Does Section 199A alter the tax calculation between IC vs. employee?

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mookie
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Joined: Sun Jul 12, 2015 1:35 pm

Does Section 199A alter the tax calculation between IC vs. employee?

Post by mookie » Sun Apr 14, 2019 5:10 pm

When comparing the tax treatment as a W2 employee vs. 1099 independent contractor, my understanding is that an independent contractor has to pay the self-employment tax, which is an additional 6.2% above what the W2 employee would have to pay in taxes. But now with the Section 199A deduction, an as independent contractor, if I'm in the 24% tax bracket, I would pay 4.8% less in taxes (20% x 24%), so that the self-employment tax and the 199A deduction almost cancel each other out?

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