Although both of these forms are called information returns, they serve different functions.
Employers use Form W-2, Wage and Tax Statement, to:
- Report wages, tips, and other compensation paid to an employee.
- Report the employee’s income and social security taxes withheld, and other information.
- Report wage and withholding information to the employee and the Social Security Administration. The Social Security Administration shares the information with the Internal Revenue Service.
Payers use Form 1099-MISC, Miscellaneous Income, to:
- Report payments made in the course of a trade or business to a person who is not an employee or to an unincorporated business.
- Report payments of $10 or more in gross royalties or $600 or more in rents or compensation. Report payment information to the IRS and the person or business that received the payment.
- Tax Topic 752 – Forms W-2 and W-3 – Where, When, and How to File
- General Instructions for Forms W-2 and W-3
- Instructions for Form 1099-MISC, Miscellaneous Income