When you are working for someone else, you may receive a 1099 form or a W-2 form. These forms document the money you have earned and the taxes that have been withheld from your paychecks. However, there are some key differences between these two forms that you should be aware of. Let’s take a closer look at what each form entails.
What is the 1099 Form?
1099 Form is a United States tax form used to report income other than wages, salaries, and tips. This includes income from interest, dividends, capital gains, rents, royalties, alimony, and self-employment. 1099 forms are also used to report payments made by businesses for services rendered. The 1099 Form is an important document for taxpayers because it is used to calculate how much tax is owed. The 1099 Form is also used by the IRS to track income and ensure that taxes are paid correctly.
What is W-2 Form?
W-2 Form is a document that an employer sends to an employee and to the Social Security Administration (SSA) at the end of each year. It shows how much money the employee made during the year and how much was withheld in taxes. The W-2 Form is also used to calculate an employee’s income tax liability.
The W-2 Form is important because it shows how much money an employee made during the year, and how much was withheld in taxes. The W-2 Form is also used to calculate an employee’s income tax liability. By knowing this information, employees can be sure that they are paying the correct amount of taxes. W-2 Forms can be found online or from the employer.
Differences between a 1099 and W-2 Forms
- 1099 and W-2 forms are the two most common types of tax forms. 1099 forms are used for reporting income from sources other than employment, such as interest, dividends, or royalties.
- W-2 forms are used for reporting wages and salary income. The main difference between 1099 and W-2 forms is that 1099 forms report gross income, while W-2 forms report taxable income.
- 1099 forms also do not have any withholding taxes taken out, while W-2 forms do have withholding taxes taken out. 1099 forms are also used for reporting self-employment income, while W-2 forms are not. Finally, 1099 forms are generally due to the recipient by January 31st, while W-2 forms are generally due to the recipient by February 28th.
The 1099 form is for independent contractors, whereas the W-2 is for employees. There are a few key differences between these two types of workers that you should be aware of. For example, an employee’s taxes are automatically withheld by their employer, while an independent contractor is responsible for paying their own taxes.