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Home > Blog > W2 vs 1099: What Nurses Need to Know
Financial Wellness
Amanda Marten

W2 vs 1099: What Nurses Need to Know

With the various jobs that the nursing field has to offer, many nurses and nursing assistants hold several jobs at different companies. While most large employers offer W2 positions to nurses, some companies offer 1099 positions. It can be difficult navigating which job type is best for you and your needs. Let’s discuss the differences between W2 and 1099 employees and how to decide which one is best for you.

Types of Employment

Whether a nurse decides to work full-time, part-time, or per diem, companies can offer W2 or 1099 employment terms.W2 employers offer nurses benefits, whereas 1099 employers do not offer benefits. A study from the Bureau of Labor Statistics found that benefits account for approximately 29% of wages. Let’s discuss the differences between each and help you compare which type of employment is best for you.

Items to Consider

Taxes

For W2 nurses, your employer will deduct the required government, state, and social security taxes from your paycheck. They pay a portion of your taxes to the government agencies. Thus, your paycheck reflects your final take-home amount with taxes accounted for.

For 1099 employees, your employer will not take taxes out of your paycheck. Your final paycheck amount will usually be much higher than a W2 employee. However, since you haven’t paid your required taxes, you will have to pay these later when you file your tax return. So it’s best to set aside money from each paycheck since you will owe taxes at the end of the year. Sometimes nurses pay their taxes quarterly to reduce the burden of paying all their taxes at once. 

Pay Scale

Typically, 1099 employees receive higher pay than W2 nurses because 1099 employees do not receive benefits through their employer. Since they don’t receive benefits, the employer offers more money to account for expenses. Some expenses include medical and dental coverage or retirement savings. Before accepting any job offer, review your pay and benefits package.

Medical and Dental Coverage

Most employers offer their W2 full-time and part-time nurses medical and dental coverage. Since the company pays a portion of the insurance premiums, nurses receive health benefits for a fraction of the cost. 

1099 employers do not offer their nurses medical and dental coverage. It’s your responsibility to find adequate coverage. Medical coverage can become quite expensive, especially for large families. Take this into consideration when comparing healthcare plans.

Also, if you are married or in a partnership, consider your spouse’s insurance premium costs and if they can add you to their plan. Be mindful before electing because some companies charge an extra fee for spousal coverage if they are offered benefits through another employer.

Retirement Contributions

Almost all companies offer retirement plan contributions to their W2 nurses. Usually, your contribution is pre-tax. Meaning that your contributions are not taxed until withdrawal at retirement age. Most W2 companies offer contributions matching up to a certain percentage of your contribution. This is free money added by your company for retirement. Verify when you will be fully vested in your retirement account, as this varies per company.

Most 1099 companies do not offer their nurses a chance to contribute to a retirement plan. You will need to fund an individual retirement savings account. In addition, the amount you set aside will be post-tax, meaning you will have less money to contribute up front but won’t be taxed during retirement when you make the withdrawal. Also, take into account that you will not receive contribution matching. 

Since retirement plan contributions are vastly different, compare plans to find the best option for you and your needs. Decide if you prefer pre-tax or post-tax contributions and if you want to be vested to receive your employer's retirement plan contributions.

Paid Time Off

Getting paid for planned vacations or unscheduled sick time is a great benefit. Most W2 companies offer their nurses several weeks of paid time off (PTO) days. 

On the other hand, since 1099 nurses are contracted, they usually do not receive PTO days, meaning that if you want time off, you will not get paid for the days you want off. This stipulation is different for every employer, so review your 1099 contract terms before signing. You can request to add PTO and sick days to your 1099 contract.

Scheduling

It’s beneficial to be a 1099 nurse when it comes to working schedules and flexibility. You don’t have to commit to working a certain number of days a week. Most of the time, you have to commit to a total number of work days a month, meaning you can decide how many days a week you would like to work. Also, depending on your contract, you don’t have to commit to working weekends like most W2 nurses. 

In contrast, W2 nurses commit to working a certain number of days a week to meet their required hours. Some companies have a weekend requirement for their nurses. If you are a W2 per diem (PRN) nurse, you may have to commit to monthly shifts and one weekend day a month. 

Other benefits

Larger companies also offer their W2 nurses many benefits besides health insurance and retirement matching. Other benefits include liability insurance coverage, life insurance, disability, and worker’s compensation. 

If you are accepting a 1099 position, it’s best to consider these before signing your contract. If you feel like you would want any of these benefits added to your contract, discuss these with your employer. See if they can be included in your contract or ask for additional compensation to pay for these coverages, especially for liability insurance, which can be expensive.

Weigh Your Options

If you are a 1099 employee, see what benefits you can negotiate into your contract, including higher pay. If you decide to take a 1099 contract, consider opening a limited liability company (LLC). LLCs protect you in case you’re ever sued and provide many tax benefits. Contact your local tax specialist, who can provide your options.

Before accepting any position, it’s best to weigh the pros and cons. While this article provides many areas to consider, it is not an exhaustive list. As everyone’s needs are different, decide what’s best for you and your individual needs.

About the author
Amanda Marten
NP-C, MSN

Amanda Marten NP-C, MSN has been a certified nurse practitioner for over three years. With eight years of nursing experience, she has worked in a variety of specialties including urgent care, travel nursing, post-surgical, and intensive care.