Employee vs. Independent Contractor
W-2 Employee vs. Independent Contractor Analysis    
     
Filing Status
 
Tax Year
 
     
Annual W-2  Items    
W-2 Wages (W-2 Box 1)  
Qualified Retirement Plan Salary Deferrals  
Employer Qualified Retirement Plan Matching & Profit Sharing Contributions  
Qualified Defined Benefit Plan  
Employer Contributions to Non-Qualified Deferred Compensation Plan  
Employee Cost of Health Insurance  
Other Pre-Tax Employee Benefits  
Other After-Tax Employee Benefits  
     
Annual Independent Contractor Items    
1099 Receipts  
Cost of Health Insurance for Sole Proprietor  
Deductible Business Expenses  
Sole Proprietor's Qualified Retirement Plan Contribution  
IRC 199A Deduction (Use IRC 199A Deduction Tab to Calculate)  
     
W-2 Employee Federal Tax Analysis    
Income Taxable Earnings  
Federal Income Tax Payable  
Employee Share of Employment Taxes Payable  
Total Federal Income Taxes and Employment Taxes Payable  
     
Independent Contractor Federal Tax Analysis    
Net Taxable Income from Business  
Federal Income Tax Payable  
Self-Employment Taxes Payable  
Deductible Part of Self-Employment Taxes  
Self-Employed Health Insurance Deduction  
Total Federal Income Taxes and Employment Taxes Payable  
     
Who Pays Less Federal Income and Employment Taxes?  
     
Lost Employer Benefits If Become Independent Contractor  
199A Deduction  
   
Tax Year
Filing Status
Specified Service Trade or Business
Net Capital Gain Income
Qualified Trade or Business Income
W-2 Wages Paid to Employees
Qualified Property Unadjusted Basis
Taxpayer's Other Net Income / (Deductions) To Get to Taxable Income
   
   
Deduction  
Taxable Income Before Deduction
IRC 199A Deduction
Taxable Income After Deduction
   
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Note that the pass-through deduction is available for taxable years beginning after December 31, 2017 and under current law will not be available for taxable years beginning after December 31, 2025. Employees generally have access to unemployment insurance, workers’ compensation, are protected by anti-discrimination laws, and may have other federal and state law benefits that are not afforded to independent contractors. Clients and advisors may want to take those laws and protections into consideration when determining whether it is more advantageous to be an employee or an independent contractor. Group benefits that may be available through an employer that are not available as an independent contractor may also be taken into consideration. Further, it is not as simple as changing one’s title from employee to independent contractor. There are various tests that need to be met as to not be classified as an employee. Additionally, the IRS may presume that a "former employee" who is now an "independent contractor" is in the trade or business of performing services as an employee, which is not a qualified trade or business for purposes of 199A. For purposes of this calculator, we can only assume that the individual would meet the classifications to be an independent contractor for tax purposes and for other state and federal law purposes. If there is no substantial change in the individual’s work function and/or the employer’s control over the individual’s work, the individual may still be classified as an “employee” for tax purposes and state and federal law purposes even though the individual purports to be an independent contractor.

These calculators do not represent tax, accounting, or legal advice. Individual taxpayers should rely on their own advisors. The authors and publisher expressly waive and disclaim any and all warranties concerning the calculators and their use or operation, whether express or implied, including without limitation, any warranty of merchantability or fitness for a particular purpose. The authors make no warranties as to the results to be obtained from the use of the calculators. You expressly agree that the use of the calculators is at your sole risk. The authors will not in any way be liable to you or any other person or entity for any damages, claims, liabilities or losses, regardless of cause, arising from the use of the calculators. The calculators are provided to you on an "as is" basis and without warranty of any kind.