Self-Employment · 7 min read
W-2 vs 1099: How the Same $80k Hits Your Bank Account Differently
W-2 employees split FICA with their employer. 1099 contractors pay both halves. Here's the actual difference.
Switching from W-2 to 1099 (or vice versa) changes more than your paycheck timing — it changes who pays which taxes.
FICA: the 7.65% gap
W-2 employees pay 7.65% FICA; the employer pays the other half. 1099 contractors pay the full 15.3% as self-employment tax.
Deductions go in different places
1099 income is reported on Schedule C, allowing deduction of business expenses before income tax. Half of SE tax is also deductible above the line.
Withholding is on you
There is no employer withholding on 1099 income. You owe quarterly estimated taxes; underpayment penalties apply if you owe more than $1,000 at filing.
The break-even
To match an $80k W-2 offer (with employer-paid FICA, health insurance, and PTO) as a 1099 contractor, you typically need ~$100–110k gross.