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How will this affect the tax? The main difference between a 1099 contractor and a W2 employee is in the payroll and social security/medicare tax requirements. B
by cft 8y ago
How will this affect the tax? The main difference between a 1099 contractor and a W2 employee is in the payroll and social security/medicare tax requirements. But these tax requirements are federal and this is a CA only decision.
- greglindahl 8y agoLast I worked on a 1099, the total tax amount was roughly the same, the difference was who paid it.
- SilasX 8y agoIt doesn’t make a difference if everyone (including the government) agrees on the classification in advance. It makes a huge difference if you can retroactively change the terms of the original agreement (“because I wasn’t classified right”) and get the other party to have to pay you back for (half of) those taxes.
- gnicholas 8y agoBingo. The IRS uses a different test, so workers could end up as "employees" for the purpose of state law and "contractors" for the purpose of federal tax withholding. Source: I used to be a tax lawyer.