W2 or 1099 for 2nd job as contractor (while 1st job is salaried employee)?

[mnwa]

I live in Washington state. I am currently working as a full time salaried employee (telecommuting) and making somewhere between 100K and 150K. I am considering a second telecommute job as a hourly contractor. I already get all the benefits (including 401K and health insurance) from the first job and hence I don't need any of them from the second job. I am wondering what would be my best bet from tax, flexibility and legal aspects - W2 or 1099? The hourly rate is $55 for W2 and $60 for 1099. Any advice, experience, information (pros/cons) will be highly appreciated. Also, do I need to inform any of my employers about this? They are not competitors (both are technology consultancy though).

 

[LdiJ]

I live in Washington state. I am currently working as a full time salaried employee (telecommuting) and making somewhere between 100K and 150K. I am considering a second telecommute job as a hourly contractor. I already get all the benefits (including 401K and health insurance) from the first job and hence I don't need any of them from the second job. I am wondering what would be my best bet from tax, flexibility and legal aspects - W2 or 1099? The hourly rate is $55 for W2 and $60 for 1099. Any advice, experience, information (pros/cons) will be highly appreciated.

W2 is a better deal. The hourly differential is enough to cover the extra self employment tax, but a W2 is still a much better deal.

 

[cbg]

Quite honestly, it may not be your choice, or even that of your employer.

All jobs can legally be classified as employee (W-2). Not all jobs can legally be classified as a contractor (1099). Which means that unless the job meets the IRS definition of a contractor, you MUST be classed as an employee (W-2). If it does meet the IRS definition you can choose one or the other (as long as the employer agrees - what's best for you is not necessarily best for him) but if it doesn't, then W-2 employee is all you've got.

It makes no difference whatsoever how your other job is classified.

 

[Stephen1]

Quite honestly, it may not be your choice, or even that of your employer.

All jobs can legally be classified as employee (W-2). Not all jobs can legally be classified as a contractor (1099). Which means that unless the job meets the IRS definition of a contractor, you MUST be classed as an employee (W-2). If it does meet the IRS definition you can choose one or the other (as long as the employer agrees - what's best for you is not necessarily best for him) but if it doesn't, then W-2 employee is all you've got.

It makes no difference whatsoever how your other job is classified.

Great answer, especially starting off with all jobs can be classified as employee (almost nobody addresses it that way).

One additional item, the State of WA has a longer list of questions than the IRS for determining whether you can be an independent contractor or not.

 

[cbg]

One additional item, the State of WA has a longer list of questions than the IRS for determining whether you can be an independent contractor or not.

Good to know, thanks.