1099 Form vs W 9 Difference: Do I Need a W-9 to Issue a 1099? (2024)

Is a W-9 the Same as a 1099 Form: Shorter Version

The W-9 and 1099 forms are distant relatives in the tax paperwork family. They're related, but each has its purpose. Below, we've dwelled upon the W-9 or 1099 comparison in detail and more straightforward terms:

W-9 Form

  • The W-9 form is a way for a person or business to gather your taxpayer identification number (TIN), usually your social security number or employer identification number (EIN).
  • When you're asked to fill out a W-9 or W-9S Form, it's because someone needs your information for their records, typically if they plan to report payments made to you to the IRS.
  • It's not about money changing hands. It's just setting the stage for future transactions.
  • You don't send the W-9 to the IRS. You keep it for your records and provide it to the requester.

1099 Form

  • Consider the 1099 form the receipt you get after purchasing. It's proof that you've received income from a particular source.
  • If you were paid $600 or more by someone during the year for services rendered, they would most likely fill out and send you a 1099 form.
  • The person or business that paid you reports this income to the IRS using the information you provided on your W-9.
  • You have to use the info from 1099 when you file your taxes so that they know about the income you've received, and then you should keep the form for your records.

The W-9 sets the stage, and the 1099 seals the deal by documenting the transaction for tax purposes.

What Is a W-9 Form

Let's shine some light on the W-9 form. Find more details below.

1099 Form vs W 9 Difference: Do I Need a W-9 to Issue a 1099? (1)

  1. What it is
  • The W-9 form is like introducing yourself to the taxman. It's where you spill the beans on who you are and how the IRS can reach you.
  • Ever had someone ask for your social security number or employer identification number? Well, chances are they may ask for it on a W-9 form.
  • It's not just for individuals. Businesses also fill out the W-9 form for 1099 employees to provide their taxpayer info.
  • The main purpose? So that whoever is paying you knows how to report those payments to the IRS.
  1. Why it matters
  • If you're doing any kind of work that results in income, expect to fill out a W-9 at some point.
  • Without a completed W-9, you might find yourself chasing after your hard-earned cash come tax time.
  • Plus, it's a tax requirement, so you’d better not ignore it. The taxman has a way of finding out!

Long story short, W-9 for contractors might seem like just another piece of paper, but it's your ticket to keeping the taxman happy and your finances in order.

What Is a 1099-NEC Form

Below, we've outlined the details of Form 1099-NEC:

1099 Form vs W 9 Difference: Do I Need a W-9 to Issue a 1099? (2)

  • The 1099-NEC is an official document utilized to report non-employee compensation. NEC stands for “Non-Employee Compensation,” which means money you made outside of traditional employment.
  • This file is the official record of money earned from freelancing or contracting gigs. Think of it as your tax receipt for side hustle success.
  • If you earned $600 or more from a client's payments during the year, expect a 1099-NEC to land in your mailbox when tax time approaches.
  • The doc details the total compensation paid to you for your services and thus makes sure that both you and the IRS are informed about your earnings.

Who fills it out:

  • It's the employer's job to handle the 1099-NEC paperwork.
  • As for you, the recipient of those earnings, just sit tight and wait for your tax mail to arrive.

Summing this section up, the 1099-NEC form is a necessary document for accurately reporting income earned outside of traditional employment arrangements.

Fillable 1099-NEC

What Is a 1099-MISC Form

1099 Form vs W 9 Difference: Do I Need a W-9 to Issue a 1099? (3)

The Form 1099-MISC, now referred to as “Miscellaneous Information,” is a document from the IRS used to report various types of miscellaneous income, for example, rents, prizes, payments to attorneys, and healthcare payments.

Before 2020, it was a “go-to” for reporting income from side gigs and freelancing. But then, in 2020, the IRS introduced the 1099-NEC for non-employee compensation. So, while the 1099-MISC used to be an all-in-one tool, now it's more like the old, reliable form, handling everything except for freelancers and contractors.

