Question:   What is the difference between a Form W-2 and a Form 1099-MISC?

Answer:   Both of these forms are called information returns.

The Form W-2 is used by employers to:

• Report wages, tips and other compensation paid to an employee.
• To report the employee's income tax and Social Security taxes withheld and any advanced earned income credit payments.
• To report wage information to the employee, the Internal Revenue Service and the Social Security Administration.

A Form 1099-MISC is:

• Used to report payments made in the course of a trade or business to another person or business who is not an employee.
• Required among other things, when payments of $10 or more in gross royalties or $600 or more in rents or compensation are paid.
• Provided by the payer to the IRS and the person or business that received the payment.