Comparing Independent Contractor Jobs with Employee Jobs: 1099 vs. W2

The question comes up fairly often — some jobs are even offered as one or the other — the physician can choose to be a W-2 employee or a 1099 independent contractor.

This is a common question and one which nearly every doctor wrestles with at some point during her career. 

For tax purposes, an independent contractor is self-employed and “paid on a 1099.”  An employee is paid on a W-2, just like a resident or fellow.

Comparing Independent Contractor Jobs with Employee Jobs: 1099 vs. W2

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First of all, I would recommend that you don’t make this a huge factor in your job hunt. The after-tax, after-benefit difference between the two offers is unlikely to be very high.

Don’t Choose A Job Based On The Tax Structure

As a general rule, you should have a higher salary as an independent contractor than as an employee. How much higher?  Enough to cover the loss of benefits and the additional payroll taxes.

An Independent Contractor Should Be Paid More

There are some additional benefits of being an independent contractor: 1. It’s pretty easy to do a Solo 401K or SEP-IRA as an independent contractor.

Some Benefits For Independent Contractors

 2. You’ll also be able to deduct a few more items on your taxes. 3. You could also deduct anything you can justify as a business expense.

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