Making Sense of Taxes, Benefits, and Liabilities on the Road
You may find yourself unsure of whether you’re a 1099 independent contractor or a W-2 employee, and you're not alone in this! We're often asked if Jackson Therapy Partners travelers are W-2 employees or 1099 contractors, and all JTP travelers are W-2 employees. We’re going to break down the difference between the two, so you’ll have a complete understanding of what being on a travel contract means.
Taxes as a W-2 employee VS. 1099 independent contractor
One of the biggest differences between W-2 employees and 1099 independent contractors is how taxes are paid! As a W-2 employee, you're a direct employee of the company, which means the company will allocate your taxes accordingly when running payroll. This also means you'll receive a W-2 every year from your employer to determine whether you owe any additional taxes at the end of the year or if you might get a refund. Companies that hire 1099 independent contractors do not allocate any taxes on your behalf, so you will receive a paycheck that does not include any tax deductions. As a result, you may owe taxes to your state and/or the IRS at the end of the year, but you’ll need to consult with a tax professional on a 1099 contract to understand more fully your responsibilities upon getting paid.
Will I Receive Benefits as a traveling therapist?
The short answer is – yes! As a W-2 employee, you’ll receive the employee benefits offered by your agency! With Jackson Therapy Partners, you receive benefits starting day one of your contract, which include a comprehensive Cigna health plan, matching 401(k), license reimbursement, and so much more. As a 1099 independent contractor, you typically don't receive any employee benefits, but that depends on your employer. More frequently, 1099 contractors are responsible for paying self-employment taxes, purchasing their own health insurance, and managing their own retirement savings.
Professional Liability Differences
As a W-2 employee, your agency provides employer benefits that cover on-the-job situations, including workers’ compensation and professional and general liability insurance. As a 1099 independent contractor, you’re typically required to secure and pay for your own liability insurance — such as workers' compensation, professional, and general liability—to stay protected on the job. While some companies may add contractors as “additional insureds,” this isn’t guaranteed and must be evaluated with each of your contracts.
Whether you’ve worked in two states or ten, your tax situation can get complex quickly. Since tax laws vary across the country, working with a qualified tax professional who understands multi-state filings and the travel therapy lifestyle is one of the best investments you can make. TravelTax is a popular option among travel therapists and travel nurses and was founded by a traveling respiratory therapist who also had an accounting degree. You can also get recommendations from fellow travelers or search for CPAs who specialize in mobile professionals. A great tax pro will help you stay compliant, maximize deductions, and give you peace of mind so you can focus on the journey ahead—not tax season.
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