1099 OR W2

Hello everyone - I'm relocating from CA to Austin, TX in January. I have the opportunity to continue working for my current employer; however, I will be working out of an office in my home. Legally, can I file a 1099 form versus a W2? What is the criteria? Will I still be able to get group medical insurance thru my employer if I get paid 1099?

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Permalink Reply by kdantzler on January 2, 2008 at 3:35pm

I was a telecommuter for HP, but at the end of the year, they sent me a w-2 and reimbursed me for all expenses I incurred, so at the end of the year, I was required to file the w-2. As an independent contractor, I recieved multiple 1099s but Texas still found me to be an employee of the company because they didn't have certain things in place for thier independent contractors. Texas requires the following to be true for 1099 and to be considered "independent" see enclosed:
http://www.texasworkforce.org/ui/tax/forms/c8.pdf
http://www.twc.state.tx.us/news/efte/appx_d_irs_ic_test.html
http://www.twc.state.tx.us/news/efte/appx_e_twc_ic_test.html

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Permalink Reply by Diva Milani on April 9, 2008 at 4:50pm

I see your posting was put on this website in December of 2007, so this reply may hit you when you've already discovered the answer to your question... but just in case....

1099 status vs. W-2 status is a function of Federal regulations and you can find a lot of good information just by visiting the IRS website at www.irs.gov which details the differences between being a "true" independent contractor vs a person that qualifies for W-2 status. W-2 implies an employer-employee relationship. If you are an employee of this company and they can control when you work, how you work and where you work, you are an employee.

A true independent contractor (and they have a laundry list of criteria on the IRS website) basically boils down to a person being truly independent... i.e. you determine your own hours and when you start and finish your work and how you complete your projects and where you do your work and they have NO CONTROL over you whatsoever, including your ability to simultaneously perform work for other clients.

If you get employee benefits, you are a W-2 employee... end of story. If you are responsible for your own health insurance, taxes, etc... you are generally a 1099 contractor. However, if you are a W-2 employee of a company and they take care of processing the taxes for you, but don't supply benefits such as health insurance, that does not mean that you are not an employee. The factors that determine whether or not a true employee-employer relationship exists is clearly spelled out on the IRS website... and also through your local (state) labor board.

I hope this helps.