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View Full Version : Are tax rates for 1099 earnings lower than for W2 earnings?


bilbo7208
Dec 14, 2010, 08:10 AM

ebaines
Dec 14, 2010, 08:52 AM
No, tax rates are not lower for 1099 earners. Actually, in a sense taxes are higher for 1099 employees. Income from both a W2 and a 1099 are considered to be ordinary income, and hence are taxed using the same rates for income tax. However, a 1099 employee is considered to be a self-employed contractor, and so in addition to income tax you also have to pay employment taxes (social security and medicare) at a rate that is twice what W2 employees have to pay. On the plus side - being self employed you may be able to deduct some expenses that employees can't.

bilbo7208
Dec 14, 2010, 09:02 AM
Thank you. Case closed.

joypulv
Dec 14, 2010, 10:53 AM
But you lower your tax BILL by filling out a Schedule C with all your expenses related to self employment.
(Sorry, I know you want the case closed.)