Is a W-2 the same as a 1099? The answer is no. Identifying the difference between employees and independent contractors, as well as their corresponding W-2 and 1099 forms, is very important as an employer.
Even though the IRS provides some guidelines for how to classify workers, there is still room for error. Lots of information is left up to the employer’s interpretation, so it is imperative to know the parameters. The three main areas of consideration for worker classification are behavioral, financial, and type of relationship.
Misclassification is serious. It can tie you up with legal fees and those financial penalties can be devastating. In order to help you properly classify the workers at your company, and provide the correct tax forms, AMS has compiled information that might be helpful. We can help you answer the question: Is a W-2 the same as a 1099?
W-2 Employee
- Long-term worker at the company
- Employer withholds employee’s income taxes, withholds and pays Medicare and Social Security taxes, and pays unemployment tax on the employee’s wages
- Employer assumes some financial and legal responsibility
- Employer has control over time, working conditions, and how the work itself gets done
- Employee receives benefits from the company
W-2 Form
The IRS provides the W-2 form online here.
- Connected to employer payroll
- Reports employee wages and withholds taxes for the employee
- Must be distributed by January 31 of that tax year if employee is paid $600 or more during the tax year
1099 Independent Contractor
- From a tax perspective, independent contractors are self-employed
- Employed by companies on a short-term, contractual basis
- Independent contractor pays their own taxes
- Employer has little to no financial and legal responsibility
- Employer has little to no control over the way an independent contractor’s work gets done
- Independent contractor chooses and provides benefits
1099 Form
The IRS provides the 1099 form online here.
- Employer must use1099-MISC form to report the wages paid to an independent contractor
- 1099-MISC and 1099-NEC are among the most common 1099 forms
- Must be distributed by January 31 of that tax year if employee is paid $600 or more during the tax year
AMS Support For W-2 and 1099 Forms
Now we can say definitively that the answer to, “Is a w2 the same as a 1099?” is no. These forms are not the same, and the worker classification for each form is also different. Luckily, AMS W-2/1099 Forms Filer can help if you have to file W-2 forms for employees or 1099 forms for independent contractors.
Our support doesn’t stop there. The AMS blog can help you answer many tax-related questions, like “Is a w2 the same as a 1099?” or “Is 1099 better than W-2?” Let us answer your tax questions and file your company’s tax forms.
Whether you classify your workers as employees or independent contractors, our W-2/1099 Forms Filer can help. AMS can make tax filing a breeze with our organized and responsive system.