Should I let my employer change my status from employee to independent contractor now that I moved out of state and work remotely?

[lshackatano]

I used to live and work in Idaho for a medical office. I moved to Colorado and continue to work for them remotely from home. We are trying to figure out taxes and my boss said his accountants told him it is easiest to switch me to an independent contractor (1099 vs W2 employee). I think this may just be easier for them and not for me - what do I need to consider and what other options would I have? I have done a little research and it sounds like I will have to pay my taxes all at once and end up owing money instead of getting a tax return each year? 

I do not want to agree to something I am not comfortable with, this is not my area of expertise - are there any other questions I should be asking? Other ramifications I need to be aware of? How difficult will filing my taxes be compared to just using a W2 (as I always have in the past, using TurboTax - never any issues or complications).

[AnnetteB]

Your instinct is probably right – it is easier for them, but not necessarily for you. 

The biggest change will be that as an independent contractor, no taxes will be withheld from your income – no Federal income tax, no Social Security tax, no Medicare tax, no state tax.  You will be responsible for setting money aside and possibly making estimated payments to cover all of those taxes. It is not necessarily a difficult thing to do, but you need to plan ahead so that you won’t be surprised at tax time. 

Filing your taxes will be a bit more complicated than just reporting income from a W-2.  You will be filing a Schedule C to report your income and expenses.  TurboTax can walk you through it all a step at a time though. 

TurboTax has many articles and tips to consider for self-employed persons.  Take a look at a few of those to learn more before you make your final decision or try to negotiate further with your employer.

Here is a good one to get you started (links to other articles will be at the bottom of the page):  Beginner’s Tax Guide for the Self-Employed