I had a job interview where they asked me if I preferred to be paid under w2 or 1099. Does anyone know what the difference is and the pro and con of each?

My family says that w2 is better because they pay the tax for you and its ultimately less expensive. With 1099 you can write stuff off but need to be more vigilant with taxes.

What do you guys think is better?

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There are not enough write-offs in the world to make it a balanced decision, IMO. Plus, W2 means they typically provide actual benefits and pay your taxes. 1099 is usually around 40% tax rate, plus no benefits. I'd always take a W2 over a 1099.

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This is helpful. Thanks for your insight. I think that W2 sounds more appealing.

PTO, holiday pay, and healthcare are factored into W2 as is the company payment for social security, unemployment, Medicare tax, etc.
As a 1099, you will need to pay more in taxes. Freelance (1099) generally uses a 30% increase as a rule of thumb to cover the offset. So $80 an hour W2 would be $104 as a 1099.

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This is helpful so the conversion factor is 1.3. So 80 x 1.3 is 104. Thanks for sharing this with me!

W2 for sure! Good luck and hope you get the position!! 🙏🏼

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Thanks for sharing your opinion. Why would you say w2 is better?

W2 for the reasons your family stated. Not to mention benefits. I've done contract work in the past and always had to secure my own health coverage. Save yourself the headache and go with W2.

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This is helpful. Do you know how much more money hourly rate would make 1099 better? I heard it’s something like 10$ more in value. So w2 pay of 30$/hr is worth like 1099 pay of 40$/hr if you have full benefits.

W2 is easier for sure. 1099 is basically self employed. You would have to crunch the numbers and do research to see which one made more financial sense. Also, have to take into consideration the company, do they pay differently based on that? What about benefits?

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Well they pay like 10$ more per hour for 1099 but I am unsure if its worth it. W2 is sounding better overall because they give sick pay, vacation pay, holiday etc

Comes down to autonomy and what you want to do. 1099 you get to pick when you work, where you work, and use your own tools. But it costs. $85 on 1099 is less than $80 on w2!

So if you really want to be a contractor with real autonomy then go for it! Otherwise w2.

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Ya that sounds like a big headache with little value. Sounds like everything is pointing in the direction of W2

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