W-4 vs. W-9: What’s the Difference? (With FAQs)

Employees fill out W-4 and W-9 forms, while employers provide W2s. The W-4 form shows how many withholding allowances you claim, plus your tax information. W-9 forms give employers information about workers who are independent contractors. At the end of the year, W-4 employees receive a W-2 form from employers showing how many dollars in taxes were withheld.

You don’t have to be an IRS employee to care about the tax forms employers, employees, and independent contractors have to fill out. Three of the most common tax forms that you may deal with are the W2, W4, and W9 forms. If you’re like most people, you probably wonder what the differences are.

Believe it or not, these three forms have fairly simple purposes. What you should know about your filing status can be a little trickier. Let’s talk about the differences between the three forms and what to expect when you fill out or receive them.

W-9 forms. The difference between Form W-4 and Form W-9 is that Form W-4 is for employees and Form W-9 is for vendors, independent contractors, freelancers and other individuals who receive non-employee compensation from a company.

Ep 42: W-4 vs W-9

What is a W-9?

A W-9, or Request for Taxpayer Identification Number and Certification, is an IRS form you may need to fill out if youre a freelancer, self-employed or do contract work for a company. You would complete this tax form to share your tax information with the employer youre working within this capacity. If the employer pays you more than $600 throughout the tax year, they use your W-9 information to complete a Form 1099-MISC that they send to you with the total amount they paid you. The employer must also send a copy of the 1099-MISC form to the IRS to report their payments.

Form W-9 should include your:

Form W-9 is important because businesses that hire individuals who are not official employees also dont withhold any of the required taxes, like federal taxes or Social Security taxes, for these independent contractors. Instead, the freelancer is responsible for paying these taxes themselves.

What is a W-4?

A W-4, or Employees Withholding Allowance Certificate, is an Internal Revenue Service (IRS) tax form that you must fill out when you start employment at a company. This form informs your employer of your tax obligations so they know how much money they should withhold from your paychecks throughout the year. Its the employees responsibility to fill out this form accurately and completely so the employer can withhold the appropriate amount of taxes, which is usually based on the allowances you have.

While filling out the W-4 form at the beginning of employment, you can choose to withhold more money than required so you have more of a chance of getting a tax refund at the end of the year. If you do not fill out your W-4 correctly or you dont withhold enough taxes throughout the year, you may owe more taxes to the IRS at the end of the year.

W-4 vs. W-9 forms

The difference between Form W-4 and Form W-9 is that Form W-4 is for employees and Form W-9 is for vendors, independent contractors, freelancers and other individuals who receive non-employee compensation from a company. The other difference is that employers use the W-4 as direction for how much taxes to withhold from their employees, but use the W-9 for informational purposes and their own recording.

Frequently asked questions about W-9s

Review these frequently asked questions with answers about Form W-9 to understand more about it:

Who may request that I fill out a Form W-9?

Companies who employ you as a freelancer, independent contractor or vendor, or those that are your paying clients, may ask for you to complete a Form W-9 so they can monitor how much money they pay you for your services. Others may ask for you to fill out a W-9, including financial institutions and giveaway companies. Be sure to double-check the validity of their request so you arent sharing your personal information with those you shouldnt.

Am I subject to backup withholding?

You would know if youre subject to backup withholding because the IRS should send a letter informing you of your mandatory status. Most individuals who are subject to backup withholding failed to report all of their information on a previous tax return.

Should I enter my SSN or EIN on Form W-9?

Whether you should enter your social security number or employer identification number on your W-9 depends on what kind of business you have. If you dont have a business, and you are filing all of your income under your personal taxes, then its likely you dont have an EIN to consider and should use your SSN. If you do have a business, the type of business you have determines which tax identification number you use on Form W-9.

For example, a sole proprietor can use either, while a corporation should use the entitys EIN. However, there are many unique situations and its best to check with a tax professional on which identification number you should use depending on how youve set up your business entity.

Do I have to fill out Form W-9?

Form W-9 isnt always required, although the company youre doing business with may require it as part of their policy because the IRS can fine any business that isnt complying with regulations and requirements. If you refuse to fill out Form W-9, the company youre working with will withhold a certain percentage from your pay, subject to current tax laws, so they can remain in compliance.

How long is a W-9 valid for?

A W-9 doesnt expire, although your relationship with the company or client may. If it does, they probably will not need your tax information any longer, and you shouldnt receive a 1099-MISC from them.

How should I submit Form W-9?

Because Form W-9 contains sensitive and personal information, its best to submit it back to a company securely. Consider mailing your form or delivering it in person. You may also want to use an encryption service to send it if youre transmitting via email.

FAQ

What is the difference between w9 and W4?

When comparing the W-4 vs W-9 forms, the difference is that an employee fills out a W-4 while an independent contractor fills out a W-9. You may elect for Toast to generate forms 1099-NEC which will be shipped directly to contractors. Otherwise, the contractor will be responsible for their own tax filings.

Should I fill out a W4 or w9?

If you are hiring a new employee, you must have that person fill out a W-4 form. If you are hiring an independent contractor, you must have that person complete a W-9 form.

Is it better to be W4 or 1099?

Neither one is better than the other, but rather, each represents an employment situation that has its own benefits and drawbacks. A more direct comparison would be 1099 vs. W-2 forms, as both of these forms involve year-end income statements, whereas a W-4 only involves gathering the information that goes onto a W-2.

What is a W-9 form used for?

Use Form W-9 to provide your correct Taxpayer Identification Number (TIN) to the person who is required to file an information return with the IRS to report, for example: Income paid to you. Real estate transactions. Mortgage interest you paid.

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