CDN on TN - 2nd job offer - cheaper to be paid on W2 or 1099

[Mathew]

Hi,
I’m a Canadian on TN-1 status working in Los Angeles as a scientist. I’ve been offered a part-time job with a second employer which I will apply for a 2nd TN. The 2nd employer offered me 2 options 1) to be paid as a part-time employee (W2) or 2) to be paid on a 1099. The work can be done in his office or can be done at home as well. Which one would be more worthwhile for myself to accept? If I accept part-time then he doesn’t have to pay all my benefits, which I don’t need because my first employer is covering that. If I accept the 1099 do I have to incorporate and can I just use my SSN? Does the 1099 allow me to claim half my rent, and any business related expenses thus reducing my tax bracket? Kindly note that with my combined salaries totaling $150,000 I will be in a high tax bracket.

Also, if the 2nd employer accepted to pay me $140 per hour as a contractor and I ask him to be put on as a part-time employee, it would be unfair to ask for that much money as well as any benefits? Would anyone know what would be a reasonable amount to reduce it to?

Your advice is sincerely appreciated.
MB

[nelsona]

You could be paid as a contractor without incorporating.

This would not necessarily allow you to claim your rent and other expenses related to your home, since the employer does not require that you work from home, but other expenses would be allowed.

Your portion of taxes would be higher since you would pay both ends of FICA taxes.

Generally, benefits usually cost the compant about $25,000, so you should NOT expect the same salary as an hourly contractor gets.

But, given your other job, you don't necessarily need those benefits, and usually paret-timers don't get full benefits anyways.

[Mathew]

Hi Nelson,
Thanks so much for your reply. You mentioned I cannot claim my rent and other expenses related to my home but just to be clear I will be working from home 70% of the time and 30% in his office (meetings). That won't qualify? When you say other expenses do you mean mileage, business lunches, office supplies? Anything else?

So in the end, what would be more worthwhile to save money....being paid on a 1099 or as a part-timer?

Thanks again,
M

[nelsona]

Qualifying for expense deductions gets tricky, especially for home, but you may qualify

Best to check with the source; this a good starting point:

http://www.irs.gov/businesses/small/art ... 07,00.html

There is no way you will be offered as much money as a salaried employee than as a contractor, and the deductions will be better on 1099.

If you don't need the benefits, go 1099.