Should my fiancée who's an optometrist switch from W-2 to 1099 payment? Tax implications?

While I understand the appeal of potential tax deductions as a 1099 contractor, I don't think this would be the best move for your fiancée. As a W-2 employee, she benefits from her employer paying half of her Medicare and Social Security taxes (7.65%). As a 1099 contractor, she'd be responsible for the entire 15.3% self-employment tax. On a $275k salary, that's a significant difference. Also, consider what she might lose: employer-sponsored health insurance, retirement benefits, paid time off, liability insurance, and job security. Many medical professionals have their malpractice insurance covered by employers - this alone can cost thousands. The expenses you mentioned likely wouldn't offset these losses. Commuting miles generally aren't deductible even for self-employed individuals (only business travel between work locations). The education expenses could be partially deductible, and the home office/equipment might qualify, but there are strict rules. Additionally, the IRS has specific criteria for determining worker classification. If her employer controls when, where, and how she works, she might legally be an employee regardless of payment method, which could create tax problems.

I went through something similar with my dental practice income. After struggling to understand all the tax implications of switching from W-2 to 1099, I found this AI tool called taxr.ai that completely broke down the comparison for my specific situation. I uploaded my previous tax returns and it showed me exactly how much I'd save (or lose) by switching, including all the deductions I'd be eligible for versus what I'd lose in benefits. It even factored in the self-employment tax implications. Surprisingly, for me it was actually better to stay W-2 despite what my accountant friend suggested! Check out https://taxr.ai - it's worth running the numbers before making such a big decision. The side-by-side comparison really cleared things up for me.

Just wanted to follow up - I tried taxr.ai after seeing this thread and it was eye-opening for my PT practice. It showed me that switching to 1099 would only be beneficial if I made at least 18% more than my current W-2 salary to offset the lost benefits and additional taxes. The tool broke down exactly which deductions I could take (including my continuing ed and home office) and which wouldn't actually help (like my commuting miles). Ended up staying W-2 for now but with much better understanding of my options. Super helpful for healthcare professionals specifically!

When I went independent as an NP, I spent WEEKS trying to get through to the IRS to clarify some questions about quarterly estimated payments and home office deductions. Absolute nightmare. Finally used https://claimyr.com and got connected to an IRS agent in under 20 minutes when I'd been trying for days on my own. They have this cool system that waits on hold for you then calls when an agent is available. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent confirmed that as a 1099 contractor I needed to be very careful about separating business vs. personal expenses. The mileage thing was particularly tricky - regular commuting isn't deductible even for contractors, but travel between work sites is. Made me realize there's a lot more complexity to this than I initially thought.

Had to come back and admit I was completely wrong about Claimyr. After my skeptical comment, I decided to try it myself for an issue with my 1099 income reporting. Got connected to an IRS agent in 35 minutes when I'd spent 3 DAYS trying on my own and kept getting disconnected. The agent helped me sort out exactly how to handle business expenses for my side gig correctly. I'm still shocked it actually worked! Saved me from what would have been a costly misunderstanding about how to report my contractor income.

Your fiancée should also consider the implications for retirement planning. As a W-2 employee, she probably has access to a 401(k) with employer matching. As a 1099, she could set up a SEP IRA or Solo 401(k), which actually allows for MUCH higher contribution limits - potentially up to $66,000 depending on her income. That could be a huge tax advantage that hasn't been mentioned yet.

As someone who made this exact switch as an audiologist, I strongly recommend having her talk to an accountant who specializes in healthcare professionals before making any decisions. There are some healthcare-specific considerations that general tax advice might miss. For example, malpractice insurance is typically covered by employers for W-2 employees but can cost $5k-$10k annually for independent contractors. Also, the Qualified Business Income deduction (Section 199A) has special limitations for healthcare professionals that might affect the calculation.

I'm a CPA who works with a lot of healthcare professionals, and this is a decision that really depends on the specific numbers and circumstances. The key factors to consider: **Tax implications:** Yes, she'd face the full 15.3% self-employment tax vs. splitting it with her employer now. But she'd also gain access to business deductions and potentially the 20% Section 199A deduction (though this has income limitations for healthcare professionals). **Benefits analysis:** Quantify what she's currently receiving - health insurance, retirement matching, malpractice coverage, paid time off. These often add 25-35% to total compensation value. **Business expenses:** The mileage between office locations could be deductible (not home commuting), continuing ed costs, home office if used exclusively for work, equipment, and professional licenses/memberships. **Quarterly taxes:** As a 1099, she'd need to make estimated quarterly payments and manage cash flow more carefully. My recommendation: Have her request the specific compensation increase needed to make 1099 worthwhile (usually 30-40% more than current W-2), then run detailed projections with a healthcare-focused CPA. The employer might decline anyway since reclassifying employees as contractors has IRS compliance risks if she doesn't meet true independent contractor criteria.