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1099 all the way if you are set up as an S corp, which you should be. Everyone’s situation is (a little) different, but I keep like 40% more on a 1099. Search this bowl for threads about accountants, and you’ll find folks who explain it more.
1099 and expense the ish out of everythaaang
1099
1099! For the deductions you can take
W-2 takes out your taxes for you, plus it looks better if you want to refi. Also pretty sure you can still expense those same things too.
Appreciate the insight, EP. My main client provided hardware and software, so 👍. But yes, options are good too. ☺️
Some agencies will only pay w2 “freelance” these days, due to the Microsoft permalancing case years ago that set a precedent for a bunch of changes to labor laws.
There are benefits to it, depending on your state. In NYC:
- you get unemployment every time you’re “between gigs” (file for it annually the moment you are “between gigs”)
- Medicaid for spells when you’re between gigs and no other income (you’ve got a bit of a buffer zone to declare income changes which might just happen to coincide nicely with your stints anyway)
- access to employer health cover after 130 hrs or 1000 hrs worked (catastrophic or comprehensive plan depending on the employer)
- access to 401k access after 1000 hrs worked (they may claw back and withhold company match but reinstate it when you go back til it vests)
- paid sick leave accrued at a rate of 1 hour per 30 hrs worked up to 40 or 56 hours depending on size of company (you may have to keep track and let HR know when you’re taking it - it will appear on your paystub as PSL x sick leave hours x your rate = $y ie you get paid if you’re sick)
In short, W2 non-exempt (erroneously called W2 freelance) is hybrid of W2 full time because the IRS and DOL view all W2 essentially the same on several fronts.
You can Google all the above under DOL, ERISA, Paid sick leave, FLSA (fair labor standards act).
You just have to be sure to strike any protective covenant clauses in a w2 contract that are designed for full timers, , eg “40 hrs not guaranteed/bill only hours worked” AND “not allowed to work for competitors” - they can’t have it both ways. (Unless of course you charge $500/hr - then yeah, work an hour and twiddle your thumbs 😉)
With 1099 you pay quarterly taxes etc so you have to have a good accountant who keeps you on top of all that.
You can do a mix of both depending on what you’re offered - oftimes being booked is better than not working than not working at all.
For many people it all comes out in the wash at tax time.
in short: W2 means you’re basically an employee.
always 1099 dont even
1099 all the way
I’ve had the same question. I do a mix of both depending on what the company wants but I like w2 because I can get unemployment when I’m out of work and don’t have to worry about owing a ton of taxes at the end of year. I thought we could deduct the same things either way?
you’re an employee under W2. don’t get it twisted
Interesting advice on another thread:
https://joinfishbowl.com/comment_ms3r2esne7
it’s actually spot on.
act like a business.. don’t act like a “gig” worker.