Help deciding between W-2 and 1099!

[Matias]

Put briefly, I have two separate offers.  

 

Offer 1:  Independent contractor position (so possible benefit of large tax breaks)

-Pay = 60% of revenue

-Malpractice and licensure/credentialing costs not covered

 

Offer 2:  employee position

-Salary = 50% of revenue after training period (initially it will be 35%)

-$2k sign on bonus

-$1k annual CME (continuing medical education) 

-401k with 3% matching

-Health insurance (but I still have a monthly premium)

-Malpractice and licensure/credentialing costs not covered

 

These are both positions in the same field and accordingly have similar revenue.  I just don't know how much the benefits of the employee position are worth (if they're worth more than 10% revenue) and how significant the possible tax breaks could be as an independent contractor opening up an LCC. Help!

[MT2PA]

Personally I wouldn't consider a job that pays solely based on revenue....too risky.

Independent contractor means you'll pay that extra 7.5% taxes that an employer normally covers.  My employer covers 90% of my health insurance premium ( nearly 10% of my salary).  These facts alone would send me to the second job no question.

But neither are that appealing.

 

[Boatswain2PA]

Suggest you make sure your contract demands that you have unfettered access to the billing/revenue.

[ventana]

from medscape 

 

https://www.medscape.com/viewarticle/913093?nlid=129931_381&src=WNL_mdplsnews_190524_mscpedit_wir&uac=89496AJ&spon=17&impID=1974030&faf=1

Question

Can I Use an Independent Contractor?

A physician wrote, "I want a nurse practitioner or physician to cover one 8-hour slot per week in my urgent care office. I want this person to be an independent contractor. Am I on solid ground legally?"

Response from Carolyn Buppert, MSN, JD  Healthcare attorney

 

Probably not. The IRS, when determining whether an arrangement is one of employer/employee or independent contracting, looks at the degree of control that you (the boss) have and the independence that the hired individual has. The general question to answer is: Who controls the work? If you are telling the independent contractor when to work and where to work, that leans toward employment. An independent contractor generally works when he/she wants, where he/she wants, completes a specific project, and serves other clients. An independent contractor usually is paid a flat fee for a project and has the possibility of incurring a profit or a loss on a project.

The consequences of an erroneous choice could mean that the IRS and/or state taxing authorities could require you to pay taxes and fines. If the IRS or a state taxation office does an audit and finds that you are calling someone an independent contractor when that person, by the agency's definition, is an employee, the agency may assess civil penalties against you. They may require you personally to pay the employee's share of payroll taxes. They may assess fraud penalties. Criminal charges may even be filed. "Everyone does this" is not going to be a good defense.

For a detailed discussion of the differences between independent contractor and employee, see the IRS resource, Independent Contractor (Self-Employed) or Employee?

It's important to understand that tax liability and penalties for misclassifying an independent contractor fall on the employer. The clinician in this scenario isn't expected to recognize the appropriate classification, but you, the hiring individual, are.