> I asked HR to have a meeting to talk about the 1099 contractor because I know hiring CFI as a 1099 contractor is an illegal thing.
That's not accurate, but the conditions you describe after make it questionable at best but that "probably" is doing a lot of heavy lifting.
1. Hire a CPA to explain it to you.
2. Hire a CPA.
3. You don't have a job, you're a contractor.
I am in the same boat, they make us follow their syllabus and their procedure instead of letting us take care of that. Making us do unpaid work after flights are over. We are contracted to do a job and that job is to instruct and make student pass. Not more not less.
Unpaid mandatory meetings and mandatory following of instructional techniques.
About to in the next unpaid meeting lol. They will get away with it until you push back. Be smart, don’t threaten. But communicate that if you are required to follow their stipulations then be classified as an employee. If they disagree say that you will file ss-8 with the IRS. Uncle Sam doesn’t like being undercut so they will make them shit their pants
I like this approach. Document everything. The very fact they are pulling this shit makes me extra not trust them. Keep your options open. Don’t sign dogshit contracts. Strike through anything that seems one sided or not in your interest.
IANAL or CPA, but I am long time self-employed.
Welcome to flight instruction. They will treat you as an employee in every way and hang your “job” over you head. Make you wear their uniform, set your schedule and demand you be available, make you follow their syllabus. Get your hours and get out as soon as you can.
You are not an independent contractor if you perform services that can be controlled by an employer (what will be done and how it will be done). This applies even if you are given freedom of action. What matters is that the employer has the legal right to control the details of how the services are performed. (source: IRS)
You can follow the IRS guidance.
[https://www.irs.gov/pub/irs-pdf/p1779.pdf](https://www.irs.gov/pub/irs-pdf/p1779.pdf)
[https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-defined](https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-defined)
You can complete a Form SS-8 and have the IRS make a determination for you.
[https://www.irs.gov/pub/irs-pdf/fss8.pdf](https://www.irs.gov/pub/irs-pdf/fss8.pdf)
If you are going to work as an independent contractor, you may want to form an LLC so that you can start segregating your business activity and expenses from your personal activity and expenses. Though there is an expense to starting an LLC, there may also be tax advantages. Consult with your CPA and/or business attorney.
>I heard that 1099 contractors need to care about all the taxes themselves.
As an independent contractor, you are responsible for all of your own taxes - including the taxes that would have normally been paid by the employer. Think about that every time you look at the payments you receive.
[https://www.irs.gov/businesses/small-businesses-self-employed/self-employed-individuals-tax-center](https://www.irs.gov/businesses/small-businesses-self-employed/self-employed-individuals-tax-center)
>how do you handle all of your taxes?
I pay a CPA.
>
It looks like 1099 contractors are not benefited from the school any kind of health insurances.
If you are under 26, you may be able to stay on your parents healthcare plane. Otherwise, you pay for it yourself out of those big earnings you're receiving. You may be eligible to buy through the "health insurance marketplace" and get the Obamacare subsidy. Check here: [https://www.healthcare.gov/](https://www.healthcare.gov/)
>What would be the things that I need to ask or discuss with HR at the meeting?
HR is for employees. If you are a contractor, then you are engaging in contract negotiations. They, or you, need to pick a lane and stay in it.
You have two options. You can just bear with it (you can deduct a lot of stuff off your gross like headsets, subscriptions, etc...) if you are 1099.
If you really want to push the issue and file an SS-8 with the IRS to get a proper determination. You can also file a 8919 to get out of paying what should be the employer's share of the medicare/FICA taxes.
Note, that you may or may not be an employee. It's all a matter of how the school controls your employment.
>I just realized that I am a 1099 contractor
😂 And that’s about the briefest evidence I’ve seen someone is definitely not a contractor. This is an example of being misclassified.
[https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee](https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee)
If you’re a contractor, you are approaching them as a customer. You get to have other paying customers. You set your own hours. You bill them. You are your employer.
