What is the difference between paying a worker a 1099 versus a W-2?

Workers paid on Form 1099-misc do not have taxes withheld from their pay, so they must file and pay the appropriate taxes themselves. The company does not pay the employer share of taxes, and the worker does not have access to the company’s unemployment, Workers’ Compensation, or benefits [medical, dental, vision, 401(k), etc.].

The IRS and state agencies have seen their tax collections suffer due to workers misclassified as 1099 independent contractors and are cracking down with more audits and heavy penalties. Therefore, it is imperative workers are properly classified per the IRS guidelines. Based on those guidelines, less than 1% of our contractors qualify for the 1099 independent contractor (IC) classification.