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1099 / W2 Differences

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1099 and W2 DIFFERENCES

Tax Forms

A W-2 is issued by an employer for an employee who in turn has payroll taxes taken out . This employee has a specific relationship with his employer. A 1099 is issued to a sub contractor who is self-employed and not controlled by employer. No payroll taxes are deducted. The specific relationship can sometimes be blurry. For more visit http://www.irs.gov/businesses/small/article/0,,id=99921,00.html

The taxation of the subcontractor is very different then an employee as he will be responsible for his own payroll taxes as well as social security (commonly referred to as self-employment tax).However, he can also deduct many expenses an employee typically  cannot. (Travel expenses to and from work, cell phone use etc) Our professionals can help steer you thru these differences.

 

 

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