IRS W-9 and 1099 Forms (Full Guide) – Free Form Downloads
Are you planning to hire a freelancer? This guide goes into great detail on the 1099 and W-9 forms, which are required by the IRS.
Independent contractors and business owners who engage them may have difficulty locating and comprehending the right tax forms to utilize. Because this is a delicate commercial operation, little mistakes can have serious effects, such as being fined or penalized by the government. Small firms and independent contractors must so understand the two IRS forms: Forms W-9 and 1099.
Most businesses hire freelancers or outsource work on a regular basis. The Ascent includes directions for completing the paperwork that contractors must submit to the IRS.
Many small firms have projects that have remained unfinished for an extended length of time. Although none of the full-time employees have the time or motivation to accomplish them, they are insufficient to warrant employing a new employee.
Independent contractors can help with this. They are hired for short-term roles with no perks or taxes deducted, and if they perform well, they may be considered for future opportunities. As a result, independent contractors frequently work with many companies.
W-2s and 1099s are issued to both independent contractors and full-time workers and are necessary to complete all business taxes at the end of the year. Let’s discuss about 1099 completion techniques and Form W-9 use.
- W-9 Forms: Why are they required?
- The Form 1099: Explained
- Forms W-9 and 1099: The Distinctions
- Connecting the W-9 and 1099 Forms
- Pricing for W-9
- FAQ: Forms W-9 & 1099
- In Conclusion
W-9 Forms: Why are they required?
W-9 forms are used by the IRS to calculate the potential tax liabilities of independent contractors and freelancers who perform labor or other services for a business. Thanks to this form, businesses are also exempt from having to withhold and pay taxes on behalf of these independent contractors. These materials also include a “Request for Taxpayer Identification Number and Certification” form.
Who Has To Fill Out a W-9 Form?
Employers who use independent contractors must provide them a W-9 form to fill out before they begin working for the company. Whoever is required to fill out a W-9 form and who is considered a “independent contractor” must adhere to a variety of rules. If you can relate to any of the following:
During tax season, the W-9 form is increasingly common since more businesses use independent contractors and freelancers to complete their work.
What Justifies Filling Out a W-9 Form?
One of the principal purposes of Form W-9 is to inform clients that independent contractors and freelancers are not subject to backup withholding.
Form W 9 is important for another reason as well.
Having some previous knowledge is beneficial. Employers of independent contractors are not required to withhold income taxes. These taxes need to be paid by the independent contractors.
However, each business that pays a contractor or independent contractor has a crucial duty. Nonemployee Compensation, or Form 1099-NEC, is required to be delivered to the payee and filed with the IRS.
W-9 Document and Security Advisory
Any Form W-9 that a contractor receives should always have a source identified. If you’re a contractor and you get a Form W-9 from someone or something that isn’t a customer, don’t fill it out. Sending a complete stranger your Social Security Number (SSN) and othe r private data might put you in a precarious scenario, including having your identity stolen.
Provide Form W-9 in a secure way as well. That includes sending it as an encrypted file attachment. If you like licking stamps, you may even send a real copy to your consumer.
Penalties for Non-Compliance with Form W-9
The IRS has outlined a number of penalties for disregarding or failing to furnish information required by Form W-9’s reporting obligations. If a valid tax number is not provided, the taxpayer is responsible for a $50 filing fee for each instance of non-compliance with tax law and regulation. This fee may be waived if the taxpayer can show that the non-compliance was not the product of willful negligence.
A taxpayer may also be subject to civil fines if they give false information that leads to erroneous withholding. If a taxpayer intentionally provides false information that prohibits backup withholding, they may be subject to a fine of up to $500. Higher fines are imposed for persistent non-compliance, and in some cases the taxpayer may face criminal charges. If any disclosures or facts are knowingly falsified, the taxpayer may be subject to fines or even imprisonment.
Fines are also imposed on the individual who made the request for the taxpayer information. If the requestor uses or discloses the taxpayer’s TINs in violation of federal law, they may suffer legal or criminal repercussions.
Here you can download the W-9 form from an official IRS page:
Electronic Filing of Form W-9
Financial institutions and others can file Information Return Forms 1042-S, 1098, 1099, 5498, 8027, or W-2G via the Filing Information Returns Electronically (FIRE) system. It is possible to file information returns electronically, but you’ll need software that can create the file in the right format as specified by Publication 1220. There is no opportunity to fill out a form electronically using FIRE.
The Form 1099: Explained
Every client who gives a contractor more than $600 must file a Form 1099. The payments they paid to them during the prior tax year are detailed in this document. A customer would typically issue a Form 1099 to a contractor in January, at the beginning of tax season.
The consumer also gives a copy to the IRS. The amount of money a contractor earned over the course of the year is determined by the IRS by looking at the Form 1099s they received from each of their clients. To ensure they are not lying, they next compare it to the contractor’s reported revenue. They want to make sure that every contractor’s income is taxed.
In addition to non-profit organizations and low-income payees, other entities that are free from withholding taxes include securities dealers, foreign governments, financial institutions, and futures commission agencies. Taxes are often not applied to trusts such real estate trusts, common trusts, and custodial trusts.
You might be penalized up to 50% of the total amount you paid to the person or unincorporated company if you don’t produce a 1099 at any point in January. If payees do not get the correct 1099 forms, they may complain to the IRS.
Form 1099: How Do I File It?
For each independent contractor you pay more than $600 in a single tax year, your business must complete this form. To complete the form, you must have access to the following resources:
- The name, location, and EIN of your business
- Your contractor’s name, address, and tax identification number (you should ask them to complete Form W-9 to obtain their TIN).
