One of the biggest reasons people are surprised at tax time when they come into Molimar is not because of their ITIN, their kids, or their tax preparer.
It is because 1099 and W-2 jobs work very differently, even when the pay looks the same.
Let’s explain this in a simple way.
What Is a W-2 Job?
If you work a W-2 job, you are an employee.
This means:
• Your employer takes taxes out of every paycheck
• Federal tax, Social Security, and Medicare are paid during the year
• You receive less money each paycheck, but taxes are already being paid
Because taxes are paid little by little, many W-2 workers end the year having paid more than needed and receive a refund.
What Is a 1099 Job?
If you work a 1099 job, you are considered self-employed.
This means:
• No taxes are taken out when you get paid
• You receive the full amount of your pay
• You are responsible for paying taxes later
This feels good during the year, but it can be a bigt shock at tax time if nothing was saved for taxes.
Simple Example
Two people earn the same amount in one year.
Elizabeth (W-2):
✓ Earns $35,000
✓ Taxes are taken out every paycheck
✓ May receive a refund
Linda (1099):
✓ Earns $35,000
✓ No taxes taken out all year
✓ May owe at tax time
Same income. Different tax result.
Why 1099 Workers Pay More at Tax Time
1099 workers pay:
✓ Income tax
✓ Self-employment tax (Social Security and Medicare)
W-2 workers also pay Social Security and Medicare, but their employer pays part of it during the year.
With 1099 income, the worker pays it themselves.
This is not a penalty.
This is how the tax law is written.
What About Kids and Credits?
Having children can help reduce taxes, but it does not change how 1099 income is taxed.
Credits can lower the amount owed, but they do not always eliminate the tax completely, especially for self-employed workers.
This is why someone with kids can still owe taxes when working 1099.
Why Comparing Yourself to Coworkers Is Confusing
Many people say:
“My coworker got a refund.”
What is usually missing from the story:
✓ Their coworker may be W-2
✓ Their coworker already paid taxes during the year
✓ Their refund may be money they overpaid
A refund does not mean someone paid less tax.
It usually means taxes were already taken out.
Bottom Line
W-2 and 1099 jobs are taxed differently, even when the pay looks the same.
Owing taxes does not mean you failed.
Getting a refund does not mean someone won.
The goal is understanding how your income works so there are no surprises.
Need Help With Your Taxes?
If you are unsure why you owe taxes, expected a refund, or work W-2, 1099, or a mix of both, getting guidance early can make a big difference.
At Molimar Tax Consulting Service Inc., we work with individuals, families, ITIN holders, and small business owners to prepare accurate tax returns and legally minimize taxes due.
We take the time to explain your situation in simple terms and help you plan so there are fewer surprises next year.
Visit us in person at:
7411 Riggs Rd, Suite 218
Hyattsville, MD 20783
Call us at:
301-434-5677
Molimar Tax Consulting Service Inc.
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