There are a lot of forms and paperwork associated with regular tax filings, both for businesses and individuals, but getting the right forms the first time is essential to a smooth submission process. Different kinds of work will result in various kinds of paperwork, including 1099 and W2 forms for various employees, depending on the services rendered. Once a company knows the work status of an employee, following up with the correct forms should be a snap. Knowing the difference can save everyone involved a lot of headaches by doing everything right from the start. Form W2 This is the paper most people are familiar with, and it’s the one regular employees should receive annually for standard work. It will include information about state and federal withholding, medical taxes and Medicare subtractions and other payroll deductions that were taken during the year. Some employees may request a 1099 instead of a W2, but they should know that no further taxes will be deducted for them in that case. They would be responsible for that on their own upon filing their individual tax returns. Form 1099 Usually given to contract and freelance workers, not all companies will issue one to someone who was employed for a single job. People with stock investments and similar investments will probably be familiar with these papers as well. Anything under $600 does not require documentation like this, according to the IRS, nor do investment royalties under $10. Workers receiving these forms should be mindful of withholdings on these kinds of jobs – namely, that there are none. Businesses need to properly classify workers at the time of hiring to avoid fines from situations like these. Both forms Some workers will receive both of these papers from a single employer, usually because they rendered services in more than one capacity, although this is a rare occurrence and is not looked upon favorably by the IRS. Standard wages will be recorded on a W2, but a company will issue a 1099 for contract work carried out, even if it was during salaried hours. In some instances, multiple 1099s may be issued by a single entity if more than one job was completed for the company during that year, and that is the method with which the business chooses to handle it. However, it is preferable to consolidate all jobs into one 1099.