Why do some employers give 1099 instead of 10w2 what is the different?

Answer 1

Both a 1099 and a W2 are a way for your employer to report spending on labor to both you and the US government. If they do not report this spending they will be taxed on that amount themselves as earnings for their company and/or themselves. So you see that if someone pays you, you are likely to get some form or another reporting this to both you and the IRS.

The difference is that on a W2 you are an employee, and so that form will show the taxes deducted from your check, but also the employer has paid matching taxes for you to social security and usually unemployment and workmens compensation.

On a 1099 you show no deductions, because none have been deducted. Your employer also has not matched any of your taxes, or paid any insurance payments for you in whole or in part.

Your real wage is less if you made the same dollars on a 1099 than if you did it and got a W2 because you are still often responsible for these taxes, as well as the portion paid by your employer. Unless you are very young, or very poor and exempt from all taxation, you will have to report this income seperately, and figure your total social security tax (both the employer and employer portion), this is called self-employment tax. Having an income low enough to make you exempt from filing does not make you exempt from filing (and paying) self-employment taxes. It will be due in addition to your regular income tax. Depending on where you live, you may have other state or local taxes to pay for yourself on self-employment.

Answer 2

A W-2 means you are an employee of the company.

A 1099 means you are self-employed. In the context of your question, you'd likely be considered an independent contractor.

If you receive a 1099, you are responsible for paying your own taxes to the government quarterly, including the employer's side of FICA

Answer 3

regrettably, no. The worst situation is what you're promoting has also despatched a duplicate of that similar 1099 to the IRS. meaning in case you do not document and contain that earnings, the IRS will be sending you letters come summertime asking why. they have paid you as a non worker. Employers are meant to withhold federal wages and state even with the undeniable fact that the 1099 is their way round it. you need to document a agenda C and rfile the earnings. in case you nonetheless paintings for them, both call for they commence withholding taxes. Or commence paying predicted funds to the IRS. which isn't honest to you in any respect. yet you also are reeking the benefits of having paid what you gross. Do you've any dependents to offset the tax you may owe? Do you own your own residence? may earnings you to enable a tax specialist look at your problem to work out in case you qualify for any credit or deductions. good luck.

Answer 4

I am not sure I have ever heard of a 10w2, are you referring to the W-2?

If so, a W-2 means your employer is responsible for your federal and state taxes, as far as withholding deductions, he has to pay this. This is most typical in an employee situation.

With a 1099, you are responsible for sending in the withholding on taxes, your employer pays you without deductions. This is most typical in a subcontractor situation.

Answer 5

A 1099 is usually for subcontracted labor. You're not technically an employee of the company. No taxes are deducted from the check, and not insurances are provided for the person.

A W-2 is given to an actual employee of the company. Federal, State and local (if applicable) along with social security and medicare are deducted from each check. Insurances (unemployment and worker's compensation) are carried on behalf of the employees.

Answer 6

A W2 is given to an employee who has had the necessary taxes removed from their payroll check. This would include but is not limited to Federal Withholding, State Withholding, and FICA Taxes.

On the other hand a 1099 is given when an employee does not have any taxes removed from their payroll check.

Answer 7

1099 means if it is above a certain amount ( $500.00 i think) then you must pay your own taxes on the income and a w-2 form staes the total income you recieved from your employer including the amount they paid to the state fed and local govt. for your taxes

Answer 8

W2 is for wages made as an employee of a company, a 1099 is for any money you made that maybe taxable.

Answer 9

1099 are for income in which no taxes were withheld. This is mostly for subcontracts
The other I am thinking you mean W-2. Those are for employees who had taxes withheld from their paychecks