Taxes
How to File 1099 and W-2 Forms Together
Whether it’s to make extra money, pursue an interest, or both, 26% of people in the US say they take on work outside their primary job (up from 22% in 2021). That means if you find yourself having to file a W-2 form together with a couple of 1099s, you’re not alone.
Fortunately, you can file both W-2 and 1099 income on the same tax return. This article walks you through the basics, but you should always chat with a tax professional for personalized advice.
Key Takeaways
- A W-2 is issued to employees. It shows wages, salary, and tips paid, plus income tax, Social Security, and Medicare withholdings.
- A 1099 is issued to contractors. It shows the total amount paid to the contractor in that year. Taxes are not withheld.
- If you have both, you’ll need to fill out form 1040, plus Schedule C.
W-2 vs 1099: What’s the difference?
A W-2 is issued to an employee. That means you were officially hired by the company, may be eligible for benefits (if offered), have certain labor protections (like disability leave), and are likely provided with equipment to do your job.
When you get paid, you receive a paystub that shows your total wages, along with withheld benefits (health insurance premiums or retirement plan contributions), and taxes (including income tax for federal and state, as well as Social Security and Medicare). Your employer also covers a portion of your Social Security and Medicare taxes.
A 1099 is issued to a contractor. That means you’re engaged to provide a service to a company, but are not eligible for benefits or any typical protections full-time employees get. You don’t get a paystub when you receive payment, just the lump sum for the amount you receive — you’ll need to pay income taxes and Social Security and Medicare payments yourself.
W-2
1099
- Sent to employees
- Reports wages, bonuses, tips, and tax withholdings
- Must be issued to all employees, no matter hours worked or wages earned
- Sent to independent contractors
- Reports total compensation paid to the contractor
- Must be issued if the payments exceed $600 for the year
Filing both W-2 and 1099 income
While you can go through the tax forms on your own, it's always a good idea to talk to an accountant, since your tax return is inherently going to be a little complicated. Here are the steps:
- Enter your W-2 income on line 1a of your 1040 form.
- Fill out a Schedule C form — this is where you will report all of your 1099 income, business expenses, and claim any deductions.
- Fill out a Schedule SE which helps you report self-employment taxes. As a self-employed person, you have to pay the full portion of Social Security and Medicare payments.
- Complete your 1040 with tax information from your W-2 and Schedule C (lines 8-33).
If you’re itemizing deductions, have a partnership LLC, or capital gains income, you may need to fill out additional schedules.
Benefits of filing a W-2 and a 1099 together
While doing more paperwork is no fun, filing both a W-2 and a 1099 does come with some bright spots.
Namely, having self-employment income unlocks tax deductions unavailable to most employees. That includes things like business mileage, home office expenses, and most tools and supplies considered ordinary in your line of work, as well as healthcare premiums if you buy your own health insurance (not provided by your W-2 employer).
If you’re planning to claim some of these tax deductions, make sure to document your expenses by keeping receipts and invoices. And if you drive for your side-hustle, track your mileage! You can deduct mileage related to your contractor work, including site visits, client meetings, and supply runs.
The easiest way to keep track of these miles is with an app, since it catches all the details (locations, dates, addresses, and total miles) automatically. An app like MileIQ can even compile mileage reports for you and lets you send it to your accountant right from your phone.
