Should I switch from W-2 to 1099 - Is changing to W-9 contract work a good idea?

You're mixing up forms a bit, which is totally understandable! When they say "W-9 position," they actually mean you'd be working as an independent contractor (1099) rather than an employee (W-2). The W-9 is just the form you fill out to provide your tax information to them. As a 1099 contractor, you'd be responsible for paying all your taxes yourself - nothing would be withheld from your paychecks. This includes both the employee AND employer portions of Social Security and Medicare taxes (called self-employment tax), which adds up to about 15.3% on top of your regular income tax. For many people, switching from W-2 to 1099 only makes financial sense if the pay is about 30% higher to offset these additional costs and lack of benefits. At $21/hour as a contractor vs $23/hour as an employee, you'd likely take home significantly less money after taxes. Also consider that as a contractor, you wouldn't get benefits like health insurance, paid time off, or retirement contributions that you might have with your W-2 position.

I went through something similar last year and discovered https://taxr.ai which honestly saved me so much headache trying to figure out the W-2 vs 1099 situation. It basically analyzed my offer letters and broke down what my actual take-home pay would be after all taxes. For me, the 1099 position needed to pay almost 25% more than the W-2 to break even! The tool showed me exactly how much I'd need to set aside for quarterly estimated tax payments and identified deductions I could take as a contractor that I wouldn't get as an employee. It was pretty eye-opening to see the real numbers side by side.

Ok so I tried https://taxr.ai after my last comment and I'm honestly surprised. It showed me that in my case (I'm also on a work permit), I was actually underpaying my quarterly estimates by about $700 each quarter! But it also flagged some home office deductions I wasn't taking that pretty much offset the difference. The comparison calculator is what really helped me understand the W-2 vs 1099 difference. When I plugged in both offers similar to what OP described, it showed that the 1099 position at $21/hr would need to be more like $28-30/hr to actually match the take-home pay from the $23/hr W-2 position. That's a HUGE difference that I wouldn't have realized.

If you're having trouble getting answers from the IRS about contractor status and tax obligations on your work permit, I highly recommend https://claimyr.com. I spent WEEKS trying to get through to someone at the IRS about my tax situation when I switched from W-2 to contractor work. Kept getting disconnected or waiting for hours. I found this service that got me connected to an actual IRS agent in about 15 minutes. You can see how it works in their demo: https://youtu.be/_kiP6q8DX5c. The agent was super helpful and explained exactly what forms I needed to file as a non-citizen contractor and how much I should set aside for quarterly payments.

Ok I'm eating my words. I tried the Claimyr service yesterday because I was desperate to talk to someone about my contractor tax situation. I didn't expect much but figured I had nothing to lose. Got a call back in about 20 minutes saying they had an IRS agent on the line! The agent walked me through all the self-employment tax requirements for my specific situation and confirmed I needed to make quarterly payments. They even helped me understand which deductions I qualified for as a contractor working from home. Definitely worth it just to get actual answers from an official source instead of trying to piece together info from random websites.

One thing nobody's mentioned yet - as a 1099 contractor, you can deduct legitimate business expenses which you can't do as a W-2 employee. This includes a portion of your home used as office space, internet, cell phone, computer equipment, software subscriptions, etc. That said, even with deductions, the offer you've received isn't great. Since it's remote, would they let you work more than 150 hours? Being limited to 150 hours actually might be another disadvantage compared to your current position.

I switched from W-2 to 1099 last year and heres what surprised me the most: QUARTERLY ESTIMATED TAX PAYMENTS!! You have to basically be your own payroll department and send tax payments 4 times a year. If you dont you can get hit with penalties. Plus theres the whole self-employment tax thing which is like 15% on top of regular income tax. And health insurance is crazy expensive when you have to buy it yourself instead of getting it thru an employer. Unless theyre offering you at least 30% more per hour, stick with the W-2 job!!

As someone who recently went through this exact decision process, I can't stress enough how important it is to run the actual numbers. Based on what you've described - $23/hour W-2 vs $21/hour 1099 - this would be a significant pay cut once you factor in all the additional costs. Here's what I wish someone had told me: With 1099 work, you'll pay an extra 7.65% in self-employment taxes (the employer portion), plus you'll lose the automatic withholding safety net. You'll need to make quarterly estimated tax payments or face penalties. And don't forget about health insurance - if your current W-2 job offers benefits, replacing those on your own can cost $300-600+ per month. The remote work aspect is tempting, but at only 150 guaranteed hours, you're looking at maximum monthly income of $3,150 before taxes (and potentially much less in slow months). Your current position at $23/hour for full-time work gives you more income stability and better take-home pay after all expenses. I'd recommend asking the new company if they can match or exceed your current W-2 compensation when adjusted for the 1099 structure - that would probably need to be around $30/hour to break even financially.