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Highlights and key takeaways
- A form W-9 is used to collect a contractor’s tax information.
- A form 1099 is used to document any payments that a client has made to a contractor, if those payments total more than $600.
- Both forms are mandatory.
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.
The contractor’s job is to fill it out with tax info for their business. (Unless they’ve registered a business name, or incorporated, their person and their business are identical for tax reasons.)
What is Form 1099?
Each client a contractor invoices for more than $600 is required to send the contractor a Form 1099. This form lists what they’ve paid them over the course of the prior tax year. Typically, a contractor will get Form 1099 from a client in January—the beginning of tax season.
The client also sends a copy to the IRS. The IRS looks at the Form 1099s from all the contractor’s clients to see how much money they’ve made during the year. Then, they check it against the income the contractor reports, to make sure they aren’t bending the truth. They want to be certain contractors are paying taxes on everything they’ve earned.
That’s the short story. To get a better sense of how Form 1099 works, check out our guide to Form 1099.
Differences between the W-9 and 1099
Tax deadline for Form 1099
Clients are required to send contractors Form 1099-NEC for the 2023 tax year by by January 31, 2024, and for the 2024 tax year by January 31, 2025.
Tax deadline for Form W-9
There is no tax deadline for Form W-9. It’s up to clients to get filled-out W-9s from their contractors before the end of the tax year, so they can file their taxes and send them their Form 1099s.
Technically, a client is required to have a contractor fill out a Form W-9 before they pay them. Not all clients follow the rules, though. It’s not out of the question for a contractor to receive a W-9 near the end of the tax year, as their client scrambles to get their taxes done on time.
How to fill out Form W-9
Here’s what Form W-9 looks like.
You can download a copy of Form W-9 and read the instructions sheets to get the full IRS rundown on how it should be filled out.
Most of it is pretty straightforward. However, there are a few places contractors tend to stumble:
- If you’re a contractor, you only need to fill out a business name if you’ve actually registered one. Otherwise, just fill out the top line and leave this one blank.
- Don’t forget to note what type of entity your limited liability company (LLC) files taxes as—a C corporation, S corporation, or Partnership. If you’re not sure which you are, take a hot minute to learn more about LLCs.
- Generally, if you don’t have a Taxpayer Identification Number (TIN) or Employer Identification Number (EIN), you should enter your SSN here.
Heads up: Form W-9 and security
Any time a contractor receives a Form W-9, they should make sure they understand who it’s coming from. If you’re a contractor and you get a Form W-9 from an individual or business who is not a client, do not fill it out. Sending off your Social Security Number (SSN) and other info to a stranger could put you in an awkward position—like having your identity stolen.
Also, when sending off Form W-9, do it securely. That means sending it as an encrypted file attachment. Or, if you like licking stamps, mail a hard copy to your client.
How to deal with Form 1099
Here’s a sight to behold: A Form 1099 that’s totally blank.
Typically, when a contractor gets a Form 1099 from a client, some of those blue boxes are going to be filled in—with the contractor’s name, address, the TIN they entered on Form W-9, and other info.
If you’re a contractor and you get a Form 1099, keep a copy for your files. Box 7 tells you how much your client paid you. Once you’ve got all your Form 1099s for the year, add up all the Box 7s to get most of your income.
Most of your income—remember, if you’re a client, you only have to send contractors Form 1099 if you were invoiced for $600 or more total. But just because you don’t send a contractor a Form 1099 doesn’t mean they don’t have to report the income to the IRS.
Contractors should hold onto copies of all the invoices they sent during the year, too. That way, if a client paid them $599 (meaning a Form 1099 wasn’t required), they can still report the income—and avoid the risk of getting dinged by the IRS in case of an audit.
Suggested reading: Form 1099 Filing and Reporting Requirements
How Bench can help
Whether you receive a 1099-NEC or need to issue one to a contractor, having clear, accurate, and up-to-date books are essential when it’s time to file your taxes. Your Bench bookkeeper can provide detailed year-end financial statements, including a 1099-specific report, that make tax filing a breeze.
In January, your Bench-provided 1099 report can tell you:
- Who you need to file 1099 NECs for
- How much you paid each person and what they were paid for, including the transactions associated with those payments
We’ll even let you know whether you need to file an NEC or MISC form for that 1099. Learn more.
1099 and W-9 aren’t the only forms you need to keep track of. To stay on top of all your obligations for the year, download the Bench Small Business Tax Checklist.
