Short Version:
Our calculator helps you when comparing between W2 and 1099 compensation.
Please visit our Resources page for all your tax preparation needs
Long Version:
Disclaimer: This tool is designed to help you compare two compensation packages: self-employed (1099) and salaried (W2). We have done our best to be accurate, but the information should not be considered professional advice. For all tax questions please consult your tax professional.
Key Details: This tool has the following assumptions: 8-hour day, 5-day work week, tax-filing status of Single, retirement funds set aside always equal what your employer matches, and no other income sources will be declared. It does NOT account for State taxes.
We have pre-filled the fields with sample values, but you can change any based on your scenario. For example, change the standard deduction if you plan on itemizing to take a larger deduction. Or, increase the business expenses field as appropriate (home office, Internet bill, etc.). We do include many features other calculators on the web are missing, such as:
- Flexible Spending Accounts,
- Employer matching 401k,
- Your retirement savings,
- Self-Employed Qualified Business Income (QBI) deduction,
- Self-Employed Healthcare Premium deduction,
- Ability to change tax year between 2023 and 2024,
- Built-in links to assist understanding each term,
- and more…including showing total cash and total package
However, each of these may have nuances based on your specific situation that we cannot account for such as: QBI has specialty rules for entity type and SSTB, you might ammoritize equipment, dependents, disabilities, other income sources, etc.
In the results pane, you see the exact numbers we calculate so you can check the work yourself and adjust based on your unique needs. We would love for the popularity of our calculator to merit building an even more robust version which would include State taxes, tax-filing status, and more – so, please let us know what you think in the comments!
1099 vs W2 Calculator
Compare job opportunites that pay differently.
W2 Items
Put in your W2 salary.
Enter the percent that your employer will match if you contribute to your 401k (or other tax free retirement plan). For COMPARISON PURPOSES to keep things equal - this calculator assumes that you will save ONLY this amount yourself as well, both in your 401k and in your self employment retirement savings (i.e. SEP). If your employer matches 3% but you know you would save only 1%, use 1% as the job offers shouldn't include that 2% extra since you won't utilize it.
Enter the total number of bonuses you expect for the year. Although these usually have a higher witholding, they are still taxed at the same rate as your salary.
Enter the MONTHLY cost of your benefits. Only include the amount the EMPLOYEE pays. Do not include the amount the EMPLOYER pays. This usually includes your Medical, Dental, and Long Term Disability. This assumes these are taken out pre-Tax as they are part of a qualified Section 125 cafeteria plan.
Enter the YEARLY cost of your Flexible Spending Accounts. This would be things like your Dependent Care or Medical FSA. Other examples include a Commuter package or if you have a high deductble health plan that allows you to contribute to a Health Savings Account.
1099 Items
Enter your business expenses PER YEAR. These are items that would lower your schedule C "Net Profit". DO NOT INCLUDE MEDICAL EXPENSES. This might also include deductions such as the home office deduction, rather than actual expenses.
This one is the most complicated.For most people who just have one "job" they would take this. However, if you know you have other factors that may eliminate the QBI deduction then consider not taking it for calculation purposes. Sorry, this is not a tax platform so we don't account for partial QBI based on other income. Other factors to consider are whether you are an SSTB. Consider running the calculator for both scenarios if you are not sure. For more info, click here.
This is the hourly rate that you will bill for your services We use this to calculate your yearly salary via an 8 hour day and a 5 day week.
Enter the MONTHLY cost of your benefits. This usually includes your Medical, Dental, and Long Term Disability.
Common Items
The calculator is current as of 3/1/2024 for tax years 2023 and 2024.
The calculator will only calculate for a SINGLE filer. If you anticipate you will NOT take the Standard Deduction from your Adjusted Gross Income (AGI), you can enter what you think you will put for your Itemized deduction. However, please note if you put in a deduction that indicates you are married, it will still calculate rates based on SINGLE filer. We hope to upgrade the calculator in the future to account for different filer statuses. This field will auto-populate the standard deduction based on what tax year you put in.
When deciding on this, we recommend including the same number of days that you will get paid time-off from the salary position you are comparing. In addition to the standard considerations such as Holiday, Vacation, and Sick days; be sure to consider other items such as flex days or paid time off to do non-profit work.
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