W-9 vs. 1099 Tax Forms: What Is the Difference?

Both 1099 and W9 tax forms are used by employers when hiring independent contractors. These forms are often seen as the same thing, but they have differences that are important to understand.

If you are a small business employer looking to hire contractors, you may be wondering what the differences are between 1099 vs. W9. Fortunately, we are going to go over the differences between a 1099 form and a W9 form to help you gain a better understanding. Read on to learn the form differences and tax implications for 1099 vs. W9.

W-9s and 1099s are tax forms that businesses need when working with independent contractors. Form W-9 is what an independent contractor fills out and provides to the employer. Form 1099 has details on the wages an employer pays to an independent contractor. This form is filed with the IRS and state tax authorities.

What are 1099 and W9 Tax Forms? | Track1099

Q&A: Do I need a W-9?

You should only need to fill out a W-9 if your employer or financial institution asks for one so they have the correct information to process your payment and tax documentation. This form is only for institutional documentation purposes, not to be sent to the IRS. If any other institutions or individuals ask for a W-9, you should proceed with caution and diligently research who they are and what they want with your information.

Here are the most common situations in which you may need to fill out a W-9 form:

Tax deadline for a W-9

Historically, the deadline for filing your taxes is April 15th. Since W-9s do not go directly to the IRS, there is not necessarily a deadline to file the W-9, specifically. However, the tax documents informed by the W-9 should be submitted before the federal deadline and the W-9 should be completed before you start work with an employer.

What is a W-9?

A W-9 is a form used by the Internal Revenue Service (IRS) and is also known as the Request for Taxpayer Identification Number and Certification. This form is provided to employees, contractors and freelancers by employers. The purpose of this form is to collect accurate tax information from the employee so that the employer can properly report income payments.

Within the W-9, you will be required to fill in information such as your:

The W-9 will then get returned to the employer, with your signature on the bottom. The employer will keep a copy of the W-9 on file, should the IRS audit them, but they do not need to submit the W-9 to the IRS. The purpose of the W-9 is simply so the employer has the correct information in regards to employees they are working with when it comes time to submit other forms during tax season.

Employers should give contractors and freelancers a W-9 to fill out once they begin working. That way, if the freelancer or contractor earns more than $600 (the threshold for submitting a 1099 form at the end of the year), theyll already have all the information they need. You can find the most recent version of the W-9 form on the IRS website.

Here are some key differences between the W-9 and 1099 forms:

What is a 1099?

A 1099 is a document or a series of documents used by the IRS to track different types of income, other than salary, received from an employer. At the end of each year, it is the responsibility of the person paying to provide a completed 1099 form to the person they pay. For example, if a business hires a freelancer, they will fill out one of the 1099 documents and send it to the freelancer by January 31.

The different types of 1099 documents include:

1099-MISC

This document is for anyone who has hired a contractor or freelancer and who paid them over $600. Employers are required to fill out and submit a 1099-MISC form for each independent contractor they work with whom meets the income threshold. Employers will send a copy to both the independent contractor and the IRS. Independent contractors should expect to receive a copy of this form from each entity they provided services to during that year.

1099-INT

The 1099-INT typically comes from banks where you have interest-bearing accounts. The interest you earn on investments is taxable, and therefore must be reported to the IRS.

1099-DIV

Similar to the 1099-INT, the 1099-DIV reports on your dividends from stock investments. When a corporation makes a payment directly to shareholders in the form of a dividend, this income gets reported on the 1099-DIV. The 1099-DIV form will be provided to you by the investment firm.

1099-C

If you have a portion of your debt canceled, this cancellation is treated as income by the federal government. For instance, if a credit card company decides that you no longer need to pay back your balance, they will send you a 1099-C form to document the amount of debt you have had canceled.

1099-G

The 1099-G form is used by government agencies to report any income you have received from them. This could include unemployment benefits or income tax refunds. Anyone who receives unemployment benefits during the year should receive a 1099-G from the government and report the income on their tax returns.

1099-R

If you withdraw money from your IRA, this amount is taxed as income. Individuals will receive a 1099-R at the end of the year that reports the total amount of withdrawals you made during the year. The form will also typically show the taxable amount on the form itself.

1099-K

The 1099-K form is typically used when you receive payments via debit, credit or store-valued cards. This is common for online retailers who accept card payments online. You will receive a 1099-K from third-party processors if you completed over $20,000 in sales and if there were more than 200 individual transactions.

1099-S

A 1099-S form is used to report income gained from real estate transactions. This could include the selling of property or rental income. It is the sellers responsibility to track and submit all relevant information regarding the sale to the IRS.

Who should fill out a 1099?

Both companies and individuals may need to fill out a 1099. For example, employers will send out W-9 forms when they first begin working with an independent contractor to collect their tax information, but they will also complete a 1099 at the end of the year to record the total payments they made to that contractor.

Tax deadline for a 1099

The 1099 form must be completed and filed with the IRS by January 31st whether you file by electronic or paper mail.

When to use a W-9 vs. a 1099

The form you need to use will largely depend on who is requesting the information. If you are an independent contractor and the company you are working with needs information about you, then you need to submit a W-9. If it is the federal government requesting the information, then youll need one of the 1099 forms to report on your various income sources. For employers, it is both the contractors and the federal government requesting information, in which case youll need to submit two copies of a 1099 form.

FAQ

Do I need both w9 and 1099?

Yes, a W-9 is used to collect information from independent contractors and a 1099 is used to record how much they’ve paid that independent contractor. You need both to file your taxes.

Who needs to fill out a w9?

Employers who work with independent contractors must provide them with a W-9 form to fill out before starting work. There are specific criteria for who is classified as an “independent contractor” and will need to fill out a W-9 form.

Who gets a 1099 based on w9?

What is Form W-9? A W-9 is sent by a client to a contractor to collect their contact information and tax number. Then, the client uses that info to fill out a Form 1099. It’s the client’s duty, as someone who is contracting work, to send the contractor Form W-9 before the end of the financial year.

Does w9 mean self-employed?

W-9 forms are for self-employed workers like freelancers, independent contractors and consultants. You need to use it if you have earned over $600 in that year without being hired as an employee. If your employer sends you a W-9 instead of a W-4, the company has likely classified you as an independent contractor.

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