W-4s, W-2s, and 1099s Explained

Taxes come with paperwork and for most people, the first tax documents they see are the W-4, W-2, and 1099. They’re confusing at first, but once you know what each one does, it makes filing taxes much less stressful.

The W-4 Form: What You Fill Out When You Start a Job

What It Is

• The W-4 tells your employer how much money to withhold from your paycheck for federal taxes.

• You only fill it out when you start a new job, or if your situation changes (marriage, kids, multiple jobs, etc.).

Where People Get Stuck

Step 2: Multiple Jobs or Spouse Works

• This trips people up because it asks you to calculate based on other jobs. Many people skip it, but if you don’t fill it out correctly, you may owe taxes later.

Step 3: Claim Dependents

• If you have children or other dependents, you enter the number here. If you’re young and single with no kids, you usually leave this blank.

Step 4: Other Adjustments (this section is optional but confusing)

• 4a (Other Income): Only fill this in if you expect extra income not from a job (like investments or side gigs).

• 4b (Deductions):If you plan to itemize deductions (mortgage interest, charity, medical expenses), you can reduce withholding here. Most young people just take the standard deduction and skip this.

• 4c (Extra Withholding): If you want extra taxes taken out each paycheck (so you don’t owe later), you can enter an amount.

Who to Ask

• Your employer’s HR or payroll department if you’re unsure how to complete it.

• The IRS has an online withholding calculator you can use to double-check your numbers.

Bottom line: The W-4 doesn’t determine how much you pay in taxes it just affects how much comes out of each paycheck upfront.

The W-2 Form: What Your Employer Sends You in January

What It Is

The W-2 shows exactly how much money you earned and how much tax your employer withheld during the year. You’ll get one for each job you worked at.

Where People Get Stuck

• Box 1 (Wages, tips, other compensation): This is your taxable income, but it might not match the total you actually took home (because deductions like retirement contributions aren’t included here).

• Box 2 (Federal income tax withheld): This is how much your employer sent to the IRS for you.

• Boxes 3–6 (Social Security & Medicare):These are separate from federal income tax. You don’t get this money back it funds retirement and health care programs.

• Boxes 12 & 13: This is where things like retirement contributions, health insurance, or stock options might be listed. Many young people don’t realize these lower their taxable income.

Who to Ask

• If something looks wrong (like your wages or withholdings seem off), ask your employer’s payroll department immediately. They’re required by law to fix mistakes.

Bottom line: Keep every W-2 you get you’ll need them when you file taxes.

The 1099 Form: What You Get If You’re Not an Employee

What It Is

A 1099 reports income you earned outside of a traditional job.

Examples:

• Freelance or gig work (Uber, DoorDash, Upwork, etc.) → 1099-NEC

• Bank interest → 1099-INT

• Investment income → 1099-DIV or 1099-B

Where People Get Stuck

• No taxes withheld: Unlike a W-2, 1099s don’t show any taxes taken out. That means you’re responsible for setting money aside and paying taxes yourself.

• Multiple 1099s: If you freelance for multiple clients, you might get several. You must report them all.

• Thresholds: Even if you don’t get a 1099 (because you earned less than $600), you’re still legally required to report that income. Many young people miss this.

Who to Ask

• If you did work for someone and didn’t get a 1099, ask the company or client’s accounting department.

• A tax preparer or the IRS website can help you figure out how much to set aside for taxes if you’re earning side income regularly.

Bottom line: A 1099 means you’re essentially your own boss for tax purposes and the IRS expects you to handle your own tax payments.

Quick Recap

• W-4: You fill this out when starting a job to tell your employer how much tax to withhold.

• W-2: Your employer sends this at tax time to show how much you earned and how much tax was withheld.

• 1099: You get this when you’re paid outside of a traditional job and no taxes are taken out for you.

Takeaway: These forms are the backbone of your tax paperwork. Once you know which is which, filing your taxes becomes a lot less overwhelming. If you’re ever unsure, your HR/payroll department (for W-4s and W-2s) or the IRS resources (for 1099 income) are the best places to get help.