Can You Be a W-2 and 1099 Worker with the Same Job?

Can you work under both W-2 and 1099 statuses with the same job? This question delves into the complexities of freelancer status and employment status, and whether you can be considered both an employee and a contractor under the same work conditions. Let's explore the nuances of this situation.

Understanding the Basics: W-2 and 1099

W-2 denotes an employee of a business, where the employer is responsible for withholding taxes and paying unemployment and workers' compensation insurance. The employer also issues a 1099, which is a form for independent contractors, and the contractor is responsible for their own taxes.

Tax Code and Employment Status

While it is technically possible to be both a W-2 and 1099 worker for the same job, the tax code generally does not permit this. Employers have the right to issue a 1099 for various reasons, including reimbursed expenses or services not part of the salaried position. However, many employers issue 1099s due to ignorance or as an attempt to avoid paying employment taxes. According to tax professionals, you can include the 1099 as wage income and pay only your share of taxes.

Employee vs. Contractor: Different Job Descriptions

Employees typically have job descriptions and are paid at market rates based on their position. Contractors, on the other hand, have a written contract with a clear scope of work and are often paid higher rates as they are responsible for their own taxes and overhead costs.

It is highly unlikely for an employee to receive a 1099 for the same job, as the IRS would consider the individual as an employee. However, if the individual performs additional tasks outside their job description on a freelance basis, a 1099 may be issued for those services.

The Same Job Duties and Employer

If an individual has the same job duties and is employed by the same company, it is not possible to be both a W-2 and 1099 worker. The Internal Revenue Service (IRS) has a comprehensive list of factors to determine if someone is an employee or an independent contractor. If the employer exerts significant control over the independent contractor's duties, the individual is more likely to be considered an employee.

Example Situations

For example, consider a scenario where a worker performs both W-2 and 1099 roles for the same employer. An employee in an assisted living facility earns a salary for their job duties. However, the same individual might also do tailoring work from home and receive a 1099 for the services provided outside their main employment.

In another scenario, if a person is employed as an office worker and also operates as an independent cleaner on weekends, they could be considered both a W-2 and 1099 worker. This is possible if the cleaner duties meet the IRS criteria for an independent contractor, such as being largely self-directed and not under the employer's control.

State Requirements for 1099 Status

In California, the requirements for 1099 status are more restrictive than in other states. However, it is still possible to be both a W-2 and 1099 worker under certain conditions, particularly if the independent work is truly independent and the employer lacks significant control over the work.

In summary, it is theoretically possible to be both a W-2 and 1099 worker with the same job if the individual performs different work roles that meet the IRS criteria for independent contractor status. It is crucial to consult with a tax professional to navigate these complex situations successfully.