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So I'm nearing graduation and have been on a job search in a field that's related to my aspirations and degree. I have luckily landed an internship that will be offering me a job. My interviewer informed me that this is a subcontracting position and went on to explain deductions etc but didn't go much into what contracting really meant or what 1099 forms were (besides the fact that taxes are paid on my own for the most part).

Here are a couple questions I'm hoping to get answered!

1) Where can I find the most well explained information on 1099 forms and what they entail. Being relatively new to almost the real world there are a lot of terms that are not familiar to me and I'm wanting to expand my knowledge.

2) I've heard some bad things about being contracted and the disadvantages that follow. I pay all expenses for living by myself alongside my girlfriend so I need to know that I at the rate they offer me that I will be able to cover myself for a living.

Thanks, let me know if clarification is needed!

closed as too broad by gnat, AndreiROM, jimm101, Dawny33, Chris E Apr 29 '16 at 13:36

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    About item 2: It's more than just that; you also have to supply your own benefits (paid time off, health insurance, retirement savings), because this company will be giving you nothing but cash in exchange for your work. You will, in effect, be running a small business, and you should make sure you'll be able to handle that plus everything else that will be on your shoulders right after college. Personally, I'd ask for regular W-2 employment or look elsewhere. – Blrfl Apr 27 '16 at 11:25
  • Yeah, thats kind of what my understanding is, but this seems like a really good opportunity to grow my career. If I don't accept this offer I won't be able to find one until the summer I graduate (next summer) So I'm not really sure what to do. – nicholaskkhrangtong Apr 27 '16 at 13:44
  • @Asiatic: Figure out what the company-supplied benefits would cost you, then add that to your hourly rate. I seem to remember that 40% is a good approximation. That is, if a salaried/hourly position works out to $50/hour, then your contracting rate would be $70/hr. (But the benefit of contracting over salary is that you usually can bill every hour worked, while the salaried employee might wind up working 80-hour weeks while getting paid for 40.) – jamesqf Apr 27 '16 at 21:03
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There is really nothing at all complicated about a 1099. It's just a form, much like a W2, that you should receive shortly after the end of the year. It will list how much the company paid you. That amount will go on IRS Schedule C (profit & loss from business) which allows you to deduct any business expenses. Then you enter the profit on your 1040, and on Schedule SE to figure your FICA (Social Security, Medicare, &c) tax.

The complication is that instead of having income tax & FICA withheld from each paycheck, you'll have to file estimated taxes (Form 1040ES) and send the IRS money approximately quarterly. Which can be a pain if you're not disciplined enough to save that money¸ otherwise not a big deal.

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