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Form 1099-MISC & Independent Contractors
Question: What is the difference between a Form W-2 and a Form 1099-MISC?
Although both of these forms are called information returns, they serve different functions.
Form W-2 (PDF) is used by employers to:
- Report wages, tips and other compensation paid to an employee.
- Report the employee's income and social security taxes withheld and other information. See General Instructions for Forms W-2 and W-3 (PDF) for more information.
- Report wage information to the employee, and the Social Security Administration. The Social Security Administration shares the information with the Internal Revenue Service.
Form 1099-MISC (PDF) is:
- Generally used to report payments made in the course of a trade or business to a person who is not an employee or to an unincorporated business.
- Required when payments of $10 or more in gross royalties or $600 or more in rents or compensation are made.
- Provided by the payer to the IRS and the person or business that received the payment.
- Tax Topic 752, Form W-2 - Where, When, and How to File
- Instructions for Form 1099-MISC (PDF), Miscellaneous Income
Category: Small Business, Self-Employed, Other Business
Subcategory: Form 1099-MISC & Independent Contractors