Taxes / W-2 and 1099
W-2 and 1099 are different tax lives
The same weekly number leaves you with different money, different paperwork and a different payment schedule.
Rules for tax year 2026 unless a line says otherwise. Written November 2, 2026.
For general information only. This is not tax, legal or financial advice, and we are not your tax preparer. Rules change and your facts decide how they apply, so consult a qualified tax professional before you act on it.
Side by side
| W-2 employee | 1099 contractor | |
|---|---|---|
| Income tax | Withheld from each check. | Nothing is withheld. You send it yourself, usually quarterly. |
| Social Security and Medicare | You pay 7.65%, and your employer matches it. | You pay both sides as self-employment tax: 15.3% on 92.35% of net earnings, with the Social Security part capped. Half of it is deductible. |
| Housing and meal money | Not taxed only under an accountable plan, with a tax home away from the job. Otherwise it is wages. | It is income. You report what you received, then deduct qualifying business travel on Schedule C. |
| Your own work expenses | Generally no federal deduction. Ask the employer to reimburse them. | Ordinary and necessary business expenses go on Schedule C. |
| State agreements | Reciprocity can cover wages. | Reciprocity generally does not cover self-employment income. Expect a nonresident return where you worked. |
| Forms you receive | W-2. | 1099-NEC from the payer, if it reports at the threshold. The income counts even without a form. |
To compare a 1099 rate to a W-2 rate, take out self-employment tax, your own insurance and retirement, and any unpaid time. The offer calculator has a Paid as setting that handles the tax part.
Who decides whether you are a contractor
The working relationship decides it, not the contract's title. The IRS looks at three things: whether the company controls how you do the job, whether it controls the business side, such as how you are paid and who provides supplies, and how the two of you understand the relationship.
Shifts set by the facility, its protocols, its equipment and its supervisors point toward employment. If you think you were wrongly paid on a 1099, you can ask the IRS to decide with Form SS-8 and report your share of the uncollected tax on Form 8919 when the instructions allow it.
If you are on a 1099 this year
- Open a separate account and move part of every payment into it. Use last year's return to decide how much.
- Pay on the estimated-tax schedule, plus any state's own schedule.
- Keep a work calendar and expense log from the first shift.
- Ask a preparer about the qualified business income deduction. Health work, nursing included, counts as a specified service, so the deduction shrinks and then ends at higher incomes: above $197,300 for most filers in 2025, or $394,600 on a joint return.
Sources for this page
- IRS, Independent contractor (self-employed) or employee? Current web page
- IRS Form SS-8 Current revision
- IRS Form 8919 Current revision
- IRS, Self-employment tax Current web page
- IRS Self-Employed Individuals Tax Center Current web page
- IRS Schedule C (Form 1040) Current revision
- IRS, Deducting business expenses Current web page
- IRS Publication 15 (Circular E), Employer's Tax Guide 2026 edition
- IRS Publication 463, Travel, Gift, and Car Expenses 2025 edition, for 2025 returns
- IRS Publication 505, Tax Withholding and Estimated Tax 2026 edition
- IRS Form 1040-ES Current revision
- IRS Instructions for Form 8995-A 2025 edition
Checked November 2, 2026. Everything here is free, and paid links never change these answers.