So lately I've ignored the distinction between W2 and 1099 employment. I've feigned indifference... Until I had a somewhat urgent request as to how I would choose to be paid. (Before any alarms start going off, no I haven't taken a new job or quit my old one, I'm just entertaining my prospects.) W2 paid 12% less than 1099.
So I tried to find a quick answer. I didn't like my Google results. I called my sister/CPA, who was at the gym and got back to me 10 minutes later assuming there was an emergency if I was calling her. (Who calls people anymore? Not I, unless I'm calling Grandma.) She seemed excited to run numbers, but needed specifics -- mainly differences in benefits, which I can't determine until Monday when I speak to someone more official.
My internet research that followed was very underwhelming. First, I couldn't find any information on benefits for the company I was speaking to, even though they're a bigger name company. I did find out that they seem to hire young people like myself (though greener out of college) and work them and abuse them to death. The person I was speaking to seemed to confirm that in manner and with some verbal cues, though he pretended to be appreciative of his right out of college position. (Now I don't know how much bearing this would have on myself, being a contractor they were just placing, until I speak to that more official gentleman.) This company is also one that I have seen in a negative light since I helped interview one of their consultants for a potential position at my company, and my brain imploded from just how unskilled this person admitted to be for how much we were going to pay his company.
The 1099 vs. W2 thing seemed to weigh in favor of W2. W2 is safer because the employer withholds taxes for you and also matches the amount that's withheld. In 1099, no tax is withheld. You have to take care of that yourself by paying quarterly based on estimated income. You also have to take care of the portion the employer would usually pay, minus a small percent. In W2, money is paid toward unemployment by the employer. 1099 doesn't seem to offer unemployment protections, though I didn't research specifically for my state (NY). I could be wrong as information on this was sparse.
In 1099 you have more flexibility as far as deductions go (home office, business expenses), but you're also more likely to be audited. Hooray audits! In 1099 you're also less likely to receive employer subsidized benefits, since you're not actually an employee.
I don't know, the extra money and deduction benefits of 1099 seem to be outweighed by the risks. Any thoughts?
