Send us a text Transitioning from W-2 employment to receiving 1099 income fundamentally changes your tax situation and officially makes you a business owner, even if you're doing the same work as before. • Self-employment tax means paying both the employer and employee portions of Social Security and Medicare (15.3%) on top of income tax • Business expenses can be deducted against your 1099 income, reducing your taxable income significantly • Opening a separate business bank account is cruci...