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The little I know and remember about this subject when I did one
contract job is the following:
W-2 employee: you pay 7.5% and the company pays 7.5% toward FICA
1099 employee: depending on the company, they may or may not pay the 7.5%
toward FICA. If they don't, your total contribution to FICA is 15%. So, if you
don't increase your hourly rate, your take-home income will be reduced by 7.5%
because you pay that much more in taxes.
Don Timmerman, dtimmerman -at- anl -dot- gov
Sr. Technical Writer
Argonne National Laboratory (near Chicago)
______________________________ Reply Separator _________________________________
Subject: QUESTION: W-2 vs. 1099 Hourly Rates
Author: KDFisher <KDFisher -at- AOL -dot- COM> at ipdlink
Date: 12/23/97 11:01 AM
I was wondering if ya'll can straighten me out on this one. Is it true that a
tech writer should get paid more per hour for working on a 1099 basis than on
a W-2, even if the W-2 rate does not include benefits (or the writer chooses
not to accept, say, the medical plan because he/she may be covered temporarily
by a COBRA plan)? I was under the impression that how you establish rates is
based solely on whether or not bennies are part of the contract, because if
they're not you have to purchase them . And it seems like the only other
difference between the two is that with the W-2, the contracting company or
agency takes out taxes, whereas with a 1099 you take out your own.
Please respond to KDFisher -at- aol -dot- com -dot- Many thanks in advance for any comments!