What is the difference between a 1099 Independent Contractor and a W2 Independent Contractor?
Independent contractors are not permanent employees of a company. They can work either as 1099 or W2 contractors. Both types of contractors are paid by the client or agency. The earnings of the 1099 Contractor are reported to the IRS on a 1099 form without the withholding of any taxes (federal, state, social security). However, the earnings of a W2 employee is reported to the IRS and federal and state income tax are withheld. The agency also pays the employer’s share of the social security tax for W2 employees. W2 Contractor: Under common law, a worker is an employee (contract, permanent, direct) if the person for whom they work has the right to direct and control the way they work, both as to the final result and as to the details of when, where, and how the work is done. When a person is paid on the form W-2, the employer withholds and pays all of the necessary employee income taxes as required by the IRS. These taxes include: Federal Income Tax, State Income Tax, and FICA (Social Se
