What's the Difference Between a W-2 and a 1099?

A W-2 and a 1099 are both tax forms used to report income, but they apply to very different work arrangements. A W-2 comes from an employer and shows wages paid to an employee, along with the taxes withheld from each paycheck throughout the year. A 1099, most commonly a 1099-NEC or 1099-MISC, is issued to independent contractors and freelancers to report payments made without any tax withholding. If you receive a W-2, your employer handles payroll taxes on your behalf. If you receive a 1099, you're responsible for setting aside money to cover self-employment taxes and making quarterly estimated tax payments throughout the year.