A common rule of thumb is 30% to 50% more than your equivalent W2 salary, but it depends heavily on your current benefits, your state, and how many weeks you actually bill in a year. As a 1099 you pay the full 15.3% self-employment tax (versus the 7.65% withheld from a W2 paycheck, since the employer covers the other half), you get no paid time off or subsidized health insurance, and you carry the risk of unpaid weeks. That's why a flat rule is rarely exact — it's better to calculate your real number with a tool like this one than with a generic percentage.

You pay them with IRS Form 1040-ES on four dates: April 15, June 15, September 15, and January 15 of the following year. They're based on your expected net income for the year. If you underpay in any quarter, the IRS can charge an underpayment penalty even if you pay everything owed by April. You can pay online via IRS Direct Pay or EFTPS. Many contractors use the "safe harbor" rule: paying at least 90% of the current year's tax, or 100-110% of last year's, avoids the penalty.

Any ordinary and necessary business expense on your Schedule C: equipment, mileage (standard IRS rate or actual expenses), a home office (simplified method at $5/sq ft up to 300 sq ft, or actual expenses), software, subscriptions, and professional services like an accountant or lawyer. You can also deduct half of your self-employment tax, your health insurance premiums if you're self-employed, and your Solo 401(k) or SEP IRA contributions — the latter reduce your adjusted gross income, not just your business income.

An LLC by itself doesn't change your federal taxes — by default it's treated the same as a sole proprietorship (a disregarded entity). Its main value is personal liability protection, not tax savings. Real savings come if you elect S-corp tax treatment for your LLC, which can reduce self-employment tax by splitting your income into salary and distributions — but that adds payroll, bookkeeping, and compliance costs, and usually only pays off above a meaningful level of net business income. Talk to an accountant before deciding.

You no longer have an employer-subsidized premium. Typical options are the ACA Marketplace (healthcare.gov), where you may qualify for subsidies based on income; a spouse's employer plan; COBRA from a previous job (usually expensive); or a private plan. The tax upside: if you qualify, you can deduct 100% of your premiums as a self-employed person, which reduces your adjusted gross income.

Yes. The two most common options are a Solo 401(k) and a SEP IRA. A Solo 401(k) lets you contribute as an "employee" (up to $24,500 in 2026) plus as the "employer" of your own business, with a combined cap of $72,000 for 2026. A SEP IRA is simpler to administer but only allows the employer-side contribution, up to 25% of your net self-employment income, subject to the same $72,000 cap.

That's misclassification, and it carries real legal consequences — the IRS uses a behavioral control, financial control, and relationship-type test, and several states (like California's AB5) have their own test, sometimes stricter. The employer doesn't get to decide unilaterally: if the work meets the characteristics of employment, the law treats it that way regardless of what form you're paid on. If you're concerned about your situation, you can file IRS Form SS-8 to request an official determination, and it's worth documenting the working relationship and consulting a professional.