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Would you switch from a W-2 job to become a 1099 contractor?

I'm thinking about switching from being paid 70-72k/year + benefits at a w-2 job in one setting to a 1099 contractor job at about $65/hr. How much of a pay increase is that? I'm in Minnesota, if that matters. I can switch to my wife's insurance at minimal cost too so I'm not too worried about benefits.

Public Comments

As a 1099 you'll need to pay taxes as a self-employed person. This means double FICA deductions (because employers pay 1/2.) I'm not sure what other taxes you'll need to pay. Obviously if you can take advantage of your wife's benefits, then the only other thing you'll now have to pay out of pocket is your vacation time - essentially you can take as much time as you like, but you won't be able to bill for it. I would say you'll come out way ahead, though (you'll make $70k in just over 1/2 a year.) Just remember, contractors are let go before employees. Good luck.
So, you want to leave company A which pays you $70K + benefits to go to company B that says it's going to pay you $65/hour. You are on your own for medical, retirement, disability, vacation funds and emergency savings if you suddenly have no work. The only way to really get a feel for this is to sit down an do a bunch of mock tax returns. Be realistic, you could knock yourself out working 2000 a year and discover that they only pay you for 1500. Even after SE tax, you would still be about $20,000 ahead of the salary job, would that $1500-2000 a month cover everything?
If it's the same job, you and they can't just switch. A given job is one or the other, an employee or a contractor, and that's defined by the terms of the job. What the new job would pay you depends on how many hours you work. You'll pay almost twice as high a % for social security and medicare as a 1099 contractor. And then there's the value of the benefits you lose.... not just insurance, but paid vacation, sick days, eligiblity for unemployment comp if you are laid off or workers comp if you get hurt on the job, and any other benefits you might have as an employee. Only you can evaluate what the loss of benefits is worth to you.