Advise on side gig w2 or independent contractor
Advise on side gig w2 or independent contractor
Hello fellow bogleheads,
My sisters full time job as nurse practitioner pays her 150k+ annual income. She wants to start a side job. Has one offer that will hire her as w2 and pay 100$/hr. The other offer pays 115$/hr as 1099. She will be working enough hours to make roughly 25-30k per year. Which job w2 or IC would benefit her better as far as taxes or can she accept both jobs so she can find some work every week between the two places
TIA
My sisters full time job as nurse practitioner pays her 150k+ annual income. She wants to start a side job. Has one offer that will hire her as w2 and pay 100$/hr. The other offer pays 115$/hr as 1099. She will be working enough hours to make roughly 25-30k per year. Which job w2 or IC would benefit her better as far as taxes or can she accept both jobs so she can find some work every week between the two places
TIA
Re: Advise on side gig w2 or independent contractor
I would guess that if all else was equal (no benefits, no difference in insurance requirements, etc.) being an IC would be more profitable and possibly allow for more tax deferred income. On the other hand there may be a little more effort involved in the IC route - more complicated taxes, etc. And if you have three jobs you might not want running your own business to be your fourth.Gpstm wrote: ↑Fri Apr 12, 2019 9:12 pm Hello fellow bogleheads,
My sisters full time job as nurse practitioner pays her 150k+ annual income. She wants to start a side job. Has one offer that will hire her as w2 and pay 100$/hr. The other offer pays 115$/hr as 1099. She will be working enough hours to make roughly 25-30k per year. Which job w2 or IC would benefit her better as far as taxes or can she accept both jobs so she can find some work every week between the two places
TIA
Re: Advise on side gig w2 or independent contractor
Will she need additional liability or malpractice insurance if she is 1099?
Re: Advise on side gig w2 or independent contractor
Liability insurance is covered at both places. The 2nd w2 job makes her sign a non compete which will make it difficult for her to find further jobs in the area.
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Re: Advise on side gig w2 or independent contractor
This is actually one case where even if the two jobs were paying the same, being an IC would pay more. A W-2 moonlighting employment will require 7.65% FICA be deducted. Since the SS maximum wage base have been reached in the primary W-2 employment. The SE self-employment will only require 2.9% SE Tax.
To me the IC job would be a better option. She would be receiving more compensation, could adopt an employer retirement plan and make additional retirement plan contributions and other benefits.
The malpractice and liability insurance issues should be investigated. In some cases the client will provide malpractice insurance, but if not that cost must be factored in.
To me the IC job would be a better option. She would be receiving more compensation, could adopt an employer retirement plan and make additional retirement plan contributions and other benefits.
The malpractice and liability insurance issues should be investigated. In some cases the client will provide malpractice insurance, but if not that cost must be factored in.
Re: Advise on side gig w2 or independent contractor
The 1099 side gig opens up self employed deductions like i401k, health insurance, travel, and so on.
These may not be relevant or allowed depending on the circumstances but could be valuable.
The non compete with the W2 offer sounds like a bad idea.
These may not be relevant or allowed depending on the circumstances but could be valuable.
The non compete with the W2 offer sounds like a bad idea.
Re: Advise on side gig w2 or independent contractor
The non-compete doesn't really make any sense in this context - it's not negotiable? I had a non-compete in an IC contract once but was able to have it removed. On the other hand, two jobs would be enough for some of us.
I'm not familiar with the industry, but in mine it's unusual that insurance would be the same for an employee and an IC.
Re: Advise on side gig w2 or independent contractor
Though I don’t work in healthcare, there’s no way I’d sign a non-compete to take a side gig. Do you know any of the details?
Edit: Maybe if it only applies for the duration of that job? But otherwise it makes no sense.
Edit: Maybe if it only applies for the duration of that job? But otherwise it makes no sense.
Re: Advise on side gig w2 or independent contractor
As an advanced practice nurse I’m in the same situation. I chose IC because, while it involves a little more hands attention, financially it’s well worth it with the business expenses write offs and the SEP. Now if she or her partner isn’t interested in keeping track of expenses and dealing with quarterly taxes then it’s another story. Although it’s really not much effort for the payoff.
And there are way too many jobs out there in healthcare (assuming she’s not out in the country) to put up with a non compete for a side gig.
And there are way too many jobs out there in healthcare (assuming she’s not out in the country) to put up with a non compete for a side gig.
Re: Advise on side gig w2 or independent contractor
bu wouldn't the SS w/h be returned at yr end since the max w/h was reached w/ the primary job?Spirit Rider wrote: ↑Fri Apr 12, 2019 10:10 pm This is actually one case where even if the two jobs were paying the same, being an IC would pay more. A W-2 moonlighting employment will require 7.65% FICA be deducted. Since the SS maximum wage base have been reached in the primary W-2 employment. The SE self-employment will only require 2.9% SE Tax.
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Re: Advise on side gig w2 or independent contractor
Good point. I know that, but somehow it didn't register when I was replying. Maybe because I am often comparing S-Corps to sole proprietors and in that case you don't get the employer share of the SS component back.kaneohe wrote: ↑Sat Apr 13, 2019 2:38 pmbu wouldn't the SS w/h be returned at yr end since the max w/h was reached w/ the primary job?Spirit Rider wrote: ↑Fri Apr 12, 2019 10:10 pm This is actually one case where even if the two jobs were paying the same, being an IC would pay more. A W-2 moonlighting employment will require 7.65% FICA be deducted. Since the SS maximum wage base have been reached in the primary W-2 employment. The SE self-employment will only require 2.9% SE Tax.
You would be out the 6.2% for the whole year and refunded with your tax return, the 1.45% MC component is not refundable and you would end up paying 1.45% more as self-employed.
Re: Advise on side gig w2 or independent contractor
The other thing you don't think about and isn't a likely issue but could be is collectibility of your invoices. Employees are much higher up the food chain in a bankruptcy than unsecured creditors. There are things you can do, I did 1099 work for a company that was pretty much known to be heading for bankruptcy. Thankfully I collected everything and was able to satisfy (repel) claw back efforts stating I was given preference items.Spirit Rider wrote: ↑Sat Apr 13, 2019 3:07 pmGood point. I know that, but somehow it didn't register when I was replying. Maybe because I am often comparing S-Corps to sole proprietors and in that case you don't get the employer share of the SS component back.kaneohe wrote: ↑Sat Apr 13, 2019 2:38 pmbu wouldn't the SS w/h be returned at yr end since the max w/h was reached w/ the primary job?Spirit Rider wrote: ↑Fri Apr 12, 2019 10:10 pm This is actually one case where even if the two jobs were paying the same, being an IC would pay more. A W-2 moonlighting employment will require 7.65% FICA be deducted. Since the SS maximum wage base have been reached in the primary W-2 employment. The SE self-employment will only require 2.9% SE Tax.
You would be out the 6.2% for the whole year and refunded with your tax return, the 1.45% MC component is not refundable and you would end up paying 1.45% more as self-employed.
Or it may just be a dispute of work or billing. Employees must be paid. Independent contractors are treated like any other vendor based upon contract law.
In this case I would think liability would be a big issue