When you first begin working for a new employer there are a lot of things to learn. Not the least of these things is how, when, and how much you will be paid. For most people, the "how" is fairly straight forward. Generally speaking, most people receive a paycheck from their employer that is net of any taxes owed to the Federal and State government. This means that, if this is your only income and your tax withholdings are correct, you shouldn't owe any further taxes on your income at the end of the year. The IRS categorizes this type of compensation arrangement as "W2 income", named after the tax form W2 that the employee receives at the end of the year stating their income and taxes that were withheld. While this is a very common employer arrangement, not every employer chooses to compensate their employees in this way. Some employers choose to pay their employees the full amount of their agreed upon compensation without withholding anything for taxes. This is called "1099 income".
Read our free eBook to learn more about what it means to be a 1099 compensated employee!