Harvest
Time Tracking
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1099 vs W2 Calculator

Harvest is a time tracking and invoicing tool that simplifies managing project costs for teams and freelancers, crucial for 1099 contractors handling their own tax payments.

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What should you charge per hour?

Most freelancers and consultants dramatically undercharge. This calculator accounts for what most people miss: non-billable time, taxes, and overhead.

$
Accounting for vacation, holidays, sick days
60%
Most freelancers can bill 50-70% of their time. The rest goes to admin, marketing, proposals, and learning.
$
Software, insurance, equipment, accounting, taxes beyond income tax, etc.
Your break-even rate $0
Recommended rate (+20% buffer) $0
Billable hours per week 0h
Equivalent daily rate $0

Start tracking your billable hours

How this hourly rate calculator works

It works back from the income you need to the rate you must bill, accounting for the hours you can't bill.

  • Billable hours/year = working weeks × hours per week × billable %.
  • Break-even rate = (target income + business expenses) ÷ billable hours.
  • Recommended rate = break-even plus a 20% buffer for taxes, slow periods, and profit.

Raising your billable percentage or trimming expenses lowers the rate you need.

Explore Harvest's 1099 vs W-2 Calculator

Harvest offers insights into the tax differences between 1099 and W-2 employment, helping contractors manage their own tax payments.

Screenshot of Harvest tool comparing 1099 vs W-2 tax obligations

1099 vs W2 Calculator FAQs

  • The main differences lie in tax responsibilities and employment benefits. W-2 employees have taxes withheld by their employer, while 1099 contractors are responsible for their own taxes, including the full 15.3% self-employment tax. Additionally, W-2 employees often receive benefits like unemployment insurance, which 1099 contractors do not.

  • Generally, yes. 1099 contractors pay the full 15.3% self-employment tax, which is higher than the shared FICA tax for W-2 employees. For example, on a $100,000 income, a 1099 worker might pay about $6,480 more in employment taxes. However, business deductions can help offset this.

  • 1099 contractors can deduct ordinary and necessary business expenses on Schedule C (Form 1040) to reduce taxable income. Common deductions include home office expenses, business mileage, equipment, supplies, and health insurance premiums. They can also claim the Qualified Business Income (QBI) deduction.

  • 1099 contractors must make quarterly estimated tax payments if they expect to owe $1,000 or more in taxes. These payments are due on April 15, June 15, September 15, and January 15 of the following year. Timely payments help avoid underpayment penalties.

  • Yes, a person can be both a W-2 employee and a 1099 contractor if they perform different types of work. For example, an employee might do freelance work unrelated to their primary job. However, this situation can invite IRS scrutiny, so it's important to clearly differentiate between roles.

  • The self-employment tax for 1099 contractors is 15.3%, covering both Social Security (12.4%) and Medicare (2.9%). Contractors pay this tax on their net earnings, which are calculated by subtracting business expenses from gross income. 50% of the self-employment tax can be deducted when calculating adjusted gross income.

  • Misclassifying a worker can result in significant penalties, including liability for unpaid employment taxes. The IRS may impose financial, civil, and criminal penalties on businesses that misclassify employees as independent contractors. Accurate classification is essential to avoid these repercussions.