Receiving tax documents can feel like deciphering a secret code.

Two of the most common forms, the W-2 and the 1099, look different and, more importantly, mean very different things for your tax return. Understanding this distinction is the first step to filing your taxes correctly and avoiding a surprise bill from the IRS.

Wait, what is a W-2?

A W-2, the "Wage and Tax Statement," is what you receive from an employer. It details your annual wages and the amount of taxes withheld from your paycheck throughout the year...

• Key takeaway: Taxes are already partially paid.

• You'll use this for: Reporting your income on your Form 1040.

Then, what about 1099?

A 1099 form, most commonly the 1099-NEC, is for independent contractors, freelancers, and self-employed individuals. It reports the income a company paid you...

• Key takeaway: No taxes have been withheld. You are responsible for paying them all.

• You'll use this for: Reporting business income on a Schedule C, which attaches to your Form 1040.

So, the Critical Difference: Self-Employment Tax

This is the biggest shock for new 1099 recipients.

With a W-2, your employer splits the cost of Social Security and Medicare taxes with you. As a self-employed individual, you're responsible for the full amount, known as the Self-Employment (SE) tax...

Deduction Opportunities

The silver lining of being self-employed? Deductions! While W-2 employees have limited options, freelancers can deduct legitimate business expenses...

• Home office

• Software and subscriptions

• Mileage

• Professional development

Whether you have a W-2, a 1099, or both, understanding your forms is key. Don't let the complexity of self-employment tax and deductions overwhelm you.

FINVO specializes in 1099 & Freelancer Tax Filing, ensuring you claim every deduction you deserve while staying compliant. Let us handle the paperwork so you can focus on your business.