I had a DOCTOR today ask me where her W-2 and most recent paycheck were from the nfp I work with.
I responded with “Your 1099-NEC was sent on or before 1/31/2022 and you most recent payment was sent on Wednesday”.
Her response? “Thanks. I will look again for my W-2″…
Now this is not to shame, but to exemplify one of the biggest issues in our society.
This a highly educated woman who had spent years and six figures on her education, but has not taken the time to learn the basics of entrepreneurship.
We have all heard that ignorance is expensive.
Ignorance also negates the letters after your name.
Whether you are employed by someone else or self-employed, please take the time to learn the basic tax forms associated with your profession.
In the USA, you have:
– W-2: end of year statement used to complete your 1040 Federal income tax return and State income tax return.
– W-4: the form you fill out when you first start employment (and hopefully after any major life events) that determines how much income tax is withheld from each paycheck.
– 1099-MISC: end of year tax statement for attorneys and landlords paid over $600 during the year.
– 1099-NEC: end of year tax statement for all other independent contractors paid over $600 during the year.
– W-9: the form you should be asked for when you first start working with a company as an independent contractor.
There are other forms, but these are the basics.
As a small business owner or entrepreneur you will want to obtain a W-9 from any vendor that is not a C or S Corp, preferably as soon as you decide to work with them. That way you will not be scrambling in mid-January.
If you have any questions, please ask in the comments, or ask your tax professional. But, please, ask… and continue to ask until you understand.