Although both of 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 to:
- Report payments made in the course of a trade or business to a person who's not an employee.
- Report payments of $10 or more in gross royalties or $600 or more in rents or for other specified purposes.
Report payment information to the IRS and the person or business that received the payment.