As the January 31st deadline approaches, it’s essential for taxpayers to understand two crucial documents they might receive: the 1099-NEC and the W-2. These forms play a vital role in tax preparation, and understanding their differences and the information they contain is key to a smooth tax filing experience.
The 1099-NEC is a tax form used to report income for individuals who are not employees but have performed work or services. This includes freelancers, independent contractors, and self-employed individuals. The “NEC” stands for Non-Employee Compensation. If you’ve done freelance work or been an independent contractor and received at least $600 from a client, you should expect this form.
Key Information on the 1099-NEC:
- Payer’s and Payee’s Information: Includes names, addresses, and Taxpayer Identification Numbers.
- Non-Employee Compensation: The total amount paid to you for services rendered during the year.
- Federal and State Tax Withheld: Any taxes already withheld by the payer (though this is rare for 1099-NEC).
The W-2 form is used by employers to report an employee’s annual wages and the amount of taxes withheld from their paycheck. If you’re an employee, you should receive this form from your employer.
Key Information on the W-2:
- Employer’s and Employee’s Information: Names, addresses, and identification numbers.
- Wages, Tips, Other Compensation: Your total earnings.
- Tax Information: Federal and state taxes withheld, Social Security and Medicare taxes withheld.
Here’s what to do if you notice error an or haven’t received your form:
- Contact the Issuer: Reach out to the employer or client who issued the form. Explain the error clearly.
- Request a Corrected Form: They should issue a corrected form, known as W-2c or 1099-NEC corrected.
- File Your Taxes with the Correct Information: Use the corrected form to file your taxes.
- Contact the Issuer: If you haven’t received your W-2 or 1099-NEC by early February, contact your employer or client. They may need to resend it or provide electronic access.
- Contact the IRS: If you still don’t receive your form by mid-February, call the IRS at 1-800-829-1040. Be ready to provide your personal information, employer’s or payer’s details, and an estimate of your wages and federal income tax withheld.
- File on Time: You may use Form 4852 as a substitute for the W-2 or 1099-NEC if you must file your taxes and still don’t have the form. Estimate your income and withholding as accurately as possible.