Quick Guide: Tax Forms W8 vs W9

For example, a W-8 form signed on October 1, 2021 would be valid through December 31, 2024. The W-8 series tax ID forms are a little bit trickier than the W-9. However, if you work with non-payroll workers who are not US citizens and also US citizens who reside outside of the US, understanding W8 is extremely important. Fails to provide the company making a payment with their TIN.

If the business requesting the W-9 is doing it through an electronic filing system, you need to make sure that a hard copy can also be produced if the IRS calls for it. An electronic signature is required for the electronic form. To fill out the 1099-MISC to record payments of US$ 600 or more, a business needs to supply details of the person who fulfilled a business service. This includes a name, address and tax identification number . Enter your number, street, and apartment or suite number.

The Difference between 1099 vs W-2 Employee

You should get the form completed by the freelancer every tax year you partner with them so that the Internal Revenue Service doesn’t have a missing form to use a basis for auditing you. Freelancers, part-time employees, and Independent contractors responsible for their own tax returns are expected to fill in the W9 form. If you consider yourself fully employed and your employer tells you to fill the W9 form, you should confirm whether the organization views you as a temp or permanent replacement. The TIN and certification form requests are critical for hiring new employees or doing business with freelancers and contractors.

Self-employed https://intuit-payroll.org/s don’t have income taxes or Social Security/Medicare taxes withheld. You and your employer can discuss the issue of your status, but it’s the IRS that ultimately decides whether a worker is an employee or an independent contractor (self-employed). The W-9 helps the payee avoid backup withholding; where the payee certifies on the W-9 that they are not subject to backup withholding. This allows them to receive the full payment due to them from the payer.

Backup Withholding

In What Is A W9 Tax Form & What Is It Used For 1, enter all money paid as rent, except if paid to a corporation. Form W-9 and Form 1099 both streamline the business owner’s workload come tax season. Both these forms are straightforward to fill out, and they present crucial tax information in an organized, easily understandable way. If your business does not get a tax identification number from a contractor, you could face penalties from the IRS. Not only must you collect the TIN, but you must also demonstrate that you are keeping the data private. The penalties for filing a 1099 increase the more time that passes when the 1099 is due.

• The purpose of a W-9 request is unclear.If you’re not sure why the requestor wants a Form W-9 from you, ask them what tax documents they’ll use it to prepare for you.
• If you’re a foreign individual or entity, you’ll need to complete a W-8.
• On the other hand, failing to fill out or submit the correct forms—whether by accident or intentionally—can cause major headaches or lead to tax penalties down the road.
• A taxpayer may also be asked to furnish a Form W-9 to cancel debt, student loans, or real estate transactions.
• On the other hand, employers must use Form W-4 to determine how much to withhold in federal income taxes from an employee’s paychecks.
• Remember that the only reason anyone would ever need a W-9 from you is because they need it to send you some kind of IRS form.
• Max Freedman is a content writer who has written hundreds of articles about small business strategy and operations, with a focus on finance and HR topics.

Using the right tax filing software can help you ensure that all your tax forms are correct. If you aren’t sure which to use, consider two of the most popular services, H&R Block and TurboTax. They both offer clear explanations of the process and a smooth filing experience. Here’s a closer look at whether you should choose H&R Block or TurboTax. The W-9 form allows businesses to keep track of their external workforce. This means you don’t send your W-9 form to the IRS. Instead, you send it to your supervisor or the company’s human resources department.