As you start to gather information for tax season, you might wonder how to file taxes with a 1099 and W-2. If your company employs a range of workers, then each worker comes with their own tax responsibilities. At AMS, we can help you determine how to file taxes with a W-2 and 1099.
Guidelines for Providing W-2 and 1099 Forms
Employee classification helps you understand how to properly file taxes. Make sure to classify employees correctly. The IRS guidelines for employee classification are helpful. Read below for a quick introduction:
- You should provide a W-2 form to a worker if your company provides benefits such as paid time off and health insurance to a full-time employee, and you control that employee’s working environment, behavior, and product. You pay this employee off your payroll and withhold taxes on their behalf.
- You should provide a 1099 form if you hire a worker on a short-term, contractual basis. This worker likely controls their own working environment, behavior, and product. You do not provide benefits for this worker or withhold taxes on their behalf.
Tax Form Distribution
If you need to know how to file taxes with a W-2 and 1099, remember that the deadline to distribute both forms is January 31st. You will distribute either a 1099 or W-2 form once you have compensated the worker at least $600.
Each of your workers will receive either a 1099 form or W-2 form. You will rarely, if ever, file a W-2 and 1099 form for the same employee. One of your employees might fill out their own 1099 form on the side if they are working another job. However, that 1099 form will not involve your oversight. In this case, the employee will need to know how to file taxes with a 1099 and W-2.
Benefits of Hiring Employees vs. Independent Contractors
There are benefits to hiring W-2 employees and 1099 independent contractors.
- Employees can grow with the company, create a consistent workplace environment, and handle long-term projects.
- Independent contractors provide expertise in their fields, cost less to employ than W-2 employees, and give fresh insight to your company’s output.
Just because you hire a worker for a certain role does not mean they have to stay in that role permanently. In some cases, you might transition a 1099 independent contractor to a W-2 employee, or vice versa. Try to plan for that transition after filing that year’s taxes so that the worker can start the new tax year with their updated classification.
How to File Taxes with a 1099 and W-2: AMS Has Your Back
If you need help understanding how to file taxes with a 1099 and W-2, we can help. 1099 and W2 filing software is supportive of your company’s tax needs whether you have only W-2 employees, or a mix of W-2 and 1099 independent contractors to account for during the tax year. A combination of 1099 independent contractors and W-2 employees might be best for your company. AMS tax software can keep all of your tax files organized, easily accessible, and secure.