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Glossary · Payroll & compliance

W-2 vs 1099

The difference between employees, who get taxes withheld and protections, and independent contractors.

Also called:Employee vs independent contractorW-21099

Definition

W-2 workers are employees. Their employer withholds income tax, pays the employer share of FICA and unemployment taxes, carries workers' compensation and follows wage and hour rules like minimum wage and overtime. 1099 workers are independent contractors who run their own business and handle their own taxes. The label on the paperwork does not decide it; the IRS, the Department of Labor and states look at how much control the company has over the work. Crew Staffing Pros employs its crews on W-2.

This definition is general information, not legal, tax or financial advice. Rules vary by state and change over time.

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