W-2 vs 1099: Employee or Contractor?
Key differences between Form W-2 wages and Form 1099 nonemployee compensation, and why classification matters.
Form W-2
Employers file Form W-2 for employees. It reports wages and taxes withheld. Employees generally have income tax and FICA withheld during the year.
Form 1099-NEC
Businesses often file Form 1099-NEC for nonemployee compensation paid to independent contractors when thresholds and rules are met. Contractors typically pay income tax and self-employment tax themselves.
Why classification matters
Worker classification affects tax withholding, unemployment insurance, benefits eligibility, and labor-law coverage. Misclassification can create tax and legal exposure for the business.
Pay stubs and contractors
Employees usually receive pay stubs. Contractors more often receive invoices and 1099s. Some platforms still generate stub-style documents for proof-of-income needs — that does not by itself change tax classification.
Frequently asked questions
Can someone get both a W-2 and a 1099 from the same company?
Yes, if they performed separate roles (employee wages and distinct contractor work), documented correctly. Get advice for edge cases.
Which form do I need for a mortgage?
Lenders often ask for recent pay stubs and W-2s for employees, or 1099s and tax returns for self-employed borrowers. Ask your lender.
Sources
See also our full sources list, methodology, and editorial standards. This page is educational and not tax, legal, or accounting advice.
Put the numbers on a real stub
Preview federal, FICA, and state amounts with your own pay details.