What’s the difference between a 1099 and W-2?

Regarding the difference between a 1099 and W-2, if you received a W-2, you’re considered an employee. A W-2 reports these:

• Wages, tips, and other compensation paid to an employee
• The employee’s income and Social Security taxes withheld and other information
• Wage information to the employee and the Social Security Administration

You should report the information on the W-2 under wages.

If you received a Form 1099-MISC, you’re considered an independent contractor.

Form 1099 reports payments made in a trade or business to either of these:

• A person who isn’t an employee
• An unincorporated business

This form is required when payments of either of these are made:

• $10 or more in gross royalties
• $600 or more in rents or compensation