Wondering who has to fill it out? Well, if you pay out at least $10 in royalties or broker payments, or dish out $600 or more in certain categories in a year, this file is for you.

What's included in those categories? We’ve provided the details below:

  • We're talking about rent payments, prizes, and awards (still dreaming of that jackpot?), as well as other types of income that don't fit neatly into a box.
  • There's even more: it also covers things like medical payments made during business matters, crop insurance payouts, and even cash for fish (yes, you’ve read that right!).
  • Also, don't forget about those direct sales of consumer products. If you sling goods to someone for resale, and it adds up to $5,000 or more — it's 1099-MISC time!

When is the deadline? Payers need to send this form to recipients by Feb. 1 and file it with the IRS by March 1 (or March 31 if they go digital).

Whether you're a fisherman, a landlord, or just a lucky prize winner, keep an eye out for the 1099-MISC. It's your ticket to keeping Uncle Sam happy and your finances in check!

Fillable 1099-MISC

W-9 Versus 1099: Compare Forms

Let's wrap up our guide with an ultimate comparison between the W-9 and 1099.

1. Main purpose

  • W-9 Form. W-9 is a sort of friendly introduction. Its main purpose is to collect taxpayer information from individuals or businesses. It's like sharing your contact info before plunging into a transaction.
  • 1099 Form. This one, on the other hand, is the aftermath. Its main purpose is to report income earned by individuals, e.g. freelancers or contractors, to the IRS. It's the official record of money changing hands.

2. Who should fill it out

  • W-9 Form. Anyone about to start a business transaction should fill out a W-9. Whether you're a contractor, vendor, or freelancer, this form is for you. It's like handing over your business card before sealing the deal.
  • 1099 Form. If you paid someone $600 or more for services rendered during a year, you're responsible for filling out a 1099. It's basically letting the IRS know whom exactly you paid and how much.

3. Where to file

  • W-9 Form. You don't file the W-9 with the IRS. Instead, you keep it for your records and provide it to the requester when needed.
  • 1099 Form. This one is filed both with the recipient and the IRS. You send a copy to the person you paid and another to the IRS to keep them updated.

Before we finish up, let's remember the wise words of the Chinese philosopher Confucius. He used to say, “Knowledge without practice is useless. Practice without knowledge is dangerous.” Now, let's transfer this idea to our topic of sorting out the W-9 and 1099 forms: if you know exactly how these docs work, you are guaranteed to keep your tax profile strong, practice-wise.

Though the W-9 and 1099 forms might seem like just another set of bureaucratic hoops to jump through, we recommend that you treat them as the nuts and bolts holding the tax system together (which they actually are). Whether you're starting a business relationship, working on your tax reporting, or getting your taxes in order, knowing the difference between them is vital for staying on the IRS's good lists.

Last but not least, if you're wondering, “Do I need a W-9 to issue a 1099?”, the answer is a definite “yes.” The W-9 form lays the groundwork for issuing a 1099 and ensures everything is above the board when the tax season arrives. With this know-how under your belt, you are all set for the tax season!

W-9 For LLC

1099 Form vs W 9 Difference: Do I Need a W-9 to Issue a 1099? (2024)


1099 Form vs W 9 Difference: Do I Need a W-9 to Issue a 1099? ›

The difference between 1099 vs W-9 is a straightforward one: the contractor fills out the W-9 form to provide information to the business they work for, and that business later reports the contractor's yearly earnings on the 1099 form.

Do I need a W9 to issue a 1099? ›

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.

How to issue a 1099? ›

How to Issue Form 1099
  1. Choose a method for issuing 1099s. You can issue 1099 forms electronically or through the mail. ...
  2. Consider using low-cost online services. IRS-approved online tools can help you issue 1099 forms. ...
  3. Gather required information. ...
  4. Complete and send Form 1099.
Mar 22, 2023

Does an employer have to provide a 1099? ›

What Is the 1099 Form Used for? The 1099 form is used to report non-employment income to the Internal Revenue Service (IRS). Businesses are typically required to issue a 1099 form to a taxpayer (other than a corporation) who has received at least $600 or more in non-employment income during the tax year.

