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 Information 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, payments to an attorney, or any amount of federal income tax withheld under the backup withholding rules (Form 1099-NEC).
• Report payments of $10 or more made in the course of a trade or business in gross royalties or broker payments in lieu of dividends or tax-exempt interest or $600 or more made in the course of a trade or business in rents or for other specified purposes (Form 1099-MISC).
• Report sales totaling $5,000 or more of consumer products to a person on a buy-sell, a deposit-commission, or other commission basis for resale (Form 1099-NEC or Form 1099-MISC).
• Report payment information to the IRS and the person or business that received the payment.