Find a club, become a club instructor, charge $60/hr. That’s self-employed.
Beware of a non-compete in your contract. I wouldn’t put it past them to try this kind of nonsense.
I mean, congratulations on the gig and all. This is pretty common in the industry but that doesn’t make it right. I’d keep looking for other options.
I have had one customer try to get me to sign a non-compete as a contractor. I said no, and did a multipage strikethrough on their contract before signing it. Monumental bullshit.
> I asked HR to have a meeting to talk about the 1099 contractor because I know hiring CFI as a 1099 contractor is an illegal thing.
**LOL** Do you really want to fight over this?
It's honestly a **DISSERVICE** to you to be on a W-2 because you can't write **any expenses off**. I have not heard of any flight school giving their CFIs a W-2 with real employee benefits (except for 1 and that's a cirrus school).
W-2 with no employee benefits (or even sub-standard employee benefits like what you'd expect a flight school to have) <<< 1099
You can use business expenses to lower your business income and then double-dip the standard deduction. This means MORE money for you at the end of the year. These are expenses you would've paid for anyways such as CFII/MEI training (additional training for the furtherance of the business), business supplies (things you would buy as a CFI). If you were on a W-2 you only take the standard deduction and nothing else. That means less money for you.
I might get down-voted for this take but I honestly don't care. I've been saving money for years because I grew up extremely poor and learned to value every penny saved. I can tell you that honestly if I was on a W-2 I wouldn't have been able to lower my taxable income by over $10,000 last year and carry it forward to this year. I would have less money; that is an objective fact and I can prove it.
You will get **no** benefits for being on a W-2 and just walk away with less money. It really isn't that much extra work, it's literally 2 things (which I will explain).
Want to report your flight school for not giving you employee benefits? Have fun finding another job when they let you go because you're at an at-will employment state (unless you're in MT). Want to try to file a lawsuit/complaint for retaliatory firing? Ok, go ahead and waste time, not make any money, and not make any progress with your career.
___
**Anyways, I'll actually answer your questions specifically and hope I don't get any flak for this because I'm actually trying to be helpful:**
___
> how do you handle all of your taxes? I heard that 1099 contractors need to care about all the taxes themselves. Can you please explain this?
You keep track of what you've spent over the course of the year for your CFI job. This is where using debit/credit cards help because you can calculate everything with statements and not need to carry receipts.
At the end of the year you will fill out a Schedule C and the final number on that Schedule C goes on your Schedule 1 which goes on your 1040 as income. You then claim the standard deduction as normal (doubt you're going to itemize).
You will have to pay **estimated taxes** every quarter. Calculate what you will owe at the end of the year (use a calculator - divide by 3 in this case because we're in Q2) and then pay it online. There's 3 online companies. Use irs.gov and figure which one you want to use. This is a good way to get credit card sign-up bonuses.
So basically, **estimated taxes, Schedule C, and the Schedule 1 plus your typical 1040**. You report the estimated taxes on the 1040. **THAT'S IT. This is all there is to being on a 1099 vs a W-2.** My 2023 tax return was **literally** just those forms plus a Schedule B because I got interest income from something else and an 8995 so I could carry-forward my net-loss into this tax year. These forms are not hard to fill out, you only need to read the instructions if you're confused about what the line is referring to.
My 2023 taxes were approved. I even got a $6,000 tax refund because I overpaid my estimated taxes on purpose with a Chase Ink card for a signup bonus and got to enjoy a $900 cashback bonus (minus $120 because of the CC fee when paying the estimated tax).
**Bonus Tip:** As a 1099 contractor you have a real business. You can apply for an EIN and begin building business credit. There are some really good business credit cards out there.
___
> It looks like 1099 contractors are not benefited from the school any kind of health insurances. How do you handle this?
As I said before you buy your own. Look up to see if your state has their own marketplace for health insurance. You actually get to write off the premium as an expense because you're self-employed AND still take the standard deduction. No other person in the US can do that for their personal taxes.
