Is being a 1099 contractor better than W-2?
Answer stability
Watching
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Follow this question →The bottom line
Reviewed against multiple sourcesNeither is universally better — 1099 trades benefits and withholding for flexibility and self-employment tax. Run the numbers for your situation.
Why we believe this
AI models agree 1099 work offers more deductions and flexibility but means self-employment tax, no employer benefits, and quarterly estimated payments, while W-2 offers withholding and benefits. The 'better' option depends on rates, benefits, and your situation.
Supporting evidence
IRS.gov self-employment guidance
Self-employment tax and estimated payments.
A CPA
To compare scenarios for your income.
What could change this answer
- Your effective rate after self-employment tax and deductions.
- Value of benefits you'd give up.
- Whether you'll make estimated payments correctly.
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FAQs
Do 1099 workers pay more tax?
They owe self-employment tax but can deduct more. The net effect depends on your situation — verify with a pro.
What's the biggest 1099 risk?
Underpaying estimated taxes. Plan for quarterly payments and confirm the schedule.