October 28, 2020 A Technology Blog

W-2 vs 1099: What’s the Difference and Why Does It Matter?

 

Tax season is right around the corner, which means it’s time for you to get all of your documentation to submit for your return. Whether you’re going to be submitting w-2’s or 1099’s with your tax file will depend on the type of employment you’ve got.

But what exactly is the difference between w-2 vs 1099? We’re glad that you asked because below, you’re going to find out everything you need to know when it comes to the 1099 vs w-2 comparison.

What’s the Difference W-2 vs 1099?

Both of these forms are forms that are given to employees by their employers. On these forms, you’re going to find a ton of information that has been recorded throughout the employment year.

A w-2 is given to employees that are employed under someone. These are people that work for companies with other employees. The main difference between a w-2 and 1099 is that 1099’s are given to those considered independent contractors.

Independent contractors work for people completing work for a specified period, and then you move on to working for another company. An independent contractor is their own boss, and they are responsible for reporting their independent earnings to the IRS and paying the due taxes.

Now that you’ve got some insight into the main difference between the two forms, here’s what you can expect to see notated on your forms.

Payouts

One thing that you can expect to see listed on your form are payouts that have gone to your designated retirement funding. When you work under an employer, your retirement fund will be set up through the company. When you work independently, you will need to pay attention to having the correct amount of money taken out of your pay and put towards your retirement account.

Personal Information

Personal information will include things like your address, government first and last name, social security number, and more. This information is on your tax form to ensure that you’re the correct person who has been receiving and will receive a tax refund from the government.

It’s also a way for the government to keep correct records of the income you’ve reported to the IRS during the tax season.

All Income

If you’re receiving a w-2, you’ll receive one for every avenue of income that you have to ensure your tax reporting is accurate. The same goes for your 1099 form; you’ll receive one or be tasked with completing your own before submitting your tax file.

If you find that you need to create w2 to complete your tax paperwork, it can easily get created using an online generator.

W-2 vs 1099

When it comes to the difference between w-2 vs 1099, the only real difference is the type of employee using them. You’ve got to ensure that everything you’re reporting is accurate to avoid any trouble with the IRs and to ensure that you get the refund you’ve been looking for.

Now that you’ve got the answers, you were looking to take some time to scroll through the other business tax law posts on our site.

 

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