If your business used a contractor during the tax season, you may wonder when do contractors get W2 forms versus 1099s. It is not common to file a W2 for a contractor, but there are some unique circumstances when it is appropriate. We will cover those situations so that you know how to handle any tax forms for your contractors. Additionally, we will explain why you should invest in a tax filing software to help meet any of your tax needs.
Do Contractors Get W2 or a 1099?
The short answer to the question do contractors get W2s is: No. In most cases, businesses file a 1099 for any contractors they employ and a W2 for any employees on a regular payroll. The IRS differentiates the role of an employee and a contractor with three categories: behavioral control, financial control, and relationship. These three areas help employers classify a worker based on the nature of the work and the type of interaction the business and worker have.
Generally, a worker is clearly an employee or a contractor. However, there are two instances in which a business could classify a worker as both types of employee. A business could hire a worker as a W2 employee while the employee concurrently fulfills separate, contracted work for the same business. In this case, the worker has a contractor and an employee relationship with one employer. If this work happens during the same tax season, the employer needs to file both a W2 and a 1099 for the worker.
A business would also file both tax forms for the same employee if the worker started out as a contractor and became an employee during the same tax year. The reverse is also true for an employee who transitioned to a contractor during the tax year. In both cases, the employer should file both forms.
How AMS Tax Software Covers Your Tax Needs
We have answered “Do contractors get W2s?” but you still may be looking for support in filling out W2s and 1099s. Investing in a comprehensive tax software like the AMS 1099 filing tool relieves the stress of completing tax forms. Our easy-to-use software allows you to generate and fill in the appropriate forms for each employee, including contractors. The menu-driven format makes the software easy to navigate for first-time users. Additionally, you have the ability to add features to tackle any task.
The AMS W2/1099 Forms Filer has key features which make it a great investment.
- Supports W-2, W-3 and all 1099 forms
- Supports up to 99,999 employees/recipients per payer
- E-Filer will electronically file your year-end W-2 and 1099 forms to the IRS/SSA
- Customizable software modules to suit individual needs
If you are interested in tax software but want to try it first, take our products for a test-run with a free downloadable demo to see how our systems can work for you. Contact our Sales and Information team at (800) 536-1099 with any questions.