Hearing rumors at work about us possibly being offered positions as 1099 contract employees. Anyone here have any experience with that? How does/did it work out?

“1099 employee” is an oxymoron. Sorta like “military intelligence” and “jumbo shrimp”.

You’re correct. I’ll rephrase it.

You should tack ~$30/hr onto your current rate to break even.

It means you are your own employer, and pay your own taxes.

They send you a 1099 form at the end of the year and report what they paid you to the IRS, and YOU are responsible for the applicable taxes, and withholding, etc.

make sure you deduct everything you can, get someone who knows what they're doing to do it.

Hint: They are not doing it because it's a better deal for employee's

This.

I did this one year and learned never to do it again, except to own your own business. You will have to pay both sides of Social Security and your own taxes. The company saves a ton. I would ask for a raise to cover your extra expenses if you decide to go this route.

And no benefits like paid vacations or medical coverage. You pay for those yourself. Also it's easy to "fire" you. Just tell you not to come in tomorrow. No severance pay.

I don't know what you do for a living but you'd better write your resume.

I pay my brother as a contractor. He has a LLC. It works well if you can't or don't want to afford the cost of having employees. Sounds like your company is looking to tighten the belt.

Tighten up the resume.

I work in a somewhat rarified field that pays well. As a contractor I make even 3x more. Even without the benefits and covering them myself, I make substantially more. If you have a spouse you can piggyback off their ins. Make quarterly tax estimate payments. I filter moneys through a separate account to keep track, then transfer to pay myself. I like being a contractor because I can make my own schedule and take as many days, weeks, or months off as I want. It works in my field but in many... you are gone when they say you’re gone.

Virginia it’s damn near impossible. You work there every day, take orders from the boss, you’re an employee. You get caught 1099’ing guys, $10,000 fine per man. Hopefully it kills all the idiots running illegals.

You get to pay both sides of the social security tax, have to make quarterly estimates if you don't already do that, and all the other stuff a contractor does. You also get to pay for your health insurance, liability insurance, unemployment, and may have to get a business license in some locales. As noted where it falls apart is if they treat you like an employee then you are one. Someone said add $30 to your hourly rate where you work now but it can be more like 50% to 70% of your current pay rate rate to cover your additional costs.

You prob won’t be covered on his workers comp insurance, so you may have to take care of that yourself. You will be considered self employed and no payroll taxes, nor social security will be taken out of your check.
If the guy you are working for dictates your hours every week, his insurance may catch up with him and he may end up paying back insurance fees also, as you will be considered an employee in their mindset.
It would be more lucrative for you and more so for him until something goes wrong
I am speaking for how things are handled in New York State. I was a home builder for 35 years with many employees over the years.
May be different in other states
QM

I have been a 1099 contract labor for 33 yrs. but I truly work for myself. but as stated above it means you have to be dedicated. you have to put away all tax money and pay in on your own. the ss tax is doubled then there is the self employment tax. it usually comes out to be about 28 percent in the end after all deductions I can muster up. but also as stated above, in most states if you are told what and when to do or when to be done , when to be there or how many hrs to work, it becomes an employee situation . the irs frowns on greatly. never heard of a 1099 employee. then there is the thing called work comp insurance and general liability insurance. wheeew that is based on how much you make at the end of the yr.the thing i do the most in my yearly opperations is handle a lot of money from one person to another, and I just take my lil cut out of it on the way by. dont get me wrong , I make a very good living. but it is a 18 hr a day thing.

If you are in IT, you are about be "H1B'ed..." As stated above, talk with a professional. To break even with your current situation, you need to consider:

> Add at least 30% to your gross salary to cover increased taxes.
> Does your spouse work, and does she have paid insurance available thru her employer?
........If YES, add the upcharge on her monthly pre-Tax insurance contribution to your salary.
........If NO, add $15-20K per year to your salary for insurance coverage.
> Add $500 to $1000 per year (estimated) for professional liability insurance.
> Add necessary costs to file DBA paperwork with local courts.
> Add costs to cover local payroll taxes if you are going to "work from home".
> Add what ever level of $$$$'s your employer was contributing to a retirement or 401K.
> Add any professional fees, dues, or CEU's covered by your current employer.
> Talk to your tax guy about setting up a home office. Home office deduction is minor. However, it sets you up for...
> Track all of your work related mileage. If you have a home office, all mileage to your "former place of employment" should be deductible at the current rate per mile.

