App-based staffing agencies give nurses the power to choose when, where, and often they work—right from the palm of their hands. When a CNA, LPN, or RN claims a shift through a nursing jobs app, they work for a staffing company as a W-2 employee or a 1099 independent contractor.
Watch our W-2 vs. 1099 video to see why being a W-2 employee is better.
When you work with ShiftMed, you're a W-2 employee—and it's the best worker classification to have. Here are five reasons why:
1. W-2 employees pay less in FICA taxes.
W-2 employees and 1099 contractors must pay federal income taxes, Social Security taxes, and Medicare taxes to the Internal Revenue Service. When you're a W-2 employee, you pay half of your Social Security and Medicare taxes (collectively known as FICA), and your employer pays the other half. When you're a 1099 contractor, you pay these taxes yourself. For example, ShiftMed pays 7.65% of your FICA taxes, and you pay the other 7.65%. When you're a 1099 contractor, you must pay the full 15.3% out of your pocket.
2. 1099 contractors must manage their payroll taxes.
When you're a 1099 contractor, you're responsible for managing your payroll taxes throughout the year and paying them in one lump sum at tax time. If you incorrectly estimate your taxes and don't set enough money aside each quarter, you could be caught off guard by the high cost of your tax bill. W-2 employees don't have to keep track of their taxes. Your employer withholds a specified amount, which you determine, from each paycheck to cover your payroll taxes and submits those funds to the IRS. You'll receive a W-2 Form from your employer to file your taxes for the previous year.
3. W-2 employees have access to company benefits.
As a W-2 employee, you can access company health benefits, whereas 1099 contractors do not. ShiftMed, in partnership with Hooray Health, provides health coverage to healthcare professionals across the country.
4. 1099 contractors have a tougher time with loans.
Regarding financial lending, 1099 wage earners are under more scrutiny than W-2 income earners. When you're a W-2 employee, your income is automatically recognized, which makes it easier for you to qualify for car loans, mortgage loans, and the like.
5. W-2 employees have more protection.
When you're a W-2 employee, the law protects you regarding minimum wage, workers' compensation insurance, unemployment insurance, and overtime protection. None of these laws apply to 1099 contractors. As a 1099 contractor, you must source your own insurance.
Payroll Points to Ponder
When it comes to W-2 and 1099 employment classifications, there tends to be a lot of confusion surrounding payroll taxes. Hopefully, this information will help clear some things up.
1099 contractors pay 100% of their FICA taxes. W-2 employees pay 50% of their FICA taxes, and their employers pay the other 50%.
W-2 employees determine how much federal income tax should be withheld from each paycheck when they complete their W-4 Form.
W-2 employees have payroll taxes taken out each paycheck. Their employer submits these tax payments to the IRS on their behalf. Employers don't keep any tax withholdings.
If you're not already a ShiftMed employee, what are you waiting for? Download our app to start doing the work you love when and where you want.