3 Decoding 1099 vs W2 Jobs: A Guide for Making Informed Employment Decisions

Episode Summary

In this episode of The Health Coach OT, Dr. Jaclyn Schwartz interviews Matthew Shiebler, CPA, about the financial implications of W-2 employment versus 1099 independent contractor status for healthcare professionals. Matthew, with over 25 years of accounting experience and specialization in working with therapy professionals, provides valuable insights into the pros and cons of each employment classification, helping listeners make informed decisions about their career paths.

Key Points Discussed

Fundamental differences between W-2 and 1099 status:

W-2 employees: Employer withholds taxes and matches Social Security and Medicare contributions

1099 contractors: Responsible for paying all taxes themselves, including self-employment tax

W-2 employees qualify for unemployment benefits; 1099 contractors typically don't

Benefits considerations:

W-2 positions often include health insurance and retirement contributions

1099 contractors must arrange their own benefits but have more flexibility in choosing plans

Some retirement options (like SEP IRA or Solo K plans) offer 1099 contractors greater tax advantages

Tax implications:

1099 contractors can deduct business expenses on Schedule C

Recent tax law changes eliminated unreimbursed employee expense deductions for W-2 employees

Cell phones, mileage, and other work expenses may be deductible for 1099 contractors

Evaluating offers:

Compare total compensation packages (salary plus benefits for W-2 vs. higher hourly rate for 1099)

Consider the value of employer-provided benefits versus the flexibility of choosing your own

Factor in tax implications and additional expenses when comparing offers

Red flags when considering 1099 positions:

Employers who pay you as a 1099 contractor but treat you like a W-2 employee

Lack of written contracts

Unclear malpractice insurance coverage

Poor reputation for timely payments or regulatory compliance

Practical Tips

Create a spreadsheet to compare the total value of different employment offers

Consider forming an LLC if working as a 1099 contractor to legitimize your business status

Always get contracts in writing and clarify who covers malpractice insurance

Research potential employers by speaking with current contractors before accepting positions

Determine if combining a W-2 position with a 1099 "side hustle" might be the best approach

About the Guest

Matthew Shiebler, CPA, is the owner of Interactive Accountants and has been practicing accounting for over 25 years. His firm specializes in working with healthcare professionals, including occupational, physical, and speech therapists. Matthew has extensive experience helping therapy professionals navigate HIPAA-compliant bookkeeping, identifying valuable tax deductions, and making strategic financial decisions.

Resources Mentioned

For income tax services or more information, contact Matthew Shiebler at info@ia.tax

Connect with The Health Coach OT

Website: www.healthcoachot.com

Instagram: @HealthCoachOT

Subscribe to our newsletter for weekly insights and updates

If you found this episode valuable, please subscribe on Apple Podcasts, Spotify, or wherever you get your podcasts, and leave us a review. For free resources, visit www.healthcoachot.com and join our newsletter for weekly insights and updates on integrating coaching into your healthcare practice.

#OccupationalTherapy #physicaltherapy #speechlanguagepathology #healthcoaching #taxes #1099 #w2 #accounting #cpa #jobsearch