Pros and Cons of 1099 versus withholding

If ya do not get hurt there ain't a lot wrong with a 1099 . Sure you will pay more SS taxes put the" Fudge" factor by being in business for yourself can make up for that . You can write more off your income taxes for one, many business expenses can be deducted such as a portion of phone bill , cell service , internet service , paper supplies . I write off ice , many meals. even calling on future contracts . Do not forget when you are a CONTRACTOR you are a business with all benefits and responsibilities .

Same with Fish & Wildlife and COE

As volunteers at the U.S. Forestry Parks, we were covered by the WC. Our paperwork specifically stated that coverage applies to the volunteers.

soren wrote:
I've been in the construction business for several decades now. I personally know several contractors who have been to hell and back with IRS battles over this issue. Bottom line is, if you are receiving direct supervision, working on an hourly basis, using tools and material provided by the employer, and not holding yourself out to be an independent contractor with your own tools, insurance, responsibility for profit and loss, etc... you ARE an employee. If you receive a 1099 for your wages, the employer is breaking the law. Is this set of guidelines 100% accurate in all cases? No. Will you end up in a big legal mess for taking the money and attempting to pay all typical costs that you employer is skipping out on? Probably not. Are you aware that you are responsible for taxes and fees on your money that can be in the 30-40% range, and need to be paid quarterly? Are you aware that if you are seriously injured on the job, you will probably have a long legal battle ahead of you, since one item you employer is attempting to avoid is having you legally and properly covered by mandated workman's compensation insurance? With 30 years experience in this game, would I ever do it as a work camper? Absolutely not! Legitimate businesses have employees, and don't play games at your expense by pretending that you are a contractor.

This should be bookmarked, posted at the top of the forum in bold letters, pointed to with bright neon arrows. It is so correct on so many levels. This may be the best 1099/W-2 post ever in the history of the world. Pay special attention to the workman's compensation portion. It only applies if you get hurt, but if you do get hurt you will be in a world of hurt if you are not covered. And don't forget liability coverage, an employee is covered by his employer if something goes horribly wrong, and independent contractor is on his/her own. (which is something I have always wondered about in these federal "volunteer" positions. Forget the tax implications, the fact that apparently government rules don't apply to the government, what will happen if in your volunteer duties of cleaning the restrooms, you slip on a wet floor and break your hip or you electrocute a guest because you made an error fixing an electrical plug. Who is going to cover that injury or liability if you are a "volunteer" and not an employee?)

My DH worked for himself for years so always had a 1099. We had to claim that income and pay all the taxes due as well as both the employer and employee portions of the social security.

As full time workampers, we would NEVER work somewhere that we received a 1099.

Mandalay Parr wrote:
1099 for non employees. W2 for employees. Withholding on either one.
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Guess again. The vast majority of employers attempting to illegally classify employees as independent contractors do so to specifically avoid things like witholding. If you are an independent contractor you get a 1099 for the amount you are paid to do a job, it's not the payer's responsibility to withhold your taxes.

I've been in the construction business for several decades now. I personally know several contractors who have been to hell and back with IRS battles over this issue. Bottom line is, if you are receiving direct supervision, working on an hourly basis, using tools and material provided by the employer, and not holding yourself out to be an independent contractor with your own tools, insurance, responsibility for profit and loss, etc... you ARE an employee. If you receive a 1099 for your wages, the employer is breaking the law. Is this set of guidelines 100% accurate in all cases? No. Will you end up in a big legal mess for taking the money and attempting to pay all typical costs that you employer is skipping out on? Probably not. Are you aware that you are responsible for taxes and fees on your money that can be in the 30-40% range, and need to be paid quarterly? Are you aware that if you are seriously injured on the job, you will probably have a long legal battle ahead of you, since one item you employer is attempting to avoid is having you legally and properly covered by mandated workman's compensation insurance? With 30 years experience in this game, would I ever do it as a work camper? Absolutely not! Legitimate businesses have employees, and don't play games at your expense by pretending that you are a contractor.

If the 1099 is a 1099 Misc typically nothing is withheld and the taxpayer has to pay self employment tax when the return is filed to make up for the lack of withholding. There would also be a state tax obligation if the state has an income tax.

1099 for non employees. W2 for employees. Withholding on either one.
No difference on income tax, but SS as stated above.

Not sure what you mean by the most obvious- is the fact that if the company does withholding it has to pay half the SStax due, but if one does the self-employment 1099, the earner has to pay it all one of them?