What is the purpose of a 1099 and What is the purpose of a W-2 for the individual when doing their Taxes?

Question

The individual does not own a business either So , the 1099 is not from a personal business.

Answer 1

A W-2 is issued to an employee by his employer to summarize the wages paid and items deducted through the year.

There are many types of 1099's. If you're talking about a 1099-misc with a non-zero amount shown as nonemployee compensation, that's for an independent contractor. Whether you consider yourself to be in business or not, legally to the IRS you are if you have non-employee compensation on a 1099-misc.

Both of these are reported to the IRS, and info from both is reported on the recipient's tax return. The difference is that the W-2 income is reported directly on a 1040, 1040A or 1040-EZ. The 1099 is shown on a schedule C or C-EZ along with any associated deductible expenses, then schedule SE is used to calculate self-employment tax on the amount from the schedule C, then the numbers from the bottom of the two schedules is transferred to form 1040 where income tax is calculated.

Answer 2

if you work as a contractor for someone or some company you are issued a 1099 because they need to report the amount paid to you, mainly because the irs wants to ensure that someone pay income taxes on that money.

if you win a prize of value over $600, cash in stock, or otherwise gain income from a non-employer source, again the party paying needs to issue the party receiving a 1099.
The irs then makes sure that you include the 1099 income when filing your tax return.

a W2 is how your employer reports your income/earnings. you must have an employee-employer relationship and the employer pays half of your social security and medicare taxes.

sometimes employers try to act as if their employees are contractors (and reallly work for themselves) to avoid having to pay their share of employer taxes (the social secuity and medicare taxes, and unemployment taxes)

there are a few different 1099 forms - like a 1099-B, which a stock brokerage would distribute, but there is only one form W2.

Answer 3

The W-2 is proof of income to the mighty revenooers.

Answer 4

How else would you know how much to report and where?
That's the purpose of the forms, so you know how much you made from different sources.