Switch to 1099 from w-2

[Anonymous]

I have been at my current job for 3 1/2 years. I am paid as a full time employee with a W2, even though I work mainly from home and not a full 40 hr week. I get benefits through my husband. With the current state of the economy, I know the company is having some financial issues and I fear that the owners might try and cut my salary, in which case I will work less hours and maybe take on a freelance job to supplement. I'm wondering if this is the case, it might make more sense for me to just switch to a 1099? I know I will have to put aside money for taxes but I'm wondering if there is any benefit? We recently bought a house so I'm not worried about being a 1099 when applying for a mortgage and the implications that might have in the process.

[Anonymous]

Legally, you can't just choose to change your status. Depending on the nature of your job, not your preference, you are either an employee or an independent contractor (1099). It is a very common misconception that you can just choose one or the other. Legally, you cannot. I don't have time to explain the ins and outs of this distinction and at times it is very nuanced. Start by googling "employee vs independent contractor" but before you make any decisions, you would be wise to consult with an employment attorney.

[Anonymous]

This is not a decision you get to make.

[Anonymous]

Op here. Did not realize that. At my old job they let me go from 1099 to w2. I guess I figured if I was 1099 it might save the company money.

[Anonymous]

With a 1099, you will pay self-employment tax on the income. I assume that you are trying to help the company save money to avoid a pay cut. But you will be effectively taking a pay cut anyway with the increase in taxes.

[Anonymous]

Anonymous wrote:Legally, you can't just choose to change your status. Depending on the nature of your job, not your preference, you are either an employee or an independent contractor (1099). It is a very common misconception that you can just choose one or the other. Legally, you cannot. I don't have time to explain the ins and outs of this distinction and at times it is very nuanced. Start by googling "employee vs independent contractor" but before you make any decisions, you would be wise to consult with an employment attorney.

+1

[Anonymous]

In addition to what pps said, yes being a 1099 makes getting a loan more difficult (any loan not just a mortgage).