I'm not well versed in the intricacies of tax law but I have been learning what I can so bare with me please. Situation is my wife is employed as an insurance agent with 1099. She was advised to get an LLC without a clear explanation as to why. I was wondering what the benefit of that would be. We were told all along prior to the LLC recommendation that we could claim a portion of our mortgage and utilities of our home, her mileage, internet, cell phone, and clothing as expenses. She does work from home some but uses the company's office as well. Is she still considered self employed And able to claim all that? And what purpose does the LLC serve? She will be getting a new job with similar circumstances soon and the new employer for now has offered 1099 or to withhold taxes, whatever she prefers to do. If that offer still stands would she be better off staying 1099 with the same expenses? Her current employer says it's to her benefit to stay 1099. We don't know. We will be meeting with someone to talk about this as well but until then I just wanted to find out what I could. Thanks
USA LLC for 1099 employee
- Thread starter M88farrow
- Start date
Depends on your state. LLCs can be problematic for taxes in CA.
The primary reason you operate under an LLC is to get liability protection separating your other assets from your business risk.
When determining whether you are a 1099 or W2, it is not a choice. It is a matter of control. If the employing entity maintains complete control, it is a W2. If the do not maintain complete control, it leans towards a 1099.
From a worker perspective, recieving a 1099 means the worker has to pay the additional 7.65% employment tax (FICA) that the employer pays on a W2. But expenses are more directly deductible against a 1099, not so for a W2. They are still deductible for a W2 but only as miscellaneous itemized deductions subject to the 2% floor. If your floor is to high or you do not itemize, the 1099 might be better. You would have to weigh the additional FICA taxes against the tax impacts of the expenses.
Whether you have an LLC or not, should not change the deduction of expenses.
The primary reason you operate under an LLC is to get liability protection separating your other assets from your business risk.
When determining whether you are a 1099 or W2, it is not a choice. It is a matter of control. If the employing entity maintains complete control, it is a W2. If the do not maintain complete control, it leans towards a 1099.
From a worker perspective, recieving a 1099 means the worker has to pay the additional 7.65% employment tax (FICA) that the employer pays on a W2. But expenses are more directly deductible against a 1099, not so for a W2. They are still deductible for a W2 but only as miscellaneous itemized deductions subject to the 2% floor. If your floor is to high or you do not itemize, the 1099 might be better. You would have to weigh the additional FICA taxes against the tax impacts of the expenses.
Whether you have an LLC or not, should not change the deduction of expenses.