Question 1

What is the difference between a 1099 contractor and W2 employee for taxes?

Accepted Answer

A W2 employee has income, Social Security, and Medicare taxes withheld by their employer, while a 1099 contractor receives gross income and is responsible for paying their own self-employment tax of 15.3% plus federal and state income tax. Contractors can deduct business expenses on Schedule C, while W2 employees generally cannot deduct unreimbursed work expenses.

Question 2

How much can a 1099 contractor save with an S-Corp election?

Accepted Answer

By electing S-Corp status, a profitable contractor pays themselves a reasonable W2 salary and takes the remainder as distributions, which are exempt from the 15.3% self-employment tax. For a contractor earning $120,000, this can save roughly $7,000 to $10,000 per year after factoring in payroll and compliance costs.

Question 3

What is a Solo 401(k) and who qualifies?

Accepted Answer

A Solo 401(k) is a retirement plan for self-employed individuals and small business owners with no employees other than a spouse. For 2026, you can defer up to $23,500 as an employee plus contribute up to 25% of net self-employment earnings as the employer, with a combined cap of $70,000.

Question 4

What services does Mitchell & Scott Advisory Group offer?

Accepted Answer

Mitchell & Scott Advisory Group offers tax preparation, customized tax planning, and bookkeeping services for small businesses, 1099 independent contractors, and W2 employees.

Question 5

How do I book a tax consultation with Mitchell & Scott?

Accepted Answer

You can book a free 15-minute discovery call directly on the website using the online scheduling tool, or submit a contact form and an advisor will reach out within one business day.

Tax tips & financial insights

What Is the Real Tax Difference Between a 1099 Contractor and a W2 Employee?

How Does an S-Corp Election Save Self-Employed Owners Thousands?

What Is a Solo 401(k) and How Much Can You Save?