> If your new employer puts you on an hourly rate... Take 2080 work hours in a year and subtract out the number of hours/days/weeks you plan to take off during the year. Then subtract out the number of holidays that your "former employer" normally shuts down operations. Then subtract out the normal number of sick days, funeral, and doctor visits you have in a year. That final number (generally in the 1700 to 1800 range) is the total number of billable hours that you will be compensated for in a year. Adjust the hourly rate accordingly.

> Will they be paying you premium pay for hours over 40 per week? Or flat rate $xx per hour for 1 hour worked, or 100 hours worked ? If you normally draw premium pay (time and half or double time) factor the loss of premium pay into the new pay rate.

> Polish up the resume...

Been "Down sized", "Right sized", "Out sourced" and "In sourced" 5 or 6 times in past 30 years. I feel for you. Good luck...

I had an offer to do a full time contracting gig right before covid. Was for a company in The Philippines. I put together a spread-sheet to take into account vacation, health care, taxes. I wanted to clear about what a $160K salary would have got me if directly employed. Figured it would take about 195K to make it work.

Got the offer, but covid killed it.

A employer 'switching over' to that concept is a little odd and legally challenged could be questionable.

I was in a legal battle with the state of Montana over 'was he a contractor or employee'?

They wanted their state comp payments.

I had to complete a 100 question form they handed me.
A couple of the questions I can recall off the top of my head read like this,

Did the man use your tools?, if so he was your employee.

Did the man have set work hours? If so he was your employee.

Was he paid a hourly rate or did he bid for the work he did for you?

Did the man operate your equipment or other vehicles owned by you? If so he was your employee.

It went on and on with similar questions.

My situation was spurred by a audit, I'd never even tried to write off the funds that came into question. It was just checks I'd written to a random dude I had paid to do a few odd ball projects over the years.

I'd paid him a hourly and he used some of my tools and equipment, I was screwed.

If your employer is attempting to get out of paying state workers compensation and other possible insurances and liabilities they'd better be getting some good legal advice and walk a tight line in their transition or it's going to come back and bite them in the azz.

There are strict rules around what an independent contractor is; break them and the powers that be are on you like flies on poo. Mostly, the strict rules apply to the employer, not so much the contractor. By law, the employer cannot tell you how to do your job, just what the job is and when it needs to be done. The employer cannot restrict you from finding other work either. So you can work for more than one employer, which can increase your income. You absolutely have to increase your billing/bid rate 150-200%. All the fees that an employer typically pays for like, some taxes, health insurance, liability insurance, computers, phones, office space, etc are on you. I run my own engineering business and have 1099 CAD contractors and am a 1099 contractor for other firms like architects and builders. You will quickly hate the IRS and taxes worse than Pelosi/Schumer. Actually maybe it's a tie.

What line of work?
Running your own business isn’t for everyone, probably not for most.
After 25 years of making my own schedule and having to answer to only myself, I don’t think I could ever be an employee again.

Get a great accountant and do what they say. Bid all work to be worth your time. Pay your taxes and insurance.
Laugh at folks that kill a clock for a living while you fish, hunt, and enjoy your life.

Coworkers son worked for some Mennonites, he was telling me they paid him$14/hr. Cash.

Told him the boy better bank 1/3 of his pay. 1099 is coming, and it's gonna
be ugly. Of course they thought I was FOS.


1099 came. Had to borrow to pay taxes.

They hired him.
Told him when to come to work.
Used company vans to go to jobs the company lined up.
Supplied all materials, most tools.

And called him a contractor!

Gets even better.

They "gave" him a $3000 "profit sharing" bonus.
Which was "reinvested" into the company for HIM.
(Except, when he quit it was gone. Never got any of it)

So, they took $3k of profit they made, invested it back into their
company, and made him pay the taxes on it.


