If I made 150k as a 10-99 employee last year, is there an equation to figure out how much I would need to make as a W-2 employee this year to net the same amount of actual income?

Depends a lot on benefits and how much you value vacation. If for example you have a spouse with kickass insurance that benefit doesn't matter to you.

I'd imagine given average person ~$120k max equivalent.

The only cost you're bearing for certain that the employer would be if you were a W2 employee is SS and Medicare. Those are a combined 7.65% for the employers piece with SS phasing out at $118,500 for 2015 and the same amount in 2016. So ignoring the phase out of SS divide $150K by 1.0765 and that's your number. Then account for things like medical benefits, retirement matching, etc. I'm self-employed which is effectively the same thing and pay $216/month for an individual health insurance plan and have no matching for my retirement. In a W2 world I would pay no more than $108 for the same policy and get probably 3% for retirement on top of what I'm putting away myself.

One additional consideration is that as an employee your expenses are limited to those exceeding 2% of your AGI, after crossing the itemized deduction threshold.

Op,

Are you asking from an employee perspective or an employer perspective?

There is a a pretty big swing between the 2 because if the stuff that or mentioned.

An employer will place value on **** you don't care about (like legal support plans) and will gloss over stuff that matters to you (like the limits on Sep accounts)

I was asking from an employee perspective. I have the opportunity to dissolve my independent contractor status and join an established company in the same field. As a result, I am trying to determine what the salary number is that I need to obtain to be able to make the move.

You need to find out the vacation, 401k match, bonus and any stock grants, education benefits what have you to figure out your true comp package. It will be a lot highee than your salary.


If you deducted your rent/mortgage, car, internet, utilites, etc, include all of that as well. Between these deduction and my sep contributions, my effective tax rate was in the low teens

Health care was a sticky point for me because, as a single male, I had a cheap plan that met my needs. So an employer plan might be a positive contribution to your Compensation or it might be a negative.

You aren't going to be able to take your hourly and multiply it by 2080 and get a salary.

You really need to set up a spreadsheet and compare line by line apples and apples on all the things important to you. Then look at their tax treatment options and evaluate the overall impact of everything added together.

There are things as a 1099 that you can deduct on Schedule C that can be very different than deducting the same thing with AGI limits to determine the standard or itemized deduction value as an employee on Schedule A.

Many of the things others have mentioned above fall in that category.

I can treat myself very well with my SEP. Much better than an employer would treat me. However; then I have to think about lost opportunity cost of that money if I took it as profit and it was out of the SEP and subject to tax treatment. Similar issue with an employer but somewhat different rules and flexibility between your employers 401K rules and the SEP.

If you drive your own vehicle lots as a 1099 and get reimbursed for mileage, the Schedule C depreciation deduction can be very different than an employer who drives their own vehicle and gets paid mileage and subject to AGI limits, etc.

Obviously I have quite a bit to consider before I can make a decision. Thank you all for your guidance.

Obviously tons of factors, but I think you can probably reasonably estimate that a comparable salary would be in the 120-130K range. Better than 130, you'll definitely be coming out ahead. Less than 120, good chance you're taking a pay cut. If any of the major employment benefits matter more or less to you, you can probably slide along that scale. To me, building a complicated model isn't necessary when a reasonable estimate can be come up with much more easily.

Depends greatly on other benefits you may receive as a w2 employee, such as 401kk match, health insurance, vacationpay, sick pay, pension, etc.

But, if all else is equal, the amount the employer would pay for you in SS and medicare taxes is around $9500. You pay the whole $19000, or you pay half and your employer pays half.

You lose deductions as an employee as I stated above....