W2 employee with NO benefits

[chocomorsel]

Just want to know why a group would hire someone as a W2 when they are really a 1099. The group provides absolutely no benefits to include malpractice but states they have a "high income potential" What's the catch or why would they do that?

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[deleted171991]

There is a sucker born every minute.

 

[chocomorsel]

There is a sucker born every minute.

Thanks, but could you elaborate? I see how it could screw me, but I don't see how it benefits them? Not a business professional, just a medical one. Still learning.

 

[deleted171991]

Why would you accept a W-2 with no benefits? You can't even deduct your expenses. What do you gain by being their employee, instead of their subcontractor?

 

[pgg]

I'm not sure why this is a default screw-job either. It's kind of weird.


$X from a W-2 with no benefits would seem to be better than $X from 1099 with no benefits ... either way, you're getting no benefits, but at least with the W-2 the employer is paying 1/2 the payroll taxes.

You can still deduct expenses from W-2 income. I have two jobs, one W-2 and one 1099. I tilt almost all of my professional deductions to the 1099 job, but there are some that are specific to the W-2 job.

Not being able to contribute to a SEP-IRA with the W-2 is a downside, but I would think you could still set up something pre-tax with your W-2 employer, even if they don't contribute to it?

 

[deleted171991]

$X from a W-2 with no benefits would seem to be better than $X from 1099 with no benefits ...

That's right. However, I don't see why the same employer would not offer the same $X + the difference in taxes for a 1099. From the employer's standpoint, the cost is the same. From the employee's, it's a big difference. Just the fact that one can contribute $52,000 to a SEP-IRA or 401(k) is worth it. Not to speak about the business expenses which should be less limited than for an employee.

 

[BLADEMDA]

Always choose 1099 over a W-2 if the math is the same. You want the employer to give you the full W-2 package including employer contribution for taxes as a 1099 figure.

 

[IlDestriero]

That sounds like a bad job, unless the W2 income is really high. All those benefits are expensive. Add limited deductions, retirement etc. No way.

 

[Apollyon]

I do not have any info on this job, but I have the very likely solution/explanation: it WAS a 1099 job, but someone challenged the "independent contractor" status of the job with the IRS, and the IRS agreed. Whether anyone agrees with it or not, just calling someone an "independent contractor" doesn't make them one anymore than me saying the sky is green. I mean, some of the criteria they follow include scheduling, location, and ability to hire your own assistants. As such, if the IRS disagreed that the specifics of the job were that of an IC, and much more closely coincided with employee status, then they would make that ruling.

Now, a W2 job with no bennies? Well, whatever. What it DOES get you is the half employer tax contribution, unemployment insurance eligibility, and worker's comp. However, if you are not bringing your own laryngoscopes, BVMs, ventilators, and drug box, don't book your own OR time whenever you see fit, and have a non-compete, you're probably not an IC.

Now, don't shoot the messenger - it is what it is. I'm just saying is all.

 

[aneftp]

I do not have any info on this job, but I have the very likely solution/explanation: it WAS a 1099 job, but someone challenged the "independent contractor" status of the job with the IRS, and the IRS agreed. Whether anyone agrees with it or not, just calling someone an "independent contractor" doesn't make them one anymore than me saying the sky is green. I mean, some of the criteria they follow include scheduling, location, and ability to hire your own assistants. As such, if the IRS disagreed that the specifics of the job were that of an IC, and much more closely coincided with employee status, then they would make that ruling.

Now, a W2 job with no bennies? Well, whatever. What it DOES get you is the half employer tax contribution, unemployment insurance eligibility, and worker's comp. However, if you are not bringing your own laryngoscopes, BVMs, ventilators, and drug box, don't book your own OR time whenever you see fit, and have a non-compete, you're probably not an IC.

Now, don't shoot the messenger - it is what it is. I'm just saying is all.

I agree. Someone blew whistle on group with 1099/W2 classification.

To be honest. Probably 75% of the so called 1099 positions can easily be challenged by the IRS to be really W2.

You must be certain criteria to be 1099. Trust me. And most will agree. If practice dictates your schedule (what time you come in and what time you have off,and still pays you 1099. You are a W2. Unless it's a locums third party contract.

But as others stated. W2 with no benefits is the worst possible job especially if salary is on the lower side. Many military contracts are W2 with no benefits.

1099 is good depending on your write offs. You still have to pay yourself a "reasonable salary" as a 1099 on corp tax returns. Meaning the IRS will frown up seeing that you pay yourself a $50k salary as a "doctor". It's a major red flag unless you have legit reason...start up pain practice with lots of sect 179 deductions for office/clinics.

 

[midwest82]

Enlightening posts, thanks!

 

[chocomorsel]

Thanks guys. This now makes sense. I dont think its a bad deal w this group as its production based pay w min guarantee. Plus its in one of my favorite cities.

 

[BuzzPhreed]

Thanks guys. This now makes sense. I dont think its a bad deal w this group as its production based pay w min guarantee. Plus its in one of my favorite cities.

Sounds like a screw job. Take it from me. Don't let geography trump the work. I think Apollyon is probably right. These guys were trying to avoid paying taxes. In other words either they are stupid or are crooks (or both). And that makes it sound like to me they are going to play fast and loose with your promised production base. My bet? You are going to make the minimum. For a long time.