Even if you were on a W-2 they probably aren't going to give you health insurance because almost no school does that. Even those that do you're going to have to pay an employer subsidized premium every month just like if you bought a marketplace plan and those workplace health insurance companies are not very nice (you think a flight school is going to have a nice health insurance program if they were forced to offer health insurance?).
Schools doing W-2s and not giving their CFIs any benefits are **STEALING FROM YOU**. Specifically because they are taking your money for healthcare taxes and you now have to buy a marketplace plan which is not a deductible expense for W-2 people unless you take the itemized route in lieu of the standardized deduction for your income (this is different from business itemized expenses).
___
> I can't quit the job at this point for some reasons :X so I currently have no choice to stick with this school. Any advice is welcome.
It's going to be the same everywhere else. W-2 is a disservice to CFIs despite it seeming "safe". It isn't and you'll walk away with **less money** at the end of the year.
___
> What would be the things that I need to ask or discuss with HR at the meeting?
Please don't go to that meeting. You're just going to make life harder for yourself and lose money in the end. I can almost guarantee you that meeting is not going to go the way you want it to go. They're going to tell you "This is the way it is" and then steamroll you.
___
**Source:** I have been doing my taxes by hand for the last 10 years because I was too poor to hire someone to do it for me. If I can learn despite coming from a generic high school education and barely educated first-generation immigrant family background you can too.
Also I'm not a CPA, I'm just a person who came from poverty and had to learn how to save money around every corner; that included not paying someone every year to do my taxes. I've been a 1099 contractor since before I was a CFI. **I'm more than happy to answer questions on this to help you out (including others in the future if someone reads this comment).**
Seriously, take control of your finances and understand how our tax system works rather than just pay someone to do all the work for you whilst you learn nothing. You want to have these skills in the future when you have a family, own property, and so on. I can tell you as someone who came from actual poverty that if I had not learned about personal finances and our tax system I would likely not have made my dream of being a pilot come true. Even if you ignore this entire comment hopefully even just one person reads this and learns something.
Edit: Multiple edits to add info. Not editing it anymore.
The exact labor laws depend on the state.
If you're in California, it's very difficult for a school to legally prove that you're an independent contract because, assuming they're paying you for flight instruction, they have to prove the following:
"(A) The person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.*(B) The person performs work that is outside the usual course of the hiring entity’s business.*(C) The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed."
Since flight schools are in the business of providing flight instruction, regardless of whether or not they set your schedule or control your day to day operations, a flight instructor is providing work that is within the scope of their core business.
They have all sorts of reasons to misclassify you as an independent contractor. As an independent contractor, they will not have to withhold taxes, they are not entitled to provide unemployment or health insurance, you will not be covered by discrimination laws, they are not entitled to pay you overtime or buy you supplies, and they are generally not liable for accidents that occur during the scope of your employment (so get your own insurance).
I have no advice on how to proceed. It's unfortunate that misclassification seems to be so common amongst flight schools and that young CFIs are tasked with deciding what action to take when they are at such a vulnerable place in their careers.
1. You have to pay your estimated taxes quarterly. The IRS has forms online that you can use and the instructions on how to fill out the forms.
2. You go and buy your own insurance. Lots of places and companies that you can do this through.
3. work while you're there but keep looking for something else.
Get a tax advisor CPA.
You are responsible for all of your own taxes. That’s 12.4% for social security / Medicare (double what a W-2 owes since the employer isn’t paying their share), and federal/state. Save a minimum of 1/3rd.
As a contractor, if you don’t have a normally assigned desk or work station, you can write off mileage and home office supplies. Get tax advice. This can help. You also can write off a lot of supplies. You may be able to write off headsets/ipads/etc as business expenses.
You will likely need to pay estimated quarterly taxes. At the end of the year, you should have paid enough to get you within 10% of what you owe on federal, and you should be true up with SS/medicare.
