Posted by: nepalijeevan April 4, 2016
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Let's assume you make $80 per hour for 2087 hours. If you take 80% your income before federal and state tax = 80 x 2087 x 80% = $133568
Max. Taxable SSI = 7347 ( completely phases out at $ 118,500)
Medicare = 133,568 x 1.45% = 1937
Income before other taxes = 133568 - 7347 -1937 = 124,284
Now let's say you take 85% (i.e. 1099)
Income = 80 x 2087 x 85% = 141,916
SSI MAX. = 118500 x 14.4% = 14694
Medicare = 141916 x 2.9% = 4115
Income before other taxes = 141916 - 14694 -4115 =
123,107
So, for this assumption, they are pretty close. If you make than this level, it's better to have W-2. If more than this income or like lots of overtime, 1099 will win. However, you have to factor ither stuffs like paid vacation, sick pay, health insurace, etc that comes with employee status.
Max. Taxable SSI = 7347 ( completely phases out at $ 118,500)
Medicare = 133,568 x 1.45% = 1937
Income before other taxes = 133568 - 7347 -1937 = 124,284
Now let's say you take 85% (i.e. 1099)
Income = 80 x 2087 x 85% = 141,916
SSI MAX. = 118500 x 14.4% = 14694
Medicare = 141916 x 2.9% = 4115
Income before other taxes = 141916 - 14694 -4115 =
123,107
So, for this assumption, they are pretty close. If you make than this level, it's better to have W-2. If more than this income or like lots of overtime, 1099 will win. However, you have to factor ither stuffs like paid vacation, sick pay, health insurace, etc that comes with employee status.