As an independent contractor (Form 1099), am I better off becoming a w2 employee
ID: 2775372 • Letter: A
Question
As an independent contractor (Form 1099), am I better off becoming a w2 employee and having State/SS taxes deducted from my paycheck? Or paying the taxes that do not get deducted out of my biweekly paychecks at the end of the year or specific paying period? As an independent contractor (Form 1099), am I better off becoming a w2 employee and having State/SS taxes deducted from my paycheck? Or paying the taxes that do not get deducted out of my biweekly paychecks at the end of the year or specific paying period? As an independent contractor (Form 1099), am I better off becoming a w2 employee and having State/SS taxes deducted from my paycheck? Or paying the taxes that do not get deducted out of my biweekly paychecks at the end of the year or specific paying period?Explanation / Answer
Becoming W2 employee is not a good option here as in that case we have to pay state taxes every time we get a paycheck. Instead of this, we can invest the money which would have been paid as state taxes if we were an employee and get some return on it by the end of the year. At the end of the year, we can withdraw money from our investment and pay the state taxes easily. But for doing this make sure, you invest in risk free asset which can be liquidated easily at any time or at the time when we need it.
Thus the return on our state tax investment would be an additional benefit of being an independent contractor .
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