Re: 1099 or W2?

[Stephen Arrants <stephena -at- COMPBEAR -dot- COM>]

Briefly....when going 1099, you must pay your own witholding and the full
Social Security taxes quarterly. It's a little more difficult, since you
have to estimate your income and pay the taxes on that to the government.
Estimate too much, and you can't get the extra back until you file your
federal return.  Estimate too little, and you run the risk of being assessed
a penalty for underpayment of taxes.  (This happend to me once.  The IRS
waived the penalty after a phone meeting with a representative.  It was my
first year as an independent, and the agent agreed with me that it is
difficult to be accurate until you've got some history under your belt.)
Plus, there's state taxes and witholding (if your state has this). You pay
your own benefits (health, etc.).  Most agencies and employers won't even
consider you as a 1099 employee unless you are incorporated and/or are
registered with them as  an approved 1099.

W-2, your employer (or contracting agency) pays a share of the Social
Security, and taxes are witheld at each pay period.  Unfortunately, if you
go W-2 for a contract, you usually don't get any benefits, and have to pay
(again) for them yourself.  Deductions are different on your 1040 return in
this case.



NOTE: This is based on my experience in California....your milage may
vary.....and I've found the whole tax subject so confusing I've had to use
an accountant for the past two+ years jus to keep my blood pressure within
acceptable limits.

In short?  Find a friendly accountant that will meet with you and advise you
on the course of action best for your situation.  The money you spend up
front getting these issues sorted out is *well* worth it.

steve arrants
http://www.compbear.com

-----Original Message-----
From: J. Konya <jkinct -at- YAHOO -dot- COM>
To: TECHWR-L -at- LISTSERV -dot- OKSTATE -dot- EDU <TECHWR-L -at- LISTSERV -dot- OKSTATE -dot- EDU>
Date: Friday, October 16, 1998 6:57 AM
Subject: 1099 or W2?


>Hi all,
>
>A quick question. What's the current thought on contracting as a 1099
>vs. W2 employee? I know 1099 has certain tax benefits (and headaches),
>but are there other issues I'm missing? Are the tax benefits worth the
>hassle?
>
>Thanks in advance,
>
>John K.
>www.helpdocs.com
>
>
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