1099 vs W4, How to set it up and take advantage of it!

[Mikie Sarabia]

Hi everyone, I've recently been traveling nursing for around a month or so. I've always been a W2 employee, however, people have been telling me a mess of things in regards to a W4 and 1099. Which one should I consider and what are the steps to take advantage of the taxes?

[NedRN]

I don't know of any current travel companies that are willing to pay a 1099 to a traveler (other than advanced practice travelers). The primary exception are home health agencies where 1099 pay is not uncommon, so getting a time limited contract from one of those agencies could potentially allow you to take some tax advantages.

Either way, you effectively have to start your own agency. This could be as simple as a sole proprietor, or you can choose from a number of corporate structures. Generally, there is little advantage to being a 1099 traveler working for an agency versus a W-2 employee, especially if you choose agencies carefully for best total compensation and maxed out tax free compensation. This does require a lot of research, and it can be helpful to find agencies that offer the same assignments so you can directly compare compensation packages. There is a Tax Calculator on PanTravelers (sign up for free membership) that can assist with the math.

The end game to having your own agency is doing direct contracts with hospitals (and/or vendor managers) as that bumps up your revenue by about 50% for the same bill rate (cutting out the middleman 25-40% cut of the bill rate).

This is an industry that has "low barriers to entry" as they say in the business world, so this is still possible. Primary pain points are insurance, workers comp, and of course landing contracts. I have a blog here that describes how to start your own one traveler agency in some detail, including differences between business entity options. While it was written some time ago, the basics are still valid. I also included some technical advice that is hopelessly outdated.