If you’re like a lot of people, trying to figure out the difference between being a 1099 contractor or W-2 employee can be confusing. But it’s important to understand the differences as it relates to how you file and pay taxes.

The Difference Between W-2 & 1099 Workers

The two forms of employment represent two different kinds of worker classifications. 1099 workers are often referred to as independent contractors or self-employed. W-2 workers are directly employed by a company. They receive regular pay, employee benefits and use the W-2 form to report their annual compensation and withheld payroll taxes. When a worker is misclassified, the result can be IRS penalties or even lawsuits against a business.

Advantages of Being a 1099 Worker

There are a lot of benefits to being a non-employee IT independent contractor:

• Your specialized skills are in high demand by a variety of businesses and industries
• You’re able to set your own work schedule and take on the work you want
• You can choose to work anywhere in the world, including remotely

Life as an independent contractor isn’t for everyone, though. Disadvantages, for instance, include being the first to be let go during down times, and not having the security of a regular paycheck.

Advantages of Being a W-2 Worker

Seventy percent of U.S. workers are classified as W-2 employees. They enjoy the job security and benefits that come from working for a company. While there are some limiting aspects to being a W-2 worker, such as not being able to grow your skillset as quickly, most company-employed workers believe the benefits outweigh any disadvantages.

IT Employment: 1099 or W-2?

If you’ve searched our job board, you may have noticed positions marked as “Contract”, “Contract to Hire” and “Direct Employee”. Here’s what they mean:

• Contract positions are typically where a client has a gap in a project they need to get done or need a temporary fill-in for someone on leave. This would be a 1099 situation.
• Contract to hire is where you’re basically “auditioning” for a position before being hired as a W-2 employee. It can be beneficial to both parties, as you as a worker get to decide if the company is a good fit before buying in.
• Direct employees are W-2 workers who are either filling a new position or one that has been vacated.

Benefits of Partnering With A Professional IT Recruiter

An IT recruiter can help you decide which type of work is right for you, laying out all the aspects you should consider, such as compensation and career advancements, before making a commitment. Currently in Las Vegas, remote contract work is more prevalent, though that can change as we move into the recovery stage of the pandemic. To learn more about the differences between 1099 and W-2 work in the IT industry, or to get help finding a company whose culture meets your needs, contact Taurean Consulting Group at 702-529-0378 today.