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Difference between W-2 (Wages) and 1099

A W-2 form is an earned income statement containing a detailed set of information, including your total income (wages, tips, commission) and the amount of federal, state and social security taxes that have been withheld. Your W-2 is the most important document you need for filing your taxes. Working on a 1099 basis actually means that you are working as a true Independent Contractor under the IRS rules. You work on a 1099 basis when you are self employed such as a sole proprietor or as a corporation. Your clients will report the monies they pay you to the IRS on a 1099 form.
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Dave Lynch   wrote on : Thu Dec 27th,2012   Back to Article

This is my first year in the consulting business in which I've had a profit. I was wondering if the 1099 "amount" for my consulting fee only includes the amount sent in a calendar year. If money is not sent till 2013 (e.g. work accomplished in Dec 2012 but money for work accomplished is not received till Feb 2013) - will that be a 2013 "income" vice "2012".

Reply :
Dear Dave Lynch:

Thanks for choosing for your business needs. If, you have chosen accrual accounting method then it has to be reported for year-2012 and if you have adopted cash accounting method then you can report it when you actually received.

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