W-2 or 1099 What to watch out for ?? Help

J

Ja Lan

Registered Users (C)
Hi FOlks,

I am a GC holder. I may begin working on a project on W-2 or 1099. Are there any pitfalls I should watch for ? What are the things I should be looking for in the contact ? SHould I ask for payment every week or every two weeks is ok ?
ANybody out there with sny horror stories of not being paid or cheated.

Any insights would be greatly appreciated.

JL
 
No Title

From what I know W2 means that you are a full time employee. Taxes will be withhold automatically from each paycheck and you may get some benefits. With 1099 you are on your own, you need to pay estimated taxes for sure (you may have to pay them even with W2) and you may be getting less benefits.

Get a tax consultant, most of them are reasonably priced and there are lots of gotchas. A tax consultant can actually save you some money.
 
w-2 vs 1099

First of all, you have to understand you can not just elect to
be considered a w-2 employee or 1099 independent contractor of
some kind. You must meet certain requirements to qualify for
1099. Go check IRS web site or consult with a CPA.

Speaking of benefits, it\'s really a trade-off. As a 1099, you
can deduct a lot of business expenses for AGI as opposed to
from AGI when considered as an w-2 employee. However, the catch
is you have to pay twice as much social security tax, although
half of it is deductable for AGI. Also, you have to do a lot
of bookkeeping work and pay estimate tax every quarter.

If you don\'t feel overwhelmed by the tax law, go do some reserach
on your own to find out if you can get the best of these rules.
Otherwise get some help from a CPA or a tax advisor. The rules
are complicated and tricky, and people on this board can give
you some directions. When it comes to actual tax planning, you
need professional advice.
 
1099 vs W2

On the web, I read that taking 1099, you don\'t have any problem, company which gives you 1099 will be held responsible if you are not agreed by IRS as 1099 eligible.

If you don\'t pay estimated taxes quarterly or if you keep doing the same work for same company for long and still get 1099s, then IRS may warn that company and not you for classifying some one as 1099 and not as w2. Nothing is my own idea, all this is what I read on web.

Companies are asking people like us to work on 1099, so that they save money. There may be many who are researching this idea in the current market conditions.

Ideas from all are welcome, that helps all of us
Thanks
 
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