When making the choice to reclassify our drivers from 1099 contracts to W2 employees, Onward Rides was adamant that the outcome of this change must be a net positive for all drivers. W2 employees are treated differently than 1099 workers. While there are several differences reviewed below, the biggest difference is your payment and taxes.
Benefits to reclassifying
On top of your hourly rate, employees are reimbursed .57 for every mile of a trip - including roundtrips! That's right, every trip mile gets reimbursed.
You have worker's compensation! If anything happens to you physically while on the job, we can help and support you.
Onward is putting money into your Social Security and towards Unemployment Insurance - while you are also having taxes taken out for these purposes, Onward is also responsible for contributing for you.
Being a W2 allows taxes to be taken out a little over time, instead of all at once. It's done for you automatically instead of you having to do it yourself at the end of the year as a 1099.
And, reimbursements aren't taxed - so mileage, parking and tolls will not have taxes withheld and will be their full rate when they hit your bank account.
Specifics about taxes
For a W2 employee, taxes are paid by the employee and by Onward Rides with each paycheck. If you make less than the stipulated amount in a year, you should receive the taxed amount in your tax return as wages lower than that number do not get taxed, or you may not see State or Federal taxes taken out of your paycheck at all.
The following taxes will be automatically deducted for you from your hourly age:
State Income Tax
Federal Income Tax
Make sure you know what you can deduct! Like, vehicle maintenance, gas, insurance, etc. You can deduct vehicle insurance - as well as other vehicle related maintenance, etc - from your taxes.
Onward Rides also contributes and pays the following taxes for you as well on every paycheck:
Federal Unemployment Tax (FUTA)
State Unemployment Tax (SUTA)
There are a few differences that are worth noting - as with the benefits of becoming a W2 employee, there are a few things to ensure are clear.
We need to ensure you have been transparent with your insurance provider about driving your vehicle for work purposes. To review vehicle insurance requirements, you can read more here.
Drivers can not get paid instantly but instead will be paid every week. Unfortunately, this is the fastest option available to us. If this changes with our payroll provider, we will update this to a faster payout when possible.
Drivers will use their employee portal within OnPay to track all payments made into their bank account. All details when filing taxes or for proof of employment can be found within OnPay.
How to signup with OnPay
All legal employment documents will be completed and housed within the OnPay system. To learn more about how to complete your W2 paperwork in that system, please check out our OnPay Onboarding help article.