Hi Money Minder,
Hey there! Just wanted to chat with you about my new gig. I’m going to be working from home, pulling in $140k a year. They’re cool with me going 1099 or W2, so I’ve gotta make a decision.
They’re throwing in a fixed monthly chunk for health insurance, since they don’t offer any benefits. PTO stays the same no matter which way I go, so that’s a win!
I’ve got this LLC on the side, bringing in about $6k a year from consulting work. Gotta keep that going.
My tax pro suggested I include a % of my electric and mortgage in my home office expenses. Smart move, right?
I read about the 7.5% extra tax for FICA/SS – anything else I need to think about here?
Catch you later Money Minder!
Response from THE MONEY MINDER:
Hello There,
Congratulations on your new role! It sounds like you have some important decisions to make regarding whether to go 1099 or W2. Given the details you’ve shared, it seems like you may want to consider the financial implications of both options. While being a 1099 contractor offers more flexibility, it also means you’ll be responsible for self-employment taxes, including the additional 7.5% for FICA/SS that you mentioned. On the other hand, being a W2 employee means your employer will withhold these taxes for you, but you may have slightly less control over your work schedule and other aspects of your job.
Since you already have an existing LLC, you may be accustomed to managing self-employment taxes and deductions. However, if you choose this route for your new role, it’s essential to consider how the fixed monthly amount for health insurance and PTO will impact your overall income and tax liabilities as a 1099 contractor. You might want to consult with your tax professional to help you weigh the pros and cons of each option based on your specific financial situation and goals.
Additionally, it’s great that you’ve been proactive in accounting for home office expenses related to your LLC. If you continue to use a portion of your home for work with your new role, make sure to keep detailed records and receipts to support these deductions come tax time.
Overall, the key is to make an informed decision that aligns with your financial needs and priorities. Consider how each option will impact your take-home pay, tax obligations, and overall financial well-being. By evaluating all aspects and seeking guidance from professionals, you can make the best choice for your unique circumstances.
Best of luck with your decision-making process, and feel free to reach out if you have any more questions or need further assistance.
Farewell from THE MONEY MINDER.
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