with everything else you said. Especially the part about having the balls to negotiate yourself a good contract or walking away.

-copro

I know what your're saying.

My point is that 1099 vs w2 does not determine whether you are going to "join a group" or being an "independent contractor" .

Independent contractors can be paid on a w2 also...

It is more an accounting difference than a job description difference.

 

[coprolalia]

I know what your're saying.

My point is that 1099 vs w2 does not determine whether you are going to "join a group" or being an "independent contractor" .

Fair enough. You can always look at the job descriptions on Gaswork and they will usually specifiy this too, if it's listed as a "1099" job.

Independent contractors can be paid on a w2 also...

It is more an accounting difference than a job description difference.

Well, not to put too fine a point on it, but if you're paid through a W-2 you are considered an "employee" of whichever entity holds the Tax ID number issuing the W-2. This is true even if you don't work "full time" and are allowed to hold other jobs. It's a tax code thing, sure. And, as you suggest, has specific accounting ramifications, not the least of which is that the W-2 issuer must pay a portion of the employee's FICA tax. This is why a true "indepenedent contractor" (in the legalese sense) is issued a 1099, so the "employer" can avoid paying this tax for workers in their workforce they don't want to.

And, the IRS has been cracking down as of late on individuals and business entitites allowing workers to list themselves as "independent contractors" when they are, in fact, "employees". Uncle Sam wants to stick his fingers into as many crevices as possible, after all.

-copro

 

[militarymd]

You are right on all counts...and I think we've probably confused Coastie even more.

 

[coprolalia]

You are right on all counts...and I think we've probably confused Coastie even more.

-copro

 

[Coastie]

You are right on all counts...and I think we've probably confused Coastie even more.

Yeah...It's ok. I'm watching the Cowboys game in HD. I'll worry about this stuff later.

 

[TheSandMan]

Yeah...It's ok. I'm watching the Cowboys game in HD. I'll worry about this stuff later.

Totally off topic, but why/how do you guys have the "2+ year member" icon under your avatars?

 

[Gimlet]

Totally off topic, but why/how do you guys have the "2+ year member" icon under your avatars?

Everyone who has been here for longer than 2 years gets one, but they're updating the profiles only a few members at a time so they don't overload the database. Yours should come soon.

 

[HenryH]

So, what's the deal with all these CRNA/AA jobs on Gaswork that specify that the anesthetist will be according to 1099 form conditions? Without a doubt, aren't anesthetists "employees" (and would be, therefore, more appropriately signed to a W-2 form)?

 

[Planktonmd]

So, what's the deal with all these CRNA/AA jobs on Gaswork that specify that the anesthetist will be according to 1099 form conditions? Without a doubt, aren't anesthetists "employees" (and would be, therefore, more appropriately signed to a W-2 form)?

No,
a CRNA or AA can be an independent contractor with a group which means they get paid a certain amount of money but they handle their own taxes and all other expenses including health insurance and malpractice insurance.

 

[HenryH]

Thanks for the clarification. Just out of curiosity, do you know how much malpractice insurance usually costs for an AA?