What are 1099 and W9 Tax Forms? | Track1099
Q&A: Do I need a W-9?
In order for your employer or financial institution to process your payment and tax documentation correctly, you should only be required to complete a W-9 if they request it. This form should not be sent to the IRS; it should only be used for institutional documentation. If any other organizations or people ask you for a W-9, proceed with caution and thoroughly research who they are and what they want with your information before giving it to them.
The following are the scenarios in which you might have to complete a W-9 form:
Tax deadline for a W-9
Historically, the deadline for filing your taxes is April 15th. There isn’t always a deadline to file the W-9 because they don’t go directly to the IRS. However, the W-9 should be completed before you begin employment with an employer and the tax documents informed by it should be submitted before the federal deadline.
What is a W-9?
The Internal Revenue Service (IRS) uses a form known as a W-9, also known as a request for a taxpayer identification number and certification. Employers provide this form to their employees, independent contractors, and freelancers. This form’s objective is to obtain accurate tax information from the employee so that the employer can report employee income payments in a legal and proper manner.
You will have to complete the W-9 by providing details like your:
Following that, the W-9 will be returned to the employer with your signature on it. Should the IRS conduct an audit, the employer will keep a copy of the W-9 on file, but they are not required to send the W-9 to the IRS. When it comes time to submit other forms during tax season, the W-9’s sole purpose is to ensure that the employer has the correct information regarding the employees they are working with.
Contractors and freelancers should be provided with a W-9 form by their employers once they start working. The freelancer or contractor will then have all the information they require if their annual income exceeds $600, the amount that must be reported on a 1099 form at the end of the year. The IRS website has the most recent W-9 form available for download.
The following are some crucial variations between the W-9 and 1099 forms:
What is a 1099?
The IRS uses a document or set of documents known as 1099s to keep track of various forms of income received from employers that are not salary. The payer must deliver a completed 1099 form to the person they paid at the end of each calendar year. For instance, if a company employs a freelancer, they must complete and send one of the 1099 forms to the freelancer by January 31.
The different types of 1099 documents include:
1099-MISC
Anyone who has employed a contractor or freelancer and paid them more than $600 should read this document. Employers must complete and submit a 1099-MISC form for every independent contractor they hire who earns the required amount. Employers will deliver a copy to the IRS and the independent contractor. Independent contractors should anticipate getting a copy of this form from every organization they worked with in that year.
1099-INT
Usually, banks where you have interest-bearing accounts provide the 1099-INT. Your investment interest is taxable, so you must file a tax return with the IRS.
1099-DIV
The 1099-DIV reports your dividends from stock investments, much like the 1099-INT does. The 1099-DIV is used to report income that corporations pay directly to shareholders in the form of dividends. The investment company will give you the 1099-DIV form.
1099-C
The federal government will consider the cancellation of a portion of your debt as income. For instance, if a credit card company determines that you are no longer required to pay back your balance, they will send you a 1099-C form to show how much of your debt has been forgiven.
1099-G
Government agencies use the 1099-G form to report any income you have received from them. This could include unemployment benefits or income tax refunds. Anyone who receives unemployment benefits throughout the year must report the income on their tax returns and receive a 1099-G from the government.
1099-R
If you take a distribution from your IRA, the money is subject to income tax. At the end of the year, individuals will receive a 1099-R that details all of the withdrawals they made. The taxable amount will typically be displayed on the form itself in addition.
1099-K
When you receive payments using debit, credit, or store-valued cards, the 1099-K form is typically used. This occurs frequently with online merchants who accept card payments. If you completed over $20,000 in sales and if there were more than 200 distinct transactions, third-party processors will send you a 1099-K.
1099-S
To report income from real estate transactions, use the 1099-S form. This could include the selling of property or rental income. It is the sellers’ duty to keep track of and send the IRS all pertinent data regarding the sale.
Who should fill out a 1099?
Companies and individuals might both need to complete a 1099. For instance, employers will send out W-9 forms to independent contractors to collect their tax information when they first start working with them, but they will also complete a 1099 form at the end of the year to record the total amount of payments they made to that contractor.
Tax deadline for a 1099
Whether you file electronically or by paper mail, the 1099 form needs to be finished and submitted to the IRS by January 31.
When to use a W-9 vs. a 1099
The person requesting the information will determine which form you should use in large part. You must submit a W-9 if you are an independent contractor and the business you are working with needs information about you. If the federal government is asking for the information, you will need to report your various income sources on one of the 1099 forms. When the federal government and contractors both ask for information from employers, you must submit two copies of a 1099 form.
FAQ
Do you need a w9 for a 1099?
Yes, a W-9 is required to obtain information from independent contractors, and a 1099 is required to document the amount paid to that independent contractor. You need both to file your taxes.
Who needs to fill out a w9?
Employers using independent contractors must give them a W-9 form to complete before they begin working. Who qualifies as an “independent contractor” and must complete a W-9 form must meet a number of requirements.
Who gets a 1099 based on w9?
What is Form W-9? A W-9 is a document that clients send to contractors to obtain their contact details and tax identification number. The client uses that information to complete a Form 1099 after that. The client is responsible for sending the contractor Form W-9 before the end of the fiscal year as someone who contracts for work.
What is Form W-9 used for?
Use Form W-9 to give the person who must file an information return with the IRS your correct Taxpayer Identification Number (TIN), for instance: Income paid to you. Real estate transactions. Mortgage interest you paid.
