What are W2 and 1099?
The W-2 form is the way that employers report the income and taxes withheld and paid to the IRS for employees. Employees use their W-2 as a key document in completing their income tax, determining whether they owe, or are owed, funds. A 1099 form is how employers report fees paid to independent contractors who have done work for the company but who are not employeesso consultants, skilled professionals brought in on a project, etc. Typically, employers do not withhold taxes for 1099 contractors. The 1099 form is then used by the contractor to determine what they owe to the IRS at the end of the year. Both forms document an individuals incomethe difference is not in the type of tax, but in how the employer reports the income.