W9 Vs. 1099 Tax Forms: What's The Difference? (2024)

FAQs

W9 Vs. 1099 Tax Forms: What's The Difference? ›

The main differences between W-9 and 1099 tax forms are that a W-9 is filled out by the supplier or independent contractor to provide their tax and payment information to the payer, whereas 1099 forms are provided by the payer to document the supplier or contractor's gross earnings after business has been done, which ...

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.

Is a W-9 Used for Self-Employed Individuals? Yes, a W-9 is most often used for individuals who are self-employed. If a worker is an independent contractor, freelancer, or self-employed, Form W-9 must be provided to those whom you have earned over $600 from without having been hired as an official employee.

Form W-9 is an IRS document that businesses use to collect an tax identification number (TIN). Independent contractors who were paid at least $600 during the year need to fill out a W-9. Internal Revenue Service.

The IRS 1099 Forms are a group of tax forms that document payments made by an individual or a business that typically isn't your employer. The business that pays the money fills out the form with the appropriate details and sends copies to you and the IRS. The form reports payments made during the tax year.

Form W-9 can also be used to report other types of payments to the IRS, such as IRA contributions or mortgage interest. A W-9 doesn't include any tax withholding information because independent contractors are responsible for filing and paying their taxes unless they are subject to backup withholding.

As an independent contractor, vendor, freelancer or other individual receiving nonemployee compensation, you typically do not work for the person or business as an employee. If you don't work as an employee, you'll typically have your earnings reported on a Form 1099-NEC and will need to prepare a W-9.

Payments earned by a contractor who completes a W-9 form aren't subject to IRS withholding, meaning it's the payee's responsibility to report the income and pay the self-employment taxes, which is calculated at a rate of 15.3 percent as of 2022.

Cash payments of $600 or more to an independent contractor should be reported on a 1099 form, regardless of the payment method. Neglecting to issue the appropriate tax forms for cash payments can lead to tax implications and penalties.

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 should fill out a W9? ›

The Importance of W9 Vendor Forms

Trades or businesses need to get W9 Forms from U.S. vendors to prepare information returns like Form 1099-NEC and 1099-MISC required by the IRS to report calendar year amounts paid to them of $600 or more or amounts of backup withholding of federal income taxes.

A 1099 form is an IRS tax information return for reporting business-related nonemployee compensation paid, certain other payments, including royalties, miscellaneous information including any backup withholding, and interest and dividends.

Exemptions from 1099 Requirement

Absent any exception (e.g., medical or substitute payments), the IRS doesn't require you to send a 1099 to: S-corporations. C-corporations. LLCs that elected S-corp tax status.

If you receive Form 1099-A, you will need to report it on Schedule D of your tax return that year. Form 1099-A can help you determine if you have any capital gain or loss from the foreclosure of your property. Capital gains from foreclosure are treated the same as capital gains from a traditional sale.

In plain language, if your business hires contractors, freelancers, or vendors, you must collect a W-9 from them at the beginning of their employment period. If you're one of those contractors, you can expect to receive a 1099 form to report your income at the end of the tax year.

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 ...

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.

A 1099 form is a record that an entity or person other than your employer gave or paid you money. The payer fills out the 1099 and sends copies to you and the IRS.