One tax difference could cost you thousands. Know your status before you file.
A W-2 classifies you as an employee. Your employer automatically withholds income tax, Social Security, and Medicare from your pay.
A 1099 worker is an independent contractor. No taxes are withheld, so you’re responsible for paying all taxes yourself.
Self-employed 1099 earners pay the full 15.3% tax, whereas W-2 employees share that burden with their employer.
1099 workers can write off expenses like a home office, mileage, phone bills, software, and other business costs.
Failing to make quarterly tax payments is a common mistake among 1099 workers, often leading to IRS penalties and interest.
Taxes aren’t just about income. Expenses and proper classification play a big role—and getting it wrong can be expensive.