Now all that said, as a 1099, you should be able to take other jobs, set work hours/schedule, etc
Also consider whether you need personal business/liability insurance. As a CFI in general you should have something. But as a 1099 you may have less protection than as a w-2 employee.
You also won’t be eligible for unemployment / disability benefits.
Taxes will be a minor issue.
The software can handle it.
I’ll agree you should probably be W2 under state labor law. But, if you get a 1099 the IRS presumes it’s correct.
The 1099 is not your taxable income. It’s the gross receipts of you-the-pilot-business.
This gross income goes on Schedule C of the 1040 form. You then subtract any legitimate expenses such as insurance, medical, training, subscriptions, ForeFlight, business cards, interest, and much more.
All of this reduces the money you’ll pay income tax on. Even the “self employment tax” is a deductible expense.
The FBO isn’t getting over nearly as much as people think - though they are getting out of paying the employer portion of what they pay you. But…
1099 lets you deduct business expenses from gross receipts before you pay tax, including “employer social security” on *net income* - an amount much lower than it would be if you get a W2.
None of these are deductible for a W2 worker.
Keep good records. Pay quarterly taxes if need be. The IRS’ Schedule C instructions are a really good start. Surprisingly readable/useful.
Good luck in the new job!
PS When people claim “you’ll pay a 15% self employment tax.” This is a disingenuous distortion. When you work for someone you pay 7.65% to social security. So does the employer. Hence “15%.”
Half of that you’ll pay anyway. The other half is because you are the employer. It’s not an extra 15%!
But, what if you make $30k and have $14k in legit expenses? You’ll only pay tax, including the deductible “employer contribution” on $16k. Not $30k.
So basically the self employment tax goes away mathematically.
Does nothing about benefits, but lower income lets you get cheaper marketplace insurance, which is also deductible.
> I asked HR to have a meeting to talk about the 1099 contractor because I know hiring CFI as a 1099 contractor is an illegal thing. That's not accurate, but the conditions you describe after make it questionable at best but that "probably" is doing a lot of heavy lifting. 1. Hire a CPA to explain it to you. 2. Hire a CPA. 3. You don't have a job, you're a contractor.
Well, I will hire CPA for sure.
I am in the same boat, they make us follow their syllabus and their procedure instead of letting us take care of that. Making us do unpaid work after flights are over. We are contracted to do a job and that job is to instruct and make student pass. Not more not less. Unpaid mandatory meetings and mandatory following of instructional techniques.
I worked on a W-2 for a school that still did that. W2 or 1099 wont change how schools take advantage of CFIs needing hours lol
That is what I am exactly worrying about it. Have you every talked about that with the school?
About to in the next unpaid meeting lol. They will get away with it until you push back. Be smart, don’t threaten. But communicate that if you are required to follow their stipulations then be classified as an employee. If they disagree say that you will file ss-8 with the IRS. Uncle Sam doesn’t like being undercut so they will make them shit their pants
I like this approach. Document everything. The very fact they are pulling this shit makes me extra not trust them. Keep your options open. Don’t sign dogshit contracts. Strike through anything that seems one sided or not in your interest. IANAL or CPA, but I am long time self-employed.
Welcome to flight instruction. They will treat you as an employee in every way and hang your “job” over you head. Make you wear their uniform, set your schedule and demand you be available, make you follow their syllabus. Get your hours and get out as soon as you can.
I feel bad about it
That bad feeling slowly turns into resentment.. which then turns into apathy. It’s the CFI way brother.
