One of these is a filing and the other is how you gather what the filing needs. They get discussed as a pair, which is reasonable, but treating them as the same job at the same time of year is the source of most of the trouble.
The information request belongs at the start of a working relationship, alongside the contract and the bank details. The filing belongs at the end of the year and should be a transcription exercise by then.
This covers what each one is for, when to ask for the information and when not to, what happens when a payee will not supply it, and how the two fit together as one process rather than two unrelated tasks.
The W-9 and the 1099 are two sides of the same compliance coin, one is collected before you pay, the other is filed after. Confusing them or skipping one can lead to backup withholding headaches and IRS penalties. This guide explains what each form does, who uses them, and exactly when to use which one.
Quick Comparison: W-9 vs 1099
| Feature | Form W-9 |
|---|---|
| What it is | A TIN collection form completed by the payee |
| What the 1099 is | An information return filed by the payer with the IRS |
| Who completes it | The contractor or payee, gives it to the payer |
| Who completes 1099 | The business or payer, files it with the IRS and sends a copy to the payee |
| When it is used | Before the first payment is made |
| When 1099 is used | After year-end, covering the full calendar year's payments |
| Filed with IRS? | No, W-9 stays on file with the payer |
| 1099 filed with IRS? | Yes, Copy A to IRS, Copy B to payee |
| Purpose | Identifies the payee's TIN for 1099 filing and backup withholding purposes |
| 1099 purpose | Reports taxable payments to the IRS so both sides are taxed correctly |
These get talked about as a pair, but only one of them is a filing. The other is how you collect the information the filing needs, and it belongs at the start of a relationship rather than the end of a year. Businesses that treat it as onboarding paperwork never have a January problem.
Ankit Sarawagi, CPA, CA, MBA · LinkedInWhat Is Form W-9?
Form W-9 (Request for Taxpayer Identification Number and Certification) is an IRS form that businesses use to collect identifying information from payees, primarily independent contractors, vendors, and landlords, before making reportable payments.
The W-9 captures:
- Full legal name (and DBA/business name if different)
- Tax classification: Individual/sole proprietor, C-Corp, S-Corp, Partnership, Trust/Estate, LLC (and what the LLC is taxed as)
- Address
- Taxpayer Identification Number (TIN), Social Security Number for individuals, or EIN for businesses
- Certification that the TIN is correct and the payee is not subject to backup withholding
Critically, the W-9 is NOT filed with the IRS. It stays in the payer's records. Its sole purpose is to give you the correct information to complete the 1099 form accurately at year-end.
What Is Form 1099?
Form 1099 is an IRS information return that businesses file at year-end to report certain types of payments. The 1099 family includes more than a dozen specific forms:
- Form 1099-NEC: nonemployee compensation (payments to contractors for services)
- Form 1099-MISC: rent, royalties, prizes, attorney gross proceeds
- Form 1099-INT: interest income
- Form 1099-DIV: dividend payments
- And several others for specific income types
The payer completes the 1099, sends Copy B to the recipient, and files Copy A with the IRS. The IRS uses these to cross-check that the recipient reported the income on their personal or business tax return.
The W-9 / 1099 Workflow
- Hire or engage a contractor. Before making the first payment, send them a blank Form W-9 and ask them to complete and return it.
- Store the completed W-9 in your vendor records for at least 4 years.
- Throughout the year, make payments for services. Track payments to each vendor separately.
- At year-end, tally total payments per vendor. Compare against the filing threshold: $600 for 2025 payments, $2,000 for 2026 payments (for 1099-NEC).
- Complete Form 1099-NEC for each qualifying vendor using the name, address, and TIN from their W-9.
- Send Copy B to the vendor by the February deadline.
- File Copy A with the IRS (paper or electronic) by the applicable deadline.
When to Collect a W-9
- Before making any payment to a new independent contractor or freelancer
- Before making any rental payment to a landlord (if payments will reach $600 or more)
- Before paying royalties of $10 or more
- Before making prizes or awards to non-employees
- When an existing contractor's TIN changes or you suspect the one on file may be incorrect
- When the IRS notifies you that the TIN on file does not match IRS records (IRS B-Notice)
When NOT to Collect a W-9
- Payments to C-corporations or S-corporations, generally no 1099-NEC required, so W-9 still useful to verify entity type but no 1099 will be filed (with attorney exception)
- Payments made via credit card or third-party payment processor, these trigger 1099-K from the processor, not from you
- Personal payments, no 1099 obligation for personal transactions
- Payments to employees, use Form W-4 instead; employees receive W-2, not 1099
What Happens Without a W-9? Backup Withholding
If a contractor fails to provide a W-9, or provides an incorrect TIN, you are required to apply backup withholding at the rate of 24% on all reportable payments. You then remit that 24% to the IRS and file Form 945 annually to reconcile.
Backup withholding can also be triggered when:
- The payee's TIN does not match IRS records (notified via a B-Notice from the IRS)
- The payee was previously found to have underreported income and the IRS has notified you
- The payee fails to certify that they are not subject to backup withholding on the W-9
đź’ˇ Pro Tip: Set a policy to collect W-9 before releasing the first payment, not after. Waiting until year-end makes it hard to apply backup withholding retroactively and risks being unable to collect the form if the contractor is unresponsive.
W-9 for Foreign Payees: Use W-8 Instead
If a payee is a foreign individual or entity, do not use Form W-9. Use the appropriate W-8 series form instead:
- Form W-8BEN: for foreign individuals claiming treaty benefits or certifying foreign status
- Form W-8BEN-E: for foreign entities
- Form W-8ECI: for foreign persons with income effectively connected to a US trade or business
- Form W-8EXP: for foreign governments and exempt organizations
Foreign payees are generally not subject to 1099-NEC reporting, but payments to them may be subject to 30% withholding (Chapter 3) reported on Form 1042/1042-S.
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Frequently Asked Questions
Does the contractor keep a copy of the W-9?
No. The contractor completes the W-9 and gives it to you, the payer. The contractor does not file it with the IRS and does not need to keep a copy (though they may keep one for their own records).
Is the W-9 form the same every year?
The W-9 is not an annual form, once collected, it stays valid until the information changes (new address, changed entity structure, new TIN). However, you should collect a new W-9 if a contractor tells you their details have changed or if the IRS notifies you of a TIN mismatch.
Can I accept a W-9 electronically?
Yes. The IRS allows W-9 forms to be signed and submitted electronically as long as the signature meets the electronic signature standards in the W-9 instructions. Many payroll and accounting software platforms support electronic W-9 collection.
What if a contractor refuses to provide a W-9?
Apply 24% backup withholding to all payments, document your requests for the W-9, and remit the withheld amounts to the IRS. Do not simply skip the withholding because the contractor refuses, the liability stays with you as the payer.
How long should these be kept?
For at least as long as the reporting they support can be questioned, and the period is set by the tax authority rather than by convenience. In practice the workable approach is to keep the collected form with the payee record for the life of the relationship and for the retention period afterwards, since the form is the evidence that you exercised reasonable care in establishing the payee's status. Check the current retention period on the authority's own guidance rather than applying a rule of thumb.
Written by
Ankit Sarawagi, CPA, CA, MBA
Ankit leads the finance team at Profitjets, where he has worked with 500+ businesses across the US on bookkeeping, tax and CFO-level strategy. He writes about the habits that keep small business books accurate all year. Connect on LinkedIn
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