W-2 vs 1099: What It Means for Your Pay
W-2 employees have taxes withheld and get pay stubs; 1099 contractors are paid in full and document their own income.
- ✓W-2 employee. Taxes withheld each period; employer issues pay stubs and a year-end W-2.
- ✓1099 contractor. Paid in full, no withholding; responsible for self-employment tax and estimates.
- ✓Documentation gap. Contractors have no employer stub, so they document income themselves.
- ✓Both need proof. Landlords and lenders ask both for income documentation, just in different forms.
COMPANY NAME
(555) 555-5555
COMPANY ADDRESS
CITY, STATE ZIP
Earnings Statement
EMPLOYEE NAME
(555) 555-5555
EMPLOYEE ADDRESS
CITY, STATE ZIP
and InformationThis PeriodYear To Date
The difference between W-2 and 1099 comes down to how you're classified and how taxes are handled. A W-2 employee has federal, state, Social Security, and Medicare taxes withheld from each paycheck by the employer, who issues a pay stub every period.
A 1099 contractor is paid the full amount with nothing withheld, and is responsible for their own self-employment tax and quarterly estimates. Contractors don't get an employer pay stub — but they still need to document income for apartments, loans, and their own records, which is where a self-generated earnings statement helps.
Frequently asked questions
- Do 1099 contractors get pay stubs?
- Not from a payer — no taxes are withheld. Contractors document their own income with an earnings statement, invoices, or bank records.
- Can I make a paystub as a 1099 contractor?
- Yes. You can create an accurate earnings statement from income you actually received to use as proof of income.
- Which pays more, W-2 or 1099?
- A 1099 rate is often higher gross, but contractors pay both halves of Social Security and Medicare and get no employer benefits, so net can be similar.
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