When to File a W-2 Versus 1099 for Your Employees

Employers should have a handle on the difference between W-2 versus 1099-NEC to make sure you accurately file the right income reporting form for your employees. Within a year, you are likely to hire a variety of workers, including employees on your payroll and independent contractors. As a result, you should know how to file for each type of employee to meet the reporting requirement of the IRS. Employers who take on the responsibility of filing taxes benefit from a quality tax software to expedite completing and submitting the forms. AMS offers a comprehensive tax software which supports all the IRS tax forms you need.

 

 

Differences Between a W-2 and a 1099-NEC Tax Form 

Employers use a W-2 tax form to report the income of employees from whom you withhold some of their pay. The pay you withhold pays for the employee’s employment taxes, which contribute to Social Security and Medicare. The W-2 form has sections for an employer to report both an employee’s total wages as well as the amount of wages taken out for each tax.

The biggest difference between a W-2 versus 1099-NEC is how an employer reports income. Employers do not withhold pay from any independent contractor they employ. The independent contractor is self-employed and, therefore, pays their own self-employment taxes. So, for any contractor that you pay more than $600, you complete a 1099 to report this income. The 1099-NEC has a section for you to mark Federal Income Tax Withheld (Box 4).

 

Filing Steps for W-2 Versus 1099 

No matter which form you are filing, the IRS deadline for submitting these forms is January 31st. The actual filing steps are not that different when comparing a W-2 to the 1099-NEC. The main difference is the content of each form.

Filing W-2 requires payroll information from the whole year to know an employee’s total wages and employment taxes. If you use payroll software, you should be able to identify these figures simply. For contractors, you need to file one 1099 for each contractor you pay throughout the year. You may have paid several contractors, so you will need to maintain organized documentation to ensure each contractor receives a 1099-NEC.

 

1099-etc: AMS Filing Software Supports All the Tax Forms You Need

AMS W-2/1099 Forms Filer software is a useful tool for employers trying to understand how to file for W-2 versus 1099-NEC. The menu-driven format makes completing the forms simple for employers and reduces errors. Additionally, once you establish an employee or payee file, their information can be saved to auto-populate on the form, so you only have to enter the information once. Need additional support? Check out our accounting and payroll software.

 

 

Tax forms require attention to detail and promptness, and AMS software is an ideal tool for employers looking to improve their tax filing system. You can even add software modules to the base software package to customize your software resources to make it the most useful for you. You can access a free demo of AMS products to try out the software for yourself before buying and call our Sales and Information Team at (800) 536-1099 with any questions.

 

Software Solutions from AMS

Our W-2 and 1099 Forms Filer is our only required platform. From there, users pick the services they need. Choose from the tools below to build out your customized accounting software.