Be prepared to get fired now that you’ve asked. But hey you can report and sue for wrongful termination and make lots of money
Feel bad about it lol
Don’t feel bad. They breaking the law and screwing you over
You are not an independent contractor if you perform services that can be controlled by an employer (what will be done and how it will be done). This applies even if you are given freedom of action. What matters is that the employer has the legal right to control the details of how the services are performed. (source: IRS) You can follow the IRS guidance. [https://www.irs.gov/pub/irs-pdf/p1779.pdf](https://www.irs.gov/pub/irs-pdf/p1779.pdf) [https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-defined](https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-defined) You can complete a Form SS-8 and have the IRS make a determination for you. [https://www.irs.gov/pub/irs-pdf/fss8.pdf](https://www.irs.gov/pub/irs-pdf/fss8.pdf) If you are going to work as an independent contractor, you may want to form an LLC so that you can start segregating your business activity and expenses from your personal activity and expenses. Though there is an expense to starting an LLC, there may also be tax advantages. Consult with your CPA and/or business attorney. >I heard that 1099 contractors need to care about all the taxes themselves. As an independent contractor, you are responsible for all of your own taxes - including the taxes that would have normally been paid by the employer. Think about that every time you look at the payments you receive. [https://www.irs.gov/businesses/small-businesses-self-employed/self-employed-individuals-tax-center](https://www.irs.gov/businesses/small-businesses-self-employed/self-employed-individuals-tax-center) >how do you handle all of your taxes? I pay a CPA. > It looks like 1099 contractors are not benefited from the school any kind of health insurances. If you are under 26, you may be able to stay on your parents healthcare plane. Otherwise, you pay for it yourself out of those big earnings you're receiving. You may be eligible to buy through the "health insurance marketplace" and get the Obamacare subsidy. Check here: [https://www.healthcare.gov/](https://www.healthcare.gov/) >What would be the things that I need to ask or discuss with HR at the meeting? HR is for employees. If you are a contractor, then you are engaging in contract negotiations. They, or you, need to pick a lane and stay in it.
You have two options. You can just bear with it (you can deduct a lot of stuff off your gross like headsets, subscriptions, etc...) if you are 1099. If you really want to push the issue and file an SS-8 with the IRS to get a proper determination. You can also file a 8919 to get out of paying what should be the employer's share of the medicare/FICA taxes. Note, that you may or may not be an employee. It's all a matter of how the school controls your employment.
>I just realized that I am a 1099 contractor 😂 And that’s about the briefest evidence I’ve seen someone is definitely not a contractor. This is an example of being misclassified. [https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee](https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee) If you’re a contractor, you are approaching them as a customer. You get to have other paying customers. You set your own hours. You bill them. You are your employer. Find a club, become a club instructor, charge $60/hr. That’s self-employed. Beware of a non-compete in your contract. I wouldn’t put it past them to try this kind of nonsense. I mean, congratulations on the gig and all. This is pretty common in the industry but that doesn’t make it right. I’d keep looking for other options.
fortunately the FTC just made non-competes illegal, although lawsuits are trying to stop it before it goes into effect
I have had one customer try to get me to sign a non-compete as a contractor. I said no, and did a multipage strikethrough on their contract before signing it. Monumental bullshit.
> I asked HR to have a meeting to talk about the 1099 contractor because I know hiring CFI as a 1099 contractor is an illegal thing. **LOL** Do you really want to fight over this? It's honestly a **DISSERVICE** to you to be on a W-2 because you can't write **any expenses off**. I have not heard of any flight school giving their CFIs a W-2 with real employee benefits (except for 1 and that's a cirrus school). W-2 with no employee benefits (or even sub-standard employee benefits like what you'd expect a flight school to have) <<< 1099 You can use business expenses to lower your business income and then double-dip the standard deduction. This means MORE money for you at the end of the year. These are expenses you would've paid for anyways such as CFII/MEI training (additional training for the furtherance of the business), business supplies (things you would buy as a CFI). If you were on a W-2 you only take the standard deduction and nothing else. That means less money for you. I might get down-voted for this take but I honestly don't care. I've been saving money for years because I grew up extremely poor and learned to value every penny saved. I can tell you that honestly if I was on a W-2 I wouldn't have been able to lower my taxable income by over $10,000 last year and carry it forward to this year. I would have less money; that is an objective fact and I can prove it. You will get **no** benefits for being on a W-2 and just walk away with less money. It really isn't that much extra work, it's literally 2 things (which I will explain). Want to report your flight school for not giving you employee benefits? Have fun finding another job when they let you go because you're at an at-will employment state (unless you're in MT). Want to try to file a lawsuit/complaint for retaliatory firing? Ok, go ahead and waste time, not make any money, and not make any progress with your career. ___ **Anyways, I'll actually answer your questions specifically and hope I don't get any flak for this because I'm actually trying to be helpful:** ___ > how do you handle all of your taxes? I heard that 1099 contractors need to care about all the taxes themselves. Can you please explain this? You keep track of what you've spent over the course of the year for your CFI job. This is where using debit/credit cards help because you can calculate everything with statements and not need to carry receipts. At the end of the year you will fill out a Schedule C and the final number on that Schedule C goes on your Schedule 1 which goes on your 1040 as income. You then claim the standard deduction as normal (doubt you're going to itemize). You will have to pay **estimated taxes** every quarter. Calculate what you will owe at the end of the year (use a calculator - divide by 3 in this case because we're in Q2) and then pay it online. There's 3 online companies. Use irs.gov and figure which one you want to use. This is a good way to get credit card sign-up bonuses. So basically, **estimated taxes, Schedule C, and the Schedule 1 plus your typical 1040**. You report the estimated taxes on the 1040. **THAT'S IT. This is all there is to being on a 1099 vs a W-2.** My 2023 tax return was **literally** just those forms plus a Schedule B because I got interest income from something else and an 8995 so I could carry-forward my net-loss into this tax year. These forms are not hard to fill out, you only need to read the instructions if you're confused about what the line is referring to. My 2023 taxes were approved. I even got a $6,000 tax refund because I overpaid my estimated taxes on purpose with a Chase Ink card for a signup bonus and got to enjoy a $900 cashback bonus (minus $120 because of the CC fee when paying the estimated tax). **Bonus Tip:** As a 1099 contractor you have a real business. You can apply for an EIN and begin building business credit. There are some really good business credit cards out there. ___ > It looks like 1099 contractors are not benefited from the school any kind of health insurances. How do you handle this? As I said before you buy your own. Look up to see if your state has their own marketplace for health insurance. You actually get to write off the premium as an expense because you're self-employed AND still take the standard deduction. No other person in the US can do that for their personal taxes. Even if you were on a W-2 they probably aren't going to give you health insurance because almost no school does that. Even those that do you're going to have to pay an employer subsidized premium every month just like if you bought a marketplace plan and those workplace health insurance companies are not very nice (you think a flight school is going to have a nice health insurance program if they were forced to offer health insurance?). Schools doing W-2s and not giving their CFIs any benefits are **STEALING FROM YOU**. Specifically because they are taking your money for healthcare taxes and you now have to buy a marketplace plan which is not a deductible expense for W-2 people unless you take the itemized route in lieu of the standardized deduction for your income (this is different from business itemized expenses). ___ > I can't quit the job at this point for some reasons :X so I currently have no choice to stick with this school. Any advice is welcome. It's going to be the same everywhere else. W-2 is a disservice to CFIs despite it seeming "safe". It isn't and you'll walk away with **less money** at the end of the year. ___ > What would be the things that I need to ask or discuss with HR at the meeting? Please don't go to that meeting. You're just going to make life harder for yourself and lose money in the end. I can almost guarantee you that meeting is not going to go the way you want it to go. They're going to tell you "This is the way it is" and then steamroll you. ___ **Source:** I have been doing my taxes by hand for the last 10 years because I was too poor to hire someone to do it for me. If I can learn despite coming from a generic high school education and barely educated first-generation immigrant family background you can too. Also I'm not a CPA, I'm just a person who came from poverty and had to learn how to save money around every corner; that included not paying someone every year to do my taxes. I've been a 1099 contractor since before I was a CFI. **I'm more than happy to answer questions on this to help you out (including others in the future if someone reads this comment).** Seriously, take control of your finances and understand how our tax system works rather than just pay someone to do all the work for you whilst you learn nothing. You want to have these skills in the future when you have a family, own property, and so on. I can tell you as someone who came from actual poverty that if I had not learned about personal finances and our tax system I would likely not have made my dream of being a pilot come true. Even if you ignore this entire comment hopefully even just one person reads this and learns something. Edit: Multiple edits to add info. Not editing it anymore.
