Employee vs Independent Contractor Tax Differences | W-2 vs 1099

In this video I compare the tax differences between being taxed as an employee vs. an independent contractor being taxed as a sole proprietor as well as an independent contractor electing to be taxed as an S Corporation. You'll learn how much more you should ask for in pay if considering to be treated as an independent contractor.

⏱ Timestamps ⏱

00:00 Topic: Employee vs Contractor Taxes
01:30 Taxes as an Employee
02:36 Taxes as Contractor (Sole Proprietor)
03:44 Taxes as Contractor (S Corp)
05:50 S Corp Fees
06:46 How much more pay to ask for

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#IndependentContractor #Taxes #SCorp

[johndeneen]

Excellent job! Every home in America should have an LLC owned by a Trust. You can add Self Directed Solo 401k, Roth IRA, and HSA. ALL SELF DIRECTED so you keep more of that money and pay no taxes.

[Alchemist]

Worst is when you’re a 1099 and they treat you like a W-2, dress code, when to show up, and how and what to do.

[WallStreetRedneck]

Great content John, but I think you should place more emphasis on the business expenses (utilities, food, travel, car payment, insurance, cell phone, etc.) that dramatically increase savings through the s corp structure. Additionally, what about distractions and corporate dividends? Isn’t that income that can be taxed differently?

[joanferreira]

An LLC also has to pay liability insurance which is quite a bit- esp. in construction.

[fleeceactress]

Excellent video! Thanks. Are there any situations in which a worker would end up paying LESS tax as an independent contractor, than if they were earning the same amount of money as an employee?

[Candired]

This is great content; however, if one works as an Independent Consultant (1099) and or Corp 2 Corp as an IT/Digital Consultant, most firms would pay more per hour or day than one would receive as a Permanent/Full-time Employee. I see you mentioned that at the end of the video, but I would be interested in seeing more on that bit if that makes sense. Cheers

[stefancasale]

Hey, Thank you for video! very informative. I hope you can answer this question and it makes sense. I make about $70k as a contractor through W-2. Would I save money on taxes if I created an LLC C-corp? It seems that I would, my employer does not pay health care, milage, retirement or PTO. I basically just get paid for what I do and they take taxes out instead of me having a 1099.

[nerassurdo]

Super confusing why John and spose pay income tax of 25.9K as full time employees, but only 19.2K as independent contractor. How does that work??? Why would the federal income tax decrease as independent contractor?

[bolivershagnasty]

They have me showing up to work at 9-5 no overtime ans the had me give up my workmans comp just to work there and i have fill out a weekly timesheet instead if daily and then they pay me when they want to .i even have it to where my job is 1099 employee

[ak-loz]

I am trying to figure this out.
I am an employee and the company I am with won't do a 1099. Unfortunately..
I'd be interested to know more on what things a W2 Employer could do to reduce their taxes.

[neetrab]

If I don't remember anything else in this video, I'll remember "don't wish for it, work for it"

[Megapedia]

Liked commented subscribed. Great content

[tigreytigrey]

Also you don't get workers comp if you take sub contractor route

[Hannasun]

Why is federal income tax rate is so different for John as employee and John as sole prop? I’m a little bit confused here, did you just assume there are some expense that reduce the total 120k tax liability?

[abhiiyer]

Can you share this spreadsheet please?

[Just_A_Name]

“I know some of you aren’t making that much” statics show only 10% of people are making that much or more 😢

[henoksolomon]

Please can you share the excel you used to digest it again myself?

[CMVFlight]

Would this appy if I have an LLC? Or I have to open a new business as a S Corp?

[scottcallen-yn]

What about retirement contributions? I’m gonna get double pay.

[Rick_Sanchez_Jr.]

How is 1099 even legal? It’s a complete ripoff for the employee