- July 25, 2017
Many taxpayers confuse themselves with the 1099 form and W2 form as both forms serve different purposes for workers. Federal Income Tax forms 1099 and W2 are used to report an individual’s income which is earned from various sources throughout the financial year. But each form is issued under different scenarios and it requires different approaches when you file federal income taxes. If you are an independent contractor, you must file 1099-MISC Form; if you are an employee you must file W-2 Form with IRS. This article briefs you on the basics of W2 forms and 1099 forms so that it avoids misperception while you file the tax.
Form 1099 Vs W2 Form
About W2 Form
A Form W-2 is a Wage and Tax Statement, if you are an employee and receive a fixed salary or wage from your employer then you will receive Form W2. As per IRS, an employer must record their employee’s salary and tax information; in turn, report it to the employee on a W2 form. W2 Form contains the details of the employee’s earned income from the employer and this can be used in the calculation of the employee’s gross income. Also, it specifies the tax withholdings for the year which includes both federal and state taxes.
Form W-2 is the due date
-
- -to your employee copy by January 31,
- -Paper filing with IRS by February 28/29 and
- -E-filing with the IRS by March 31.
About IRS 1099 Form
Form 1099 is used to hold the records of income that you receive as an independent worker while working for different sources. For instance, if you are a freelancer and working for multiple clients, then you may receive 1099-MISC Form from all the clients when they have paid you at least $600 during the financial year. An individual may receive different IRS 1099 series forms, depending upon their sources of income or money-making activities.
Form 1099-MISC is the due date
- –to your recipient copy by January 31,
- -Paper filing with the IRS by February 28/29 and
- -E-filing with the IRS by March 31.
How do Independent Contractors Differ from Employees?
- As a self-employed freelancer or contractor, you must calculate your own 1099-MISC taxes and need to file and submit them with the IRS before the 1099 due date on a quarterly basis.
- As a W2 employee, payroll taxes are automatically debited from your salary and then paid to the IRS through your employer or organization on a yearly basis.
- If you are not sure about whether you are hired by an independent contractor or an employee, you can able to submit SS-8 Form with IRS. IRS people will find your status based on the provided information, keep in mind this SS-8 Form will take 6 months to process and return.
- Form 1099-MISC reports income from prizes won, rent payments, fishing boat proceeds, and attorney fees of $600 or more.
- Form W2 reports total income, social security, and Medicare income and shows how much amount has been withheld from employee pay for federal income taxes to state and local taxes.
- 1099-MISC Form specifies only the income you received from the client but does not contain the information related to the taxes which you have paid to the government.
Stay with us for more tax tips with Tax2efile, Compare your income information on both forms and apply for it accordingly. Tax2efile helps you to file 1099 taxes comfortably. If you have any queries give us a call or send us a live chat on 24*7 basis on weekends also. You can Email us at anytime at support@tax2efile.com.
