This article was updated for Tax Year 2023, last edited on December 18th, 2023.
Two of the most common employment/income tax forms are the W-2 form and 1099 forms
A Form W-2 is an employee’s Wage and Tax Statement. It’s filed for all employees of a company who earned any wages through employment, and it’s issued as a record of an employee’s compensation, benefits, and taxes withheld for a given tax year. As an employee, your employer withholds your federal and state taxes from your paycheck to pay to the appropriate revenue authorities.
On the other hand, Form 1099 (most commonly a Form 1099-NEC) reports nonemployee compensation, such as for independent contractors. It details compensation paid in a given tax year, plus any federal, state and local taxes withheld. A 1099-NEC is required to be filed for workers who were paid at least $600 for services but didn’t withhold taxes under an employment arrangement.
As an independent contractor (self-employed individual/freelancer), you are now your own employer and responsible for paying federal and state taxes. In order to have a lower tax bill by the time tax season arrives, you can pay estimated tax payments.
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