Author Topic: Opportunity to Become 1099 Contractor  (Read 1791 times)

dcozad999

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Opportunity to Become 1099 Contractor
« on: May 18, 2016, 10:20:59 AM »
Looking for as much info as possible on the pros/cons.

I would be going from 82k to $50/hour (104k for 40 hrs/wk) as a Business Analyst. Currently Health/Dental is through my employer, but my wife's does provide it so we can switch that over.
This opportunity is happening very fast so I need to get educated in the next day or so and decide whether it's worth it.

Even if I'd break even, it would probably be worth it because I feel like my life is being sucked out of me in my current position.

Would appreciate any info/experiences you guys have. Any good websites that explain all this?

Also, my wife should be delivering our second child in about 2 weeks and will be taking the full 3 months off and then go to part-time. How does paying for the insurance work when they are on FMLA? Do you write a check and take it down to the HR office? 


jwright

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Re: Opportunity to Become 1099 Contractor
« Reply #1 on: May 18, 2016, 10:48:13 AM »
As a contractor, you are responsible for both employee and employer portions of FICA and Medicare; so you are on the hook for 15.3% SE tax when it would normally be 7.65% withheld from your paycheck.  So now your apples to apples salary is $96,044.  You also do not get benefits, or paid time off as a contractor.  You are supposed to provide your own supplies, but you can ask your client to reimburse you.  Will you have to travel?

Why is the position considered contractor?  Business Analyst seems like it would lend itself to being an employee situation.

TheAnonOne

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Re: Opportunity to Become 1099 Contractor
« Reply #2 on: May 18, 2016, 10:52:54 AM »
I would ask for a few more dollars per hour but going contract is generally the way to go. There are higher rates in that field as well, so you can look for those over the next 6-12 months!

As a .NET dev, salary can be 100-120 on the higher end, but contract rates (W2 so still 7.25% Payroll taxes) can be $80/h + AND you get paid for overtime. So... 100k or 160-200? Easy choice.

Get a spouse to cover the basic benefits if you can, then there is even less reason to remain FT.

dcozad999

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Re: Opportunity to Become 1099 Contractor
« Reply #3 on: May 18, 2016, 11:10:21 AM »
As a contractor, you are responsible for both employee and employer portions of FICA and Medicare; so you are on the hook for 15.3% SE tax when it would normally be 7.65% withheld from your paycheck.  So now your apples to apples salary is $96,044.  You also do not get benefits, or paid time off as a contractor.  You are supposed to provide your own supplies, but you can ask your client to reimburse you.  Will you have to travel?

Why is the position considered contractor?  Business Analyst seems like it would lend itself to being an employee situation.


No travel.

Not sure why it's a contractor position as I haven't gone to the interview yet, however it is pretty common in my area to have contract BA's.



dcozad999

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Re: Opportunity to Become 1099 Contractor
« Reply #4 on: May 18, 2016, 11:12:43 AM »
I would ask for a few more dollars per hour but going contract is generally the way to go. There are higher rates in that field as well, so you can look for those over the next 6-12 months!

As a .NET dev, salary can be 100-120 on the higher end, but contract rates (W2 so still 7.25% Payroll taxes) can be $80/h + AND you get paid for overtime. So... 100k or 160-200? Easy choice.

Get a spouse to cover the basic benefits if you can, then there is even less reason to remain FT.


This is my thinking. Just seems to be bad timing with the kid so soon to arrive. But I don't want to miss this type of opportunity either. I'm learning nothing in my current role and need to move on. I'm also thinking this type of position could be a springboard for future opportunities.

TheAnonOne

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Re: Opportunity to Become 1099 Contractor
« Reply #5 on: May 18, 2016, 12:06:04 PM »
I would ask for a few more dollars per hour but going contract is generally the way to go. There are higher rates in that field as well, so you can look for those over the next 6-12 months!

As a .NET dev, salary can be 100-120 on the higher end, but contract rates (W2 so still 7.25% Payroll taxes) can be $80/h + AND you get paid for overtime. So... 100k or 160-200? Easy choice.

Get a spouse to cover the basic benefits if you can, then there is even less reason to remain FT.


This is my thinking. Just seems to be bad timing with the kid so soon to arrive. But I don't want to miss this type of opportunity either. I'm learning nothing in my current role and need to move on. I'm also thinking this type of position could be a springboard for future opportunities.

6 years ago I left FT employment, and have never been out of work. Even if I was, I could always lower my standards (rate) and get a job that much faster... The way I look at it, if I can work 1500 hours a year I break even, everything after that is gravy. Most years I work more than 2200 hours, and overtime is where the money is.

Obviously, YMMV

bacchi

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Re: Opportunity to Become 1099 Contractor
« Reply #6 on: May 18, 2016, 12:54:35 PM »
As a contractor, you are responsible for both employee and employer portions of FICA and Medicare; so you are on the hook for 15.3% SE tax when it would normally be 7.65% withheld from your paycheck.  So now your apples to apples salary is $96,044.  You also do not get benefits, or paid time off as a contractor.  You are supposed to provide your own supplies, but you can ask your client to reimburse you.  Will you have to travel?

Why is the position considered contractor?  Business Analyst seems like it would lend itself to being an employee situation.

The W2 82,000 is actually (82,000 - (82000*.0765)) before income taxes. The comparison would be $87313 to $50/hr.

Edit: If you're saving a large percentage of your income, then a 1099 + solo 401k is almost the best FIRE vehicle available.
« Last Edit: May 18, 2016, 01:02:45 PM by bacchi »