Follow the money
Find every dollar of income.
What Dana said
What does each form report?
Tap where each form belongs.
- Form W-2
- Form 1099-NEC
- Form 1099-INT
- Form 1099-G
- Form SSA-1099
Where is the federal tax withheld?
Luis asks how much tax already came out of his pay.
Luis also drives for delivery apps.
The numbers come in.
Shift complete!
- Read the key boxes of a W-2
- Match 1099s to income types
- Report side-gig income
- Know when SE tax applies
See it in the software
Short how-to videos from the Nationwide software. Tap a video to play it here.
Lesson notes
Want the details? Tap a card to open it.
What you will learn
- The main types of income reported on Form 1040
- How to read Form W-2 and the common 1099 forms
- What counts as self-employment income
Wages and Form W-2
Employers report wages on Form W-2. Box 1 shows taxable wages; box 2 shows federal income tax withheld; boxes 3 to 6 show Social Security and Medicare wages and taxes; box 12 codes report items like retirement contributions. Always compare the W-2 with the client’s last pay stub when something looks off.
Other common income
- 1099-NEC: payments to independent contractors (reported on Schedule C).
- 1099-K and 1099-MISC: payment app or platform payments and other income.
- 1099-INT and 1099-DIV: interest and dividends.
- 1099-G: unemployment compensation and state refunds.
- 1099-R and SSA-1099: retirement distributions and Social Security benefits.
Self-employment income
Income from a business or side gig is reported on Schedule C, even if the client did not receive a 1099. Net earnings of $400 or more are also subject to self-employment tax (Schedule SE). Help the client list all income and keep records of business expenses.
Tax year 2025 changes to know
New deductions for qualified tips and qualified overtime pay apply for 2025 through 2028, with income limits, and they require the amounts to be reported by the employer. These are deductions, not exclusions: the income is still reported, and the deduction is taken separately.
Key terms
- Form W-2: Wage and Tax Statement from an employer
- Form 1099-NEC: Nonemployee compensation paid to a contractor
- Schedule C: Profit or Loss from Business
- Self-employment tax: Social Security and Medicare tax for the self-employed
Practice example (fictional)
Luis received a W-2 from his warehouse job and $3,200 from food delivery apps with no 1099. What do you report? The W-2 wages on Form 1040, and the delivery income on Schedule C with his allowable expenses; if net profit is $400 or more, Schedule SE applies.