Form 1099-MISC is used to declare payments made to independent contractors (who cover their own payroll taxes). The W-2 form, on the other hand, is used for employees (whose employer withholds payroll taxes from their earnings). Both Form W-2 and Form 1099 serve a similar purpose in reporting the income you earned from sources throughout the tax year, but each is issued under different circumstances and requires slightly different approaches to planning for the tax season. Form W-2 is an annual informational statement provided to an employee that lists taxable wages, as well as income tax withholding and Social Security and Medicare tax withholding.
Before January 31, the Form W-2 employee will receive a Form W-2 that includes information on taxable compensation, tax withholding, and any additional tax deductions for employee benefits, such as employer-sponsored health coverage or 401 (k) plans.
