My new job said they pay 1099 and asked if i’m ok with that. I have no idea what that means or the difference it makes. From what i’ve read it seems like I will have to pay everything back during tax season? I’m so confused. This is a receptionist job paying hourly wage. Please explain
In: Economics
>This is a receptionist job paying hourly wage.
Are you sure? Seems inappropriate to have a receptionist be a 1099. 1099 refers to the tax form that you fill out. People who fill out 1099s are not employees, they’re independent contractors. It’s as if you’re your own company and they’re hiring your company for a specific job. But you’re ultimately responsible for paying the taxes for your income since you’re not an employee. The company can’t withhold your taxes. This is typically done for sales jobs where you get paid commission, not an hourly employee.
My advice is to not take this job. Seems very sketchy.
I highly doubt as a receptionist that they can legally make you a 1099 contractor. One of the tests to see if you should be a 1099 contractor or a w2 employee is if you set your own hours.
Since I assume they control when you are at your desk to actually perform your receptionist job, you are not a 1099.
As a 1099, they get to avoid their half of the taxes (taxes paid by you instead. ), they don’t have to give you employee benifits, and don’t have to do your withholding for you, so be sure to pay your quarterly estimated taxes and probably still owe taxes at the end of the year.
1099 positions tend to pay more hourly to make up for all the perks of being an actual employee you lose, but they better be paying a VERY nice hourly wage to be worth letting them illegally screw you over in other areas.
It means that you are a contractor rather than a full time employee.
There are _many_ differences between the two. The most impactful for you will be that you will be ineligable for benefits (health insurance, 401k, etc.) and the company **will not** withhold estimated taxes from your check; you will be expected to do that yourself and make estimated tax payments at least quarterly (maybe more frequently depending on your location). Failure to make those payments can get you in trouble with the IRS and local taxing authorities.
Ideally, you’d prefer to be a W2 employee over a contractor. Moreover, it is _unlikely_ that this is actually a 1099 position. Companies often try to have W2 employees classified as 1099 contractors (as it is less expensive for them) but the rules around which category an employee falls into are very strict. If the company requires you to come to the office, gives you set hours, and directs your individual assignments, you are **not** a 1099 contractor.
A W-2 employee will have both income tax and payroll taxes withheld from their paychecks. As a 1099 employee, they won’t withhold taxes from your paycheck. That means that you will need to estimate how much you will owe and you should pay taxes quarterly else the IRS will get mad at you.
A larger difference is that for W-2 employees, payroll taxes are half paid by the employee and half by the employer. As a 1099 employee, you will be responsible for both halves of this tax, meaning that a 1099 job should pay you at least 8% more than a W-2 job to make a comparable take home wage.
1099 is for contractors/freelancers. This means you get paid in full and the employer doesn’t take taxes out. For example, if they pay $10 an hour for 40 hours each week, you get a check for $400 for the week but it is your responsibility to pay the taxes on your own This also means they don’t give you benefits, paid time off, insurance, etc. A normal w2 job would take taxes out and they are legally required to offer insurance. Since they take taxes out, your check might only be $330 instead of the full $400 at the same $10 rate.
With that being said, what they are doing is illegal and a red flag. Do not take this job and report it to the department of labor.
If you are a virtual receptionist on a contract, then they can pay you according to a 1099-NEC, non-employee compensation. However, if you are working on site, especially if you are full-time, then you are a full-time employee. You may want to consider checking this company out to be sure they are legitimate.
It’s illegal for a normal hourly position to be 1099ed. But basically it means that:
a) you have no protection for workman’s comp, unemployment, etc.
b) you’ll pay double the taxes that you would normally because you are on the hook for the employer portion that the employer would normally pay.
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