IRS Forms 1099 VS W9: What's The Difference?

Independent contractors and businesses that hire freelancers must understand the difference between 1099 forms and W9 forms to ensure proper tax compliance and reporting.

Understanding Form W-9

Form W-9, Request for Taxpayer Identification Number and Certification, is used by businesses to collect information from independent contractors, freelancers, and other service providers. The contractor fills out this form to provide their taxpayer identification number (TIN) and other identifying information.

Understanding Form 1099

Form 1099 is an information return that businesses use to report payments made to non-employees during the tax year. There are several types of 1099 forms, with 1099-NEC (Non-Employee Compensation) being the most common for independent contractor payments.

Key Differences

• Purpose: W-9 is for collecting information; 1099 is for reporting payments
• Who completes it: Contractors complete W-9; businesses complete 1099
• When to use: W-9 before work begins; 1099 after year-end
• Filing requirement: W-9 is not filed with IRS; 1099 must be filed with IRS

Compliance Requirements

Businesses must request Form W-9 from contractors before making payments and issue Form 1099-NEC if they pay $600 or more during the tax year. Failure to comply can result in backup withholding and penalties.