Confused About 1099-K, 1099-NEC, and W-2s? Here’s What You Really Need to Know

CPA for YouTubers, Online Sellers, Creators & Medical Professionals in Los Angeles

If you’re a YouTuber, Shopify store owner, Amazon seller, TikToker, actor, or even a dentist with side income, you’ve probably asked:
“Which tax forms should I expect—and what do I do with them?”

As CPAs for creators, online commerce professionals, and dental practices, we see this confusion every year. The truth is, different income sources trigger different tax forms—and understanding the difference could save you from unexpected IRS notices or penalties.

1099-K, 1099-NEC, and W-2: What’s the Difference?

1099-K:

This form reports payment transactions received through third-party platforms like PayPal, Stripe, or Shopify.

Expect it if:

• You run a Shopify store or Amazon business
• You receive payments via third-party processors like PayPal, Venmo (business accounts), or Zelle

Real-Life Example:
What would you do if you earned over $20,000 through product sales processed via PayPal—and then received a 1099-K from PayPal, thinking it was extra income?
In reality, it was income you had already accounted for through your Shopify store.
Do you know how to avoid double-reporting and overpaying taxes?

1099-NEC (Nonemployee Compensation):

This form reports income paid to freelancers, creators, or contractors—anyone not classified as an employee.

Expect it if:

• You’re a YouTuber or TikToker paid by brands for sponsored content
• You’re a filmmaker or actor doing freelance gigs
• You do marketing or consulting for businesses

Real-Life Example:
What would you do if you were paid $15,000 by an indie production company for directing a commercial—and received a 1099-NEC instead of a W-2?
Do you know how to deduct expenses like gear, travel, and meals against that income?

W-2:

This is the traditional employee tax form. It’s issued when you’re on payroll, and taxes are withheld from your paycheck.

Expect it if:

• You work full- or part-time at a clinic, agency, or business
• You’re a dentist employed by a larger dental group
• You’re hired as staff on a commercial or film set

Real-Life Example:
What would you do if you received both a W-2 from your part-time clinic job and a 1099-NEC for consulting work?
Do you know how to file both correctly—and reduce your overall tax bill using industry-specific deductions?

Common Mistakes to Avoid

• Reporting income twice (especially with 1099-Ks and bookkeeping systems like Shopify)
• Ignoring a 1099-NEC just because you didn’t receive a physical copy—you’re still responsible for reporting it
• Not deducting expenses tied to 1099 income (software, equipment, mileage, home office, etc.)

What Should You Do?

• Track who pays you, how, and through what platform
• Maintain clean bookkeeping so you don’t get overwhelmed at tax time
• Work with a CPA for Online Commerce, Creators, or Medical Professionals who understands the differences between these forms and can help you avoid costly mistakes

Still Not Sure What Forms to Expect—or How to Report Them?

At Velin & Associates, Inc, we help YouTubers, TikTokers, Shopify store owners, online commerce sellers, filmmakers, actors, and dentists across Los Angeles stay compliant and save money with smart tax planning.

For more information about our services, please visit our website or contact us below.

Velin & Associates, Inc

8159 Santa Monica Blvd STE 198/200 West Hollywood, CA 90046
323-902-1000
dmitriy@losangelescpa.org