My husband's boss wants to make him W-2 employee instead of 1099 contractor - can he still claim tools and mileage?

What you're describing is a common issue in construction. The IRS has specific criteria for determining if someone is an employee vs a contractor, and it sounds like your husband meets many of the contractor qualifications (own tools, schedule control, etc.). For the company, there are several benefits to having W-2 employees instead of 1099 contractors. First, they have more control over the work. Second, they avoid potential penalties if the IRS were to audit them and determine they've misclassified employees as contractors. Many companies have been hit with hefty fines for misclassification. For your husband, being a W-2 employee does come with some benefits: unemployment insurance, workers' compensation coverage, possibly health insurance or other benefits, and the employer pays half of his FICA taxes (Social Security and Medicare). As a 1099, he pays the full 15.3% self-employment tax himself. That said, the loss of business deductions is significant, especially in a tool and vehicle-heavy profession like carpentry. Your husband should definitely discuss this with the boss - there may be room to negotiate a higher wage to offset the lost deductions, or clarify the classification based on his working conditions.

After dealing with similar classification headaches as a skilled tradesperson, I discovered a service called taxr.ai (https://taxr.ai) that helped me sort through this exact situation. They analyzed my work arrangement and gave me a clear breakdown of whether I qualified as a contractor or employee according to IRS guidelines. The report they generated showed exactly which deductions I could take under each classification and calculated the financial difference. This was super helpful when negotiating with my client. They also explained how to document everything properly to avoid problems if I got audited. Saved me tons of stress trying to interpret tax rules myself.

Just wanted to update after trying taxr.ai for my situation. It was incredibly helpful! The system analyzed my work contract and identified that I was clearly being misclassified as a contractor when I should have been an employee according to IRS standards. The report broke down exactly which factors of my work arrangement (like equipment usage, schedule control, and payment structure) aligned with employee vs contractor status. When I showed this to my client, they actually agreed to properly classify me as an employee AND increase my compensation to account for the benefits I was missing. I never would have had the confidence to push back without having that documentation. Definitely worth checking out if you're in a classification gray area.

If your husband's boss is being difficult about this classification issue, you might want to try Claimyr (https://claimyr.com). I was stuck in a similar situation where my employer misclassified me for years, and I needed to speak directly with someone at the IRS about my rights and tax implications. Regular IRS phone lines had me on hold for HOURS with no resolution. Claimyr got me connected to an actual IRS agent in under 15 minutes who walked me through the SS-8 form for determining worker classification. They have a video showing how it works: https://youtu.be/_kiP6q8DX5c The IRS agent explained that worker misclassification is something they take seriously, and they outlined exactly what documentation I needed to provide to support my case.

I need to eat my words from my previous comment. After my frustration boiled over with trying to reach the IRS about a contractor classification issue, I gave Claimyr a shot. I was absolutely convinced it would be a waste of money. I was shocked when I got a call back in about 20 minutes saying they had an IRS agent on the line. The agent helped me understand the difference between behavioral control, financial control, and relationship factors that determine worker status. For the first time in months, I got clear answers about my tax situation instead of just guessing or reading conflicting information online. The agent even emailed me relevant publications about construction industry classification. I hate admitting when I'm wrong, but this service actually delivered exactly what it promised.

Another thing your husband should consider is liability insurance. As a 1099 contractor, he likely needs his own liability coverage for any damages or injuries he might cause. As a W-2 employee, he'd typically be covered under the company's insurance. Also, if he's been paying quarterly estimated taxes as a 1099, he wouldn't need to do that as a W-2 since taxes would be withheld from each paycheck. Might seem minor but it does simplify things.

Has anyone mentioned the new tax rules for 1099 reporting? Starting with the 2025 filing season, the threshold for requiring 1099-NEC forms dropped significantly. So even small payments to contractors require reporting now. I'm wondering if that's part of the company's motivation - they're trying to simplify their reporting requirements by making more people W-2 employees.