W-2 Employee vs. 1099 Contractor
Nursing job apps have revolutionized how CNAs, LPNs, and RNs approach their careers. They put the ultimate job flexibility at your fingertips, providing the perfect work-life balance for your world. However, they're not all created equal. Some have you working shifts as a W-2 employee and others as a 1099 independent contractor. Which one is better? That's for you to decide.
The choice between being a W-2 employee or a 1099 contractor can be a game-changer, with your decision ultimately hinging on your goals, finances, and preferences. Let's dive deep into the differences between these two employment classifications to help you make the right choice. We'll also cover the benefits of claiming shifts via the ShiftMed app.
What Is a W-2 Employee?
As a W-2 employee, you're a traditional company employee. Your employer withholds and submits the employment taxes you must pay to the government every paycheck. You then receive a Form W-2 at the end of the year, summarizing your earnings and tax withholdings. You use this form to file your taxes.
You may be eligible for employee benefits such as medical and dental insurance, retirement plans, and access to training and educational opportunities. You also have greater job security and protections under labor laws, and your employer is responsible for workers' compensation and unemployment insurance.
What Is a 1099 Contractor?
As a 1099 contractor, you're a self-employed worker who provides services to companies. You're responsible for paying your employment taxes to the government four times a year. You'll receive a Form 1099-NEC from the facility at the end of the year that summarizes your earnings. You use this form to double-check your reported earnings for the year and file your taxes.
Typically, you do not receive employee benefits. You must arrange and pay for your health insurance, retirement savings, and educational opportunities. You also don't have the same job security and protection as a W-2 employee. You're not eligible for workers' compensation or unemployment when your contract ends.
W-2 and 1099 Analogy
Another way to explain the difference between a W-2 employee and a 1099 contractor is to compare renting a fully furnished apartment (W-2 employee) versus owning a home (1099 contractor).
The Apartment Renter (W-2)
When you rent an apartment, you sign a lease agreement with the landlord (employer) that outlines the rent you pay (salary) and the rules you must follow (company policies).
Your apartment has everything you need, including appliances, furniture, and utilities (company benefits). You pay a fixed monthly rent that covers most of your expenses (income tax) and maintenance work (Social Security and Medicare taxes).
Renting a furnished apartment, like being a W-2 employee, has less financial management responsibility and more fringe benefits.
The Homeowner (1099)
You're the boss when you own a home and must furnish it all by yourself (no company benefits). You're also responsible for all its maintenance (income tax) and repairs (Social Security and Medicare taxes) on your property.
Owning a house, like being a 1099 contractor, requires greater financial responsibility and self-reliance.
Choosing Your Employment Classification
So, which employment classification should you choose? It truly depends on your situation. Here are a few considerations to help you decide:
1. Are you looking for stability and long-term growth? (W-2)
2. Are you comfortable managing your taxes and benefits? (1099)
3. Do you prefer the convenience of having your employer manage your taxes? (W-2)
4. Do you value labor law protection and company benefits? (W-2)
5. Are you willing to accept a level of risk and responsibility? (1099)
ShiftMed Hires W-2 Employees
If you're leaning towards the W-2 employment classification, you're sure to take a solid stance after you hear what we offer our W-2 healthcare professionals.
We offer a comprehensive suite of benefits, including:
Access to quality, affordable healthcare insurance after working one shift.
Get paid after clocking out of a shift using our free Instant Pay service.
Reserve discounted Uber Health rides to and from shifts in the ShiftMed app.
Score Platinum Rewards through our employee incentive program.
Receive a discount on nurse training and upskilling opportunities.
Conclusion
Nurses must understand the differences between W-2 and 1099 employment classifications because these variances affect their financial and employment situation. Nurses should consider their career goals, financial planning, and preferences when deciding whether to work as a W-2 employee or a 1099 contractor. Additionally, they should consult with a tax professional to understand the tax implications of their choice.
Interested in working when, where, and how often you want—all while scoring the fantastic benefits of being a W-2 employee? Download the ShiftMed app today to get started!
Disclaimer: ShiftMed does not provide legal, accounting, or tax advice. This content is for informational purposes only and is not intended to provide legal, accounting, or tax advice. Please refer to a professional advisor prior to acting on the information set forth herein.
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