Question
What's the difference between a Form W-2 and a Form 1099-MISC or Form 1099-NEC?
Answer

Although these forms are called information returns, they serve different functions.

Employers use Form W-2, Wage and Tax Statement to:

  • Report wages, tips, and other compensation paid to an employee.
  • Report the employee's income and social security taxes withheld and other information.

Employers furnish the Form W-2 to the employee and the Social Security Administration. The Social Security Administration shares the information with the Internal Revenue Service.

Payers use Form 1099-MISC, Miscellaneous Income or Form 1099-NEC, Nonemployee Compensation to:

  • Report payments made of at least $600 in the course of a trade or business to a person who's not an employee for services (Form 1099-NEC).
  • Report payments of $10 or more made in the course of a trade or business in gross royalties or payments of $600 or more made in the course of a trade or business in rents or for other specified purposes (Form 1099-MISC).
  • Report payment information to the IRS and the person or business that received the payment.