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Which one best for me 1099 vs W-2

By kala_vb ·
I got an offer having two choices, I can work as 1099 or W-2. If I choose W-2, the employer takes
money from pay check for employer SS and Medicare contributes (7.65%) and pays the rest. But employer doesn't have 401(K) plan to contribute myself, I can't put any in 401(K) to get tax benefits except $5,000 as Traditional IRA.
Given the choices which one is best for me to reduce taxes and make contributes to retirement plan at least save money for retirement. Please give suggestions.

Thanks in advance - KB

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by cmiller5400 In reply to Which one best for me 109 ...

This is not a financial serives forum, but I would sugguest that you speak with your financial advisor and/or a tax person/attorney. they will beable to guide you.

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by kala_vb In reply to Which one best for me 109 ...

I knew this is technical website, I suppose to not ask fiancial related questions. But I found this below link, then I thought it is ok to ask. Sorry!

http://techrepublic.com.com/5206-11181-0.html;jsessionid=KjA-PrUUrM5mw_Fc1q?forumID=6&threadID=198293&start=0

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by HeavenAmbassador In reply to Which one best for me 109 ...

Having had my own business and also having worked as a 1099 contractor, I can share my own experience. If you just work all year as a 1099, you will have to pay your entire tax liability when you file in April. This is as I understand it. You can make estimated payments throughout the year, if you can remember to do it and be disciplined to set aside money regularly. In my opinion, it was not worth the hassle and heavy tax burden to be 1099. You should of course consult a tax professional and a financial advisor to see what your retirement options are.

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by mdhealy In reply to Which one best for me 109 ...

I agree with the poster who suggested consulting a tax advisor, and with the second who pointed out being 1099 can be inconvenient at the end of the year. It also makes a difference if you're on a joint return -- when my wife was 1099 for some years, in order to avoid worrying about estimated taxes and paying the penalty for failing to pay them, I simply had my employer withold extra taxes from my salary in sufficient amount to cover my wife's income and self-employment taxes. Remember if you go 1099 not only do you risk having to cough up a lump sum for income and self-employment taxes at the end, but also if you didn't pay enough during the course of the year the IRS may hit you with a stiff penalty.

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