By Eric Boyum, AAMS®, CKA® a financial advisor with Inspire Advisors
Ah, tax season. The time of year when we’re all either feeling like financial wizards—or wishing we could magically vanish. But don’t worry, I’m here to be your tax guide, your form whisperer, your IRS translator.
Got a W-2 or a 1099 and wondering what these cryptic forms mean? Grab your coffee (or your tax-season stress snack of choice), and let’s dive in—without the panic!
W-2: The Smooth Sailing Employee Form
If the W-2 were a person, it’d be the responsible friend who always has their life together. This form shows up when you’ve got a 9-to-5, part-time gig, or even a seasonal job. It’s the VIP pass to your earnings and deductions.
Here’s the beauty: your employer has already done the hard work. Taxes? Withheld. Social Security? Covered. All you have to do is plug in the numbers and hit submit.
It’s like ordering a pizza, and someone else already paid the bill. You just have to sit back and enjoy the cheesy goodness. Filing taxes with a W-2 is that simple.
Now, let’s talk 1099—the badge of honor for the hustler, the entrepreneur, the “I’ll make my own schedule” go-getter. Whether you’re driving for Uber, creating art for Etsy, or building your empire as a freelancer, the 1099 tells your self-made income story.
But here’s the twist: you are the boss. No taxes withheld. You’re in charge of making Uncle Sam happy—and believe me, he’s got the memory of an elephant when it comes to his share.
You’ve baked a pie for a party. Everyone’s excited to dig in, but Uncle Sam shows up and says, “I’ll take a slice, thanks.” The 1099 is that pie—your pie—and you need to save him a piece before the party starts.
The 1099 isn’t just one form—it’s a whole family, and they all want to be invited to your tax return.
- 1099-NEC: For non-employee compensation—freelancers, gig workers, and side hustlers, this one’s for you!
- 1099-MISC: Covers rental income, royalties, or even prize money (yes, winning that chili cook-off is taxable).
- 1099-INT: Interest income from your bank. Who knew parking your money could cost you?
- 1099-DIV: Dividend income from investments. Because your stocks are doing more crunches than you are.
- 1099-B: Gains or losses from selling investments. Bought GameStop stock in 2021? This is your receipt.
Each form has its quirks, but they all share one goal: helping you keep things kosher with the IRS.
The W-2 is your all-inclusive tax package—think cruise ship where everything’s handled. The 1099? That’s the rugged, DIY adventure. No one’s withholding your taxes, so it’s up to you to plan ahead, track expenses, and keep Uncle Sam happy.
If you’re rocking a 1099, consider making quarterly tax payments. It’s like prepaying for peace of mind when April rolls around.
Whether you’re team W-2, team 1099, or living in both worlds, tax season doesn’t have to feel like climbing Everest. Understanding these forms is the first step to mastering your money—and maybe keeping more of it.
If you found this post helpful, share it with a friend who could use a tax tip. And don’t forget to subscribe to my YouTube channel www.youtube.com/@EricBoyumInspireAdvisors for more insights to make tax time a breeze.
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