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
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.
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