With the introduction of app-based staffing agencies, CNAs, LPNs, and RNs can control when, where, and how often they work. To claim shifts through these apps, you’re working for a staffing agency as a W2 employee or a 1099 independent contractor.
While every staffing agency operates differently, anyone who works through ShiftMed is a W2 employee—but what does that mean exactly? You’re about to find out.
FICA and Income Taxes
Whether you’re a W2 employee or a 1099 worker, you’re legally required to pay taxes to the IRS. However, W2 employees pay their taxes every time they get paid, whereas 1099 workers pay their taxes in one lump sum upon filing their tax returns.
As a W2 employee, your employer withholds taxes from your earnings every payday. The company pays for half of your social security and Medicare taxes—collectively known as FICA taxes—and withholds the other half from your earnings. The company also withholds your state and federal income taxes based on your W4 form.
As a 1099 worker, you must pay 100% of your social security and Medicare taxes, along with your state and federal income taxes. You’re also liable for your taxes, which can be cumbersome and tricky to manage. For example, if you don’t estimate your tax payments each quarter and set that money aside, you could be in for an unhappy surprise come April.
Pay and Benefits
When you’re a W2 employee, it can feel like you’re earning less money than a 1099 worker making the same hourly wage—but that’s not true long term.
W2 employees have taxes withheld every paycheck, while 1099 workers don’t, which is why they have bigger paychecks. That, however, doesn’t mean 1099 workers don’t have to pay taxes. In reality, 1099 workers pay higher taxes than W2 employees.
You could also think of the situation this way: W2 employees pay their taxes incrementally through their paychecks, whereas 1099 workers pay their taxes in one lump sum at tax time.
As a 1099 worker, you don’t have access to the same company benefits as a W2 employee, such as health insurance, vacation time, overtime, worker’s comp, and unemployment benefits. Not to mention, when you’re a W2 employee, work liabilities fall on your employer. But when you’re a 1099 worker, they fall on your shoulders.
ShiftMed and You
Healthcare professionals, including CNAs, LPNs, and RNs, who claim shifts through the ShiftMed app are W2 employees. We offer flexible work schedules, Next Day Pay®, Guaranteed Shifts®, holiday pay, overtime, and bonuses.
Ready to become a ShiftMed healthcare professional? Start your onboarding process today!