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second job as W2 vs 1099

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  • second job as W2 vs 1099


    I work full time for the state of California with the annual salary of 336,000 with a defined Benefit Pension Plan. I maximize 457 and 401 K but there is no employer match. I put 800 per month in 529 account for our child age 8 yrs. We file income tax as “married jointly”. We have no other source of income. I have an opportunity to get a side gig that is offering to pay salary of 320 K per year with all the benefits of a full-time employee. They have 2% 401 k match, PTO 16 days, 8 Holidays, 3 sick days.

    So, I will be having 2 full time jobs with somewhat similar benefits except for the Defined Benefit Pension Plan.
    The employers are keen to hire as full-time employee. If I tired to push they might agree to hire me as a 1099 with perhaps increase in compensation from 320k to 350 k. but then I will lose PTO and holidays etc.

    My Question is - How much tax advantage is there in getting a secondary job as W2 vs 1099 on top of having a primary W2 job?

  • #2
    There can be a huge advantage to having such a significant 1099 gig given you have health insurance coverage (in particular) and other bene’s in your first W2 job. That’s a generalization, of course, and they’re really not compensating you enough extra to make up for the lost bene’s but you already have the most important, health insurance in job Home You can max out a solo-k if you take the 2nd job as 1099, for starters. Then there is a home office possibility and other ordinary and necessary expense deductions (which may or may not be applicable).

    My question is how you can make much use of PTO and holidays with 2 ft jobs. Sounds a little nuts to me if you are looking for any family time & QOL, but maybe you have a tremendous SL burden or trying to catch up finances by burning the candle at both ends (hopefully for a couple of years only)?
    Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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    • #3
      While not an issue in your post, it is often too late to raise it after the fact. If you do ultimately choose to be a 1099, do not form an S-Corp (especially if CA).

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      • #4
        Thank you Both. Also, I agree about Quality of life and maintaining work life balance. not every extra dollar is worth it.

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        • #5
          Originally posted by cc132652 View Post
          Thank you Both. Also, I agree about Quality of life and maintaining work life balance. not every extra dollar is worth it.
          to give my tired old line here, just in case you have not seen it, a Financial Checkup (which is different from ongoing planning) could give you the perspective you may lack. You are talking about some serious life changes impacting a lot of people…not just family, but others on the periphery, and, especially, yourself - you get only one go-around at this life.

          Maybe more, but you could be a butterfly next go-round and then it won’t matter, anyway.
          Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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