@tpackert - let me explain the 'self employment tax'... and then it should make sense.
When you are a W-2 employee, 7.65% is withheld for social security and medicare tax. Then your employer matches that, so the federal government collects 15.3% of your income for these two taxes - half paid by you and half by the employer.
But for a 1099-NEC, that doesn't occur on the weekly paycheck, so the IRS charges a self employment tax of 15.3% to collect what would be collected if there was a W-2. that is a tax that you can't get out of. But then, the IRS will deduct HALF from your income to mimic that your employer normally pays half.
it really puts you in the same position as if you were a W-2 employee. Without this mechanism, most everyone would want to be a 1099-NEC employee and then Medicare and Social Security wouldn't be collecting anything.
make sense?
