A 1099 tech offer almost always looks better than a W-2 offer on paper. More per job, more per hour, more per week. Sometimes it really is better. Often it isn’t. Here’s how to compare the two honestly before you take one.
What the W-2 job gives you that the 1099 doesn’t
- The employer’s half of Social Security and Medicare: 7.65% of your pay. On a 1099 you pay that yourself.
- A company truck and gas, if they provide one
- Tools, meters and supplies provided by the company
- Health insurance partly or mostly paid by the employer
- Paid time off and paid holidays
- A 401(k) match, if they have one
- Workers’ comp and unemployment insurance if you get hurt or laid off
On a 1099, every one of those comes out of your own pocket or doesn’t exist.
What the 1099 gives you that the W-2 doesn’t
- Higher pay per job, usually
- Your work costs (miles, tools, phone) come off your income before tax
- Usually more say over which days you take work
- The option to work for more than one company
A side-by-side example
Two offers for the same install work, 2,000 hours a year:
| W-2: $25/hr | 1099: $36/hr | |
|---|---|---|
| Pay for the year | $50,000 | $72,000 |
| Truck, gas, insurance, wear | $0 (company truck) | −$9,000 |
| Tools, meters, supplies, phone | $0 | −$3,000 |
| Health insurance you pay | −$2,400 | −$6,000 |
| Paid time off (2 weeks) | included above | −$2,880 (unpaid) |
| Social Security + Medicare | −$3,825 | −$8,478 |
| Left before income tax | $43,775 | $42,642 |
These numbers are made up to show the method, not a real offer. In this example a $36 1099 rate, 44% higher than the W-2, comes out roughly the same. Your truck costs, insurance and time off may be very different. Run your own.
The quick rule of thumb
A 1099 rate usually needs to be at least 25–40% higher than a W-2 rate for the same work just to break even, more if you’re supplying your own truck. If the 1099 offer is only 10–15% higher, the W-2 job almost always wins.
Questions to ask before taking a 1099 install job
- Is pay per job, per point or per hour? What did techs actually average last month?
- What gets charged back: equipment, repeat calls, audits? How much do techs typically lose to chargebacks?
- Do I supply my own truck, ladder, meters and tools?
- Is there a truck or equipment rental taken out of pay?
- What insurance do I have to carry, and who pays for it?
- How steady is the work in the slow season?
If you take the 1099
The pay only works out if you handle the parts the employer used to handle: set aside a share of every check for taxes, pay the IRS four times a year, and keep every receipt and every work mile so your costs come off your income. Your first year on a 1099.
This is general information about U.S. federal taxes, not advice for your situation. If something here doesn't match your paperwork, ask a tax preparer.