Anyone here self employed or gets a 1099?

[twuoo]

I have a job offer, but it is as a contractor and I'll get a 1099 at the end of the year.

Can anybody chime in with their two cents as to the advantages of a 1099 versus gettinga 1040/w-2?

I know about the taxes and that you end up paying all the ss and medicare.

Any tax advantages?

I have been trying to search online, but alot of the sites are so full of junk and spam commercials and the info found is so general.

Thanks

[StartingOver08]

The advantages are numerous. All of your business expenses are deductable. For example, if you use your car in business you can deduct all the expenses in the percentages used for business. (That is one minor example). Where this becomes important is the following:

Say you receive $100k in a calander year based on 1099 (and you are a S corp - say XYZ LLC or XYZ PA)
If your expenses are $30k, you are paying your taxes on only $70k rather than $100k. IF you have a really good accountant, there is a possiblity to LEGALLY pay much, much less in taxes than a normal w-2 type income. Talk to a good CPA.

[fltoo]

In agreement, but just make sure you send in estimated quarterly taxes so you don't end up not having the tax money at the end of the year.

[HHM]

I wouldn't neccesarily say there are advantages...as w-2 employee, you don't really have business expenses (or at least you shouldn't). But SO08 is correct, you can deduct your business expenses (you do not need to be an s-corp, in fact, if this is a simple contract position, setting up an S-corp or LLC has no benefit and simply makes things needlessly complicated).

The disadvantage is you really need to be on the ball with the taxes. You should make Estimated Tax Payments quarterly (form 1040 ES) that way you don't get used to getting the "tax portion" of your income and are able to pay the tax bill come tax time.

[StartingOver08]

HHM you are right. The reason I prefer the S corp is the savings of approx $7500 on SS tax. Otherwise the SS tax is payable on the business expenses too.....