If you are truly a contractor, a 1099 is how it's done.


But getting 1099ed doesn't make you a contractor.
Usually, it makes you a stooge.

As someone else said.
"Companies don't do it to benefit workers"

I work both a W2 job and do consulting work as an independent contractor for multiple other entities. The rate you need to charge as an independent contract depends on a lot of factors. I nominally charge about 2x plus direct costs of my W2 wage. If you are working on an hourly basis as an independent contractor, there are overhead hours that you have to eat for things like preparing taxes, preparing proposals, billing, business development, etc. You also may have extra insurance costs (I have to carry professional liability insurance). You will want to set up a separate bank account that is only used for your business. Also get a separate credit card that is only used for business expenses. Set up a a Solo-401K so you can tax defer a chunk of your income.

In your case, I would spend the money to have an attorney look at whatever kind of contract they are going to offer you. I don't know how much bargaining power your have, but these contracts are usually heavily in the employer's favor. The IRS has been cracking down on these kind of work arrangements so I would want the company to indemnify me if, at some point in the future, the government decides your were really and employee and not a contractor.

Chesterwy: Once I retired from the PD (24 years ago) I began working for two different body guard and robbery suppression companies.
I was a 1099 "employee" for many years - wasn't much of a hassle - and lots of ways to diminish that taxable income!
Good luck and keep good records.
But remember the number one rule in America - NEVER and I mean NEVER everfuck with the I.R.S.!
They will never quit coming after you and they never forget.
Hold into the wind
VarmintGuy

The one debt you can't bankrupt out of.

Have seen a number of guys go tits up in businesses.
To a man, when thing got tight they cheated the quarterly taxes.
Figured they could get things fixed and make it right.
Next quarter, oh chitt.

The IRS man coming to the door was the wakeup call, finally.
I was personally there for it with an employer.

After the equipment goes back to the finance company, the bankruptcy
court let's you screw those who trusted you, the IRS keeps you on the hook.

And they will tell you straight up in that very first interview, pay us.
Pay it now. Borrow anything you still can to pay us.
Use a credit card. The interest rates are better than the IRS.


No trying to derail.
Just fair warning if you go 1099.
Set aside tax money first. And forget it. It's gone.
You can not touch it. Ever. The more you might need it, the
more important you don't touch it.

Why even issue a 1099? It is only(when I was doing it) a $50 dollar fine from the IRS. Well worth not having to do all the paperwork....

Oil and Gas work. Basically what is happening right now, our jobs (in the field, where the company makes money) are pretty infrequent. And they don't want to pay us to sit around the shop waiting for work to call in (there's only so much cleaning, greasing, oil changing) that can be done before you run out of stuff to do. So essentially they just want to pay us when we are in the field running a job. I'm thinking it would be in the neighborhood of $1000 a day. Which depending on the workload, might be $5000 a month, could be $30,000 a month. Just like the nature of oil and gas. You're either eating bear, or barely eating.

Do you already own your own service truck and tools?

If you do it, check out setting up your own Individual 401K, its very nice.

Used to mean you pay both sides of your social security

Welcome to self-employment reality muddafouckas LOL

no big sugar daddy employer paying halfsies for ya

I have not worked as an engineer since the week obuma got elected, but as I remember it:

1) Direct employee W2 [work overtime for free because you are "salaried"]
2) Contractor through job shop W2 [get paid 50% extra for overtime]
3) Independent contractor 1099 [send an invoice, which is a piece of paper with a dollar amount written]
4) Form a corporation, [get deductions but get taxed twice; corp tax and income tax]


I worked as a direct employee engineer from 1978 -1983
I worked as a combination of direct employ and job shop contractor 1983-1991
I worked as a combination of job shop contractor and 1099 independent contractor 1991-2008

look into switching to an S corp, that way you don't get hammered in self employment taxes.

To the people that say you can't be 1099 and be told when to report and when to do what etc- all companies on large construction projects are forced to comply with a production schedule- or get sent down the road.
Based solely on that- they would be considered employees under the IRS guidelines- oops.

You will probably have to pick up your own liability and workers comp Insurance.