The answer is not really. How we talk about W-2 and 1099 employees is more than a little complex. However, if you want to know if you can use a 1099 form for a W-2 worker, then it is a straightforward no.
The Internal Revenue Service distinguishes employees and independent contractors in several specific ways. Employers weigh the following factors to properly classify all of their workers and to know which forms they must use for each individual:
Behavioral – Employers cannot control what an independent contractor does or how the worker completes the job. Employers set hours and guidelines for W-2 employees.
Financial – Consider whether or not you control the business components of a worker’s job. Did you add a worker to the company payroll? If yes, the worker is an employee. Does a worker use tools from their own business? Classify that worker as a contractor.
Relationship Type – You cannot 1099 an employee with a written contract or employee-type benefits. Benefits may include health insurance, vacation, and a pension. Employers do submit 1099 forms if the relationship or project has a set end date.
Accurately classifying workers not only helps you use the correct forms. Classifications help you ensure that you appropriately withhold employment taxes. We handle payroll and non-employee compensation with our AMS Payroll software. Try our free 1099-etc Demo or call us directly with any questions at 1-(800)-536-1099.