The tax difference that can cost you thousands. Know your status before you file.
W-2 means employee status. Your employer withholds taxes, Social Security, and Medicare from your paycheck.
1099 means independent contractor. No taxes are withheld. You are responsible for paying everything yourself.
1099 workers pay 15.3% self-employment tax alone. W-2 employees split this tax with their employer.
1099 workers can deduct: Home office, mileage, phone, software, and business expenses.
Many 1099 workers forget quarterly tax payments. This leads to IRS penalties and interest.
It depends on income, expenses, and planning. The wrong classification can increase your tax bill.