GC_thisyear
Registered Users (C)
I received my GC couple of months ago. My employer wants to move me from w-2 to 1099. Is there any risk down the road for citizenship?
i appreciate your inputs.
thanks.
i appreciate your inputs.
thanks.
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w-2 or 1099?
- Thread starter GC_thisyear
- Start date
TheRealCanadian
Volunteer Moderator
I received my GC couple of months ago. My employer wants to move me from w-2 to 1099. Is there any risk down the road for citizenship?
No risk, but make sure you demand more money to compensate for the increased taxes you will need to pay on 1099.
The person who gets 1099 is considered as independent contracter/self employed by IRS. SO will have to pay SS and medicare taxes. Also the one with 1099 are less protected by labor laws and does not get unemployment benefits etc. Read on IRS web site or google it.
In case of W2, the person is considered as employee of organization, and employer pays 50 % of SS and medicare taxes. Gets 401 K, retirement benefits/pension etc
It is better to be on W2.
Research the comparison
abhuda
In case of W2, the person is considered as employee of organization, and employer pays 50 % of SS and medicare taxes. Gets 401 K, retirement benefits/pension etc
It is better to be on W2.
Research the comparison
abhuda
TheRealCanadian
Volunteer Moderator
The person who gets 1099 is considered as independent contracter/self employed by IRS. SO will have to pay SS and medicare taxes.
This is the main part - you pay both the employee half of FICA as well as the employer half, so all other things being equal there's an extra 7% tax liability. However, as a contractor you can create an S-corp and pay most (but not all) of your income as a dividend, and you could theoretically pay less FICA than before.
Also the one with 1099 are less protected by labor laws and does not get unemployment benefits etc. Read on IRS web site or google it.
That's not necessarily true, and you can be covered by UI if you want to pay the premiums for it.
Gets 401 K, retirement benefits/pension etc It is better to be on W2.
Keep in mind that a 401k is not necessarily better than an IRA and a SEP, and I don't want a company paying for my retirement. I think you'll find that a lot of the top performers and income earners much prefer being contractors to being employees. I'd certainly love to go back to being a contractor.