Question on W2 and 1099

[hopeofgc]

Hi Gurus,
I just want to know if one can work W2 and 1099 for the same company for the same yr? Is it possible? I know a person can work on W2 for company A and on 1099 for company B for same yr.

Pls reply.

Thanks

[TheRealCanadian]

Originally Posted by hopeofgc

I just want to know if one can work W2 and 1099 for the same company for the same yr? Is it possible?

Sure. There are plenty of contractors who become employees for the same company, and vice-versa. You should, however, make certain that you meet IRS' definition of a contractor if you go from W2 to 1099. If all that's changing is how you're paid, IRS will not be happy.

[hopeofgc]

Originally Posted by TheRealCanadian

Sure. There are plenty of contractors who become employees for the same company, and vice-versa. You should, however, make certain that you meet IRS' definition of a contractor if you go from W2 to 1099. If all that's changing is how you're paid, IRS will not be happy.

Ok thanks for your reply. Well, i'm not talking about changing from W2 to 1099....i am asking if one work on BOTH W2 and 1099 for same company during the same yr. Is it ok by IRS? I am a consultant and my payroll is being run as per LC requirements....so remaining balance amount, can i obtain on 1099 instead of W2, so we can skip the company taxes of 15% or something?

[TheRealCanadian]

Originally Posted by hopeofgc

I am a consultant and my payroll is being run as per LC requirements....so remaining balance amount, can i obtain on 1099 instead of W2, so we can skip the company taxes of 15% or something?

IRS would be quite displeased with such a scenario, since you're clearly not a contractor and are merely doing this to avoid taxes. Besides, all that would happen with the remaining amount is that you'd have to pay both sides of FICA.

[Jackolantern]

Originally Posted by hopeofgc

I just want to know if one can work W2 and 1099 for the same company for the same yr? Is it possible?

W2 and 1099 at the same time for the same company? I doubt it. At different times of the year? Yes, lots of people do it without a problem. They start contracting as 1099 and get an offer to join as W2 full time.

Or they quit or retire after working as W2, but the company asks them to come back for a short contract as 1099.

[pulos]

I don't see the problem here. I am working fulltime (9-5) for a company as a scientist and get paid in W2. Once every while, I also get a small project from them (like writting a paper, etc) to do in my spare time and they always pay me a few k$ extra for that in form of 1099 since they don't want to go through the complexities of changing my hours/overtime/etc and these extra works are done at home, so there is no clock in/out... I don't know why IRS might frawn at it since I and employer both are reporting these and I am paying the taxes for the 1099 as well... I appreciate if you could elaborate more.

[TheRealCanadian]

Originally Posted by pulos

I don't know why IRS might frawn at it since I and employer both are reporting these and I am paying the taxes for the 1099 as well... I appreciate if you could elaborate more.

I would guess that so long as you are not trying to claim business deductions against that income you may be fine. IRS doesn't like employees trying to claim they're contractors to get out of paying tax.

[hopeofgc]

Originally Posted by TheRealCanadian

I would guess that so long as you are not trying to claim business deductions against that income you may be fine. IRS doesn't like employees trying to claim they're contractors to get out of paying tax.

Thanks for your replies everyone.

What are the benefits of moving from W2 to 1099? I got GC last yr. If i get more money/less tax on 1099, then i would switch to 1099 instead of being on W2.

[wik]

Originally Posted by hopeofgc

Thanks for your replies everyone.

What are the benefits of moving from W2 to 1099? I got GC last yr. If i get more money/less tax on 1099, then i would switch to 1099 instead of being on W2.

The 'switch' is not discretionary. It is based on a test that the IRS applies to the nature of the employment. You cannot be on an 'infinite' contract with a single employer because it would be clear that you (and your employer) are only doing so to avoid taxes.

You would probably be better advised by consulting the IRS Web site and not the immigration forums.