Around 1 in 10 workers are contractors or freelance workers.
With the rise of the internet and the ability to take out a business loan for virtually anything, so many people are starting their own business. While freelancing is increasing in popularity, there are still plenty of salaried employees.
Well, what’s the difference between these job titles? The biggest difference comes with how taxes are filed! W2 and 1099 employees are required to submit different documents and pay different fees.
So, how should you file your taxes as either employee? Keep reading to learn more!
How You Should File Taxes When You Have W2 and 1099
Whether you are a salaried employee or an independent contractor, filing taxes is part of your job.
Here is the difference between the two:
What Is a W2?
A W-2 is a tax form given to those who are salaried employees.
Employees who use a W2 form are typically employed full-time and receive benefits. Benefits provided to a W2 employee typically include a 401(k), medical insurance, and paid time off.
How Do You File Taxes With a W2?
When you work as a W2 employee, your employer is required to supply the W2 form to you.
You’ll want a printable W2 form 2019.
Once you’ve been given your W2 form, you can work on filing your taxes. Choose how you want to file taxes, and what you choose will depend on the process. For example, if you’re working with a tax professional, they’ll want you to scan your W2 form.
Then, they’ll take care of submitting the information for you.
You can also choose to use a website or an app to help you file. Many people prefer this method as it can be less expensive initially. If you choose this route, you’ll need to just plug in your information in the spots asking for it.
It’s a fairly simple process.
What Is a 1099 Employee?
A 1099 form should be filled out by any contractor who has made more than $600 doing freelance work.
You should receive one of these forms from your main source of work. However, if you don’t make at least $20,000 per year with this employer, they’re not required to provide you the 1099 form.
In this case, it would be wise to work with a tax professional to understand the paperwork you’re required to submit.
How Do You File Taxes With a 1099?
First, you’ll want to get your hands on a 1099 form.
Your employer may provide you one if you’ve earned enough through them. If this isn’t the case, you can always print off your own 1099 form. While filing as a freelancer or contractor on your own is possible, it’s recommended that you ask for some professional help.
You may miss out on extra money if you don’t claim everything you have the ability to. A tax professional will help you identify what you’re able to claim, increasing your return!
How Are You Going to File?
When it comes to tax season, you want to know exactly what forms are required from you.
To avoid being audited, you’ll want to do some research for filing. For W2 and 1099 employees, having accurate and up to date information is crucial for filing most efficiently.
If you found this article helpful, check out our other lifestyle content!