Who is required to fill out a W9? ›

You will need to fill out a W-9 form if you: Classify yourself as an independent contractor or “freelancer.” Are not a full-time employee of the business. Will be paid more than $600 for work provided to the business.

Do I need to issue a w9? ›

Who Needs to Complete Form W-9? You will usually submit a W-9 form when you engage with a company where reporting information to the IRS might be necessary, such as receiving payments for services you provide as an independent contractor, paying interest on your mortgage or even contributing money to your IRA account.

Is a 1099 and W9 the same thing? ›

W-9s and 1099s are tax forms that are required when employers work with an independent contractor. Form W-9 is completed by the independent contractor and provides details on who they are. Form 1099-NEC is completed by the employer and details the wages paid to the contractor.

What type of 1099 do I need to issue? ›

You should receive a Form 1099-NEC if you earned $600 or more in nonemployee compensation from a person or business who isn't typically your employer. You should receive Form 1099-MISC if you earned $600 or more in rent or royalty payments.

Do I need to issue a 1099 to my cleaning lady? ›

You don't need to issue your housekeeper a form 1099. Your business must file a form 1099 with the IRS and to each unincorporated business or individual to whom you paid $600 or more during a given tax year.

When must I issue a 1099? ›

The reason is IRS Form 1099 provides the means of reporting very specific types of income from non-employment related sources that might not be reported elsewhere. If you paid someone for services (other than employees) you must issue them a 1099 by January 31 of the following year.

What happens if a company does not issue a 1099? ›

If your employer didn't send you a 1099, don't panic. You can still report your income to the IRS. Use your records, including invoices and payment receipts, to determine your earnings. Then, report this income on your tax return.

What if my employer does not issue a 1099? ›

If you have not received an expected 1099 by a few days after that, contact the payer. If you still do not get the form by February 15, call the IRS for help at 1-800- 829-1040. In some cases, you may obtain the information that would be on the 1099 from other sources.

Who gets a 1099 based on w9? ›

Independent contractors, like freelancers and real estate agents, in the U.S. (citizens or non-resident aliens) filing a Form W-9 and other business service providers not on the payroll (receiving Form W-2) should expect to receive Form 1099-NEC from each client for payments exceeding the $600 or more reporting ...

What happens if I don't fill out a W9? ›

The IRS has outlined several penalties for failure to furnish or comply with the reporting requirements of Form W-9. If the taxpayer fails to furnish a correct tax number, the taxpayer is subject to a $50 fine for every instance of non-compliance with tax law and regulation.

What is the difference between a W9 and a substitute W9? ›

Payors and withholding agents are allowed to use their own Forms W-9, which are not the official Internal Revenue Service (IRS) published Forms W-9. These forms are called substitute Forms W-9. In order to be sure that the substitute Form W-9 is reliable, a few items must be in place. Substantially similar content.

Does W9 count as income? ›

If I Get a W-9, Will I Be Taxed? Yes, assuming you earn at least $600 in a calendar year performing work for a business. Unless you are subject to backup withholding, a company you do business with will not withhold any taxes for you.

What if a contractor or vendor refuses to provide a w9 for a 1099? ›

If the independent contractor doesn't provide you with Form W-9 you must withhold tax from payments to that person. This is referred to as backup withholding and should be withheld at the rate of 24% and then submitted to the IRS. Form 945 will also need to be filed to report the withheld tax.

What if a company will not provide a w9? ›

If you decide to work with a vendor who won't furnish a W-9, backup withholding is required. Instead of paying the vendor the entire fee, you send 24% of it to the IRS, along with Form 945. You can stop backup withholding when you receive a completed W-9.

What vendors do not need a w9? ›

Foreign vendors are the only vendors who don't need to fill out a W-9. These entities will need to fill out W-8 forms instead. Under most circ*mstances, you will need to fill out Form 1099-MISC or 1099-NEC at the end of each year. This serves as a record of how much you paid out.

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