Author Topic: W2 or 1099  (Read 1344 times)

Calis

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W2 or 1099
« on: October 16, 2017, 10:04:36 AM »
Hi,

I currently work as a contractor of sorts. I get paid a rate for each session of therapy that I provide. I am not afforded any type of benefits (i.e. health insurance or 401k). And I currently work anywhere from 4-10 hours/week for this agency. If I don't provide a session of therapy I don't get paid. Currently, the agency that employees me sends me a w2 at the end of the year however, I feel that based on our work agreement, I am more of a contractor and should be issued a 1099. I think I know the answers to these questions but I want to double check. Can I write off expenses such as car repairs, therapy materials purchased and mileage used to get from one client to the next if I am a w2 employee? Would a w2 or a 1099 benefit me most? Thanks for your help!

Calis

Maccountant

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Re: W2 or 1099
« Reply #1 on: November 15, 2017, 08:24:18 AM »
There is alot of debate over what qualifies a worker from being an independent contractor versus an employee.

Check out this page on the IRS website:
https://www.irs.gov/newsroom/understanding-employee-vs-contractor-designation

Basically there are 20 different factors that boil down to three different areas of scrutinization:
- Behavior Control
- Financial Control
- Relationship

The easiest and safest path for employers to take is to error on the side of caution and consider you an employee. Hence the W-2 you receive. As a W-2 employee you can still deduct unreimbursed work expenses on form 2106 when you file your taxes, but you will only be able to deduct a portion of the expenses if you itemize. If you take the standard deduction you will not receive a benefit.

I would say you have two options for your situation:

1. (Preferred Option) Go to your employer and say - Hey I am an employee and I need to be reimbursed for expenses I incur on the job. Then submit your receipts and mileage logs and everything else you can prove is a reasonable and necessary business expense for reimbursement.

2. (Less Preferred) Have  a conversation with your employer and ask what would be required to operate as a independent contractor? You may have to incorporate or form an LLC to show a ratified business entity and then become an employee of your corporation that is hired by your current employer for services. This will require corporate filings, payroll, you will have to pay payroll tax out of your pocket (15.3%) plus income tax, I don;t know what kind of liability insurance you have to have for your line of work but a policy will be required to cover you. But the good news is you will be able to deduct all your expenses!