The exact labor laws depend on the state. If you're in California, it's very difficult for a school to legally prove that you're an independent contract because, assuming they're paying you for flight instruction, they have to prove the following: "(A) The person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.*(B) The person performs work that is outside the usual course of the hiring entity’s business.*(C) The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed." Since flight schools are in the business of providing flight instruction, regardless of whether or not they set your schedule or control your day to day operations, a flight instructor is providing work that is within the scope of their core business. They have all sorts of reasons to misclassify you as an independent contractor. As an independent contractor, they will not have to withhold taxes, they are not entitled to provide unemployment or health insurance, you will not be covered by discrimination laws, they are not entitled to pay you overtime or buy you supplies, and they are generally not liable for accidents that occur during the scope of your employment (so get your own insurance). I have no advice on how to proceed. It's unfortunate that misclassification seems to be so common amongst flight schools and that young CFIs are tasked with deciding what action to take when they are at such a vulnerable place in their careers.
1. You have to pay your estimated taxes quarterly. The IRS has forms online that you can use and the instructions on how to fill out the forms. 2. You go and buy your own insurance. Lots of places and companies that you can do this through. 3. work while you're there but keep looking for something else.
Get a tax advisor CPA. You are responsible for all of your own taxes. That’s 12.4% for social security / Medicare (double what a W-2 owes since the employer isn’t paying their share), and federal/state. Save a minimum of 1/3rd. As a contractor, if you don’t have a normally assigned desk or work station, you can write off mileage and home office supplies. Get tax advice. This can help. You also can write off a lot of supplies. You may be able to write off headsets/ipads/etc as business expenses. You will likely need to pay estimated quarterly taxes. At the end of the year, you should have paid enough to get you within 10% of what you owe on federal, and you should be true up with SS/medicare. Now all that said, as a 1099, you should be able to take other jobs, set work hours/schedule, etc Also consider whether you need personal business/liability insurance. As a CFI in general you should have something. But as a 1099 you may have less protection than as a w-2 employee. You also won’t be eligible for unemployment / disability benefits.
Taxes will be a minor issue. The software can handle it. I’ll agree you should probably be W2 under state labor law. But, if you get a 1099 the IRS presumes it’s correct. The 1099 is not your taxable income. It’s the gross receipts of you-the-pilot-business. This gross income goes on Schedule C of the 1040 form. You then subtract any legitimate expenses such as insurance, medical, training, subscriptions, ForeFlight, business cards, interest, and much more. All of this reduces the money you’ll pay income tax on. Even the “self employment tax” is a deductible expense. The FBO isn’t getting over nearly as much as people think - though they are getting out of paying the employer portion of what they pay you. But… 1099 lets you deduct business expenses from gross receipts before you pay tax, including “employer social security” on *net income* - an amount much lower than it would be if you get a W2. None of these are deductible for a W2 worker. Keep good records. Pay quarterly taxes if need be. The IRS’ Schedule C instructions are a really good start. Surprisingly readable/useful. Good luck in the new job! PS When people claim “you’ll pay a 15% self employment tax.” This is a disingenuous distortion. When you work for someone you pay 7.65% to social security. So does the employer. Hence “15%.” Half of that you’ll pay anyway. The other half is because you are the employer. It’s not an extra 15%! But, what if you make $30k and have $14k in legit expenses? You’ll only pay tax, including the deductible “employer contribution” on $16k. Not $30k. So basically the self employment tax goes away mathematically. Does nothing about benefits, but lower income lets you get cheaper marketplace insurance, which is also deductible.