- The entire amount given to the contractor
- Additional details on the type of compensation
Here you can download the form 1099 from an official IRS page:
Form 1099 Should Be Submitted When?
Your business completes Form 1099 and delivers it to the IRS and your contractor at the conclusion of each tax year. Additionally, your business should keep a copy of this form on file for internal use. The following paperwork has deadlines:
Before January 31, 2023, you must provide Copies B and 2 to your independent contractor(s).
Copy A must be sent to the IRS by February 28th at the latest. The online reporting cutoff date for businesses has been extended to March 31.
Copy 1 must be delivered to the majority of state tax authorities by February 28th at the latest, unless your state does not impose an income tax.
Your business might be fined $250 if it doesn’t submit a Form 1099 for one of its contractors.
Other Regular Form 1099
Form 1099 comes in a number of variations. Small and medium firms utilize Form 1099-NEC the most frequently since it is the one that is used to record payments made to independent contractors. Prior to 2020, however, 1099-MISC was most often used.
Additional forms of the 1099 for small and medium-sized enterprises include:
- A 1099-INT form – Businesses may be required to use this form to record interest paid to people or partnerships. It is issued by businesses and financial institutions to report interest payments.
- 1099-MISC Form – issued by companies to track various payments made to non-employees that are not made to contractors, such as payments made to attorneys for rent, prizes, and other expenses.
- Invoice 1099-DIV – This form is distributed by businesses and financial institutions to shareholders in order to record dividends paid to them.
- Invoice 1099-CAP – Sent by businesses to announce changes to their financial structure and corporate control
Forms W-9 and 1099: The Distinctions
This table illustrates the main variations between the W-9 form and the form 1099 so that they may be understood.
|Although the form W-9 has no due date, the independent contractor must complete it in order to get the form 1099.||The paperwork must be completed by the employer before January 31st.|
|Unless the contractor’s information changes, the form should only be filed once.||Every year, by the end of January, the employer must produce the form 1099.|
|Information about an independent contractor who must pay them is provided on the W-9 form.||The contractor’s compensation is disclosed on Form 1099 by the employer or other party.|
|The form is filled out and delivered to the employer by the independent contractor.||The 1099 form is completed by the employer and sent to the IRS.|
|It is filled out by the independent contractor.||The Form 1099 must be filled out by the employer who outsources work.|
Connecting the W-9 and 1099 Forms
The best course of action for firms is to request W-9 forms from contractors on the day they are hired. Although the W-9 will not be forwarded to the IRS, the information will be required later to complete the contractor’s 1099. Keep a copy on hand to go over at the end of the year.
Deliver the 1099 forms to your contractors as soon as possible in January, ideally by January 31. Your contractors rely on you to send them their IRS forms on time so that they may fulfill their tax reporting duties.
Pricing for W-9
1. Make and Send
Create and deliver your W-9s utilizing our streamlined method from any location.
2. Micro Businesses
Ideal for proprietors of small businesses with few vendors
Annual management of W-9s and 1099-MISC/NEC reportability evaluations
Plans to satisfy the demands of every mid-sized business
Annual management of W-9s and 1099-MISC/NEC reportability evaluations
Enough sophistication for the biggest organizations
Annual management of W-9s and 1099-MISC/NEC reportability evaluations
Prices For Form 1099 Filing
|Number of 1099s||Price per IRS e-file|
|1 – 9||$2.90|
|10 – 24||$2.90|
|25 – 49||$2.25|
|50 – 99||$1.99|
|100 – 249||$1.80|
|250 – 499||$1.30|
|500 – 999||$1.10|
|1000 – 2499||$0.80|
FAQ: Forms W-9 & 1099
What should you do if a surprising source asks you to fill out a W-9 tax form?
Parties are only required to get a W-9 from you if they intend to pay you interest, dividends, non-employee compensation, or any other sort of reportable income. If you receive a W-9 request out of the blue, find out why. You are not required by law to offer an explanation if their response does not satisfy any legitimate explanations.
What is the cost of the 1099 E-File Service?
The 1099 E-file Service costs $14.99. Up to three forms can be designed and submitted electronically. Each additional 1099 costs $3.99. If you have more than 20 forms, we will add them without charging you more. QuickBooks is giving an early bird discount from January 1 through January 15, with rates beginning at $12.99 and $2.99 for each extra form.
What are the most important 1099 deadlines?
- The 1099 E-file Service, which launches on January 1, has an early bird pricing cutoff of January 15th.
- Contractors must have their 1099 paperwork by January 31.
- The deadline for filing 1099-NEC documentation without penalty to the IRS is February 1st.
- The deadline for sending 1099-MISC forms without penalty to the IRS is March 31.
Note: If you use Intuit’s 1099 E-file Service, we recommend delivering your forms by January 31 at the latest to ensure that they are completed in time for the revised IRS due date of February 1.
How can I get copies for my consultants?
If you use QuickBooks Online, we’ll deliver digital and printed copies to your contractors automatically. All of your forms are converted into PDF files via the Intuit E-file Service.
How can I send my copy to the IRS?
QuickBooks will safely and electronically deliver the form on your behalf because we are an accredited IRS E-file supplier.
What happens if I fail to file a Form W-9?
If a company demands a W-9 and you do not provide one, your payments may be subject to backup withholding of up to 28 percent.
When should a W-9 be updated or replaced?
Each time your information (name, business name, address, or Social Security number) changes, you must issue a new W-9 to active clients or customers.
Is it required filling IRS Form 1096?
When filing online, an IRS Form 1096 is not required.
Accountants are permitted to file on behalf of several clients.
Yes. Accountants that utilize Intuit Online Payroll for Accounting Professionals qualify for a $15 per client discount. All 1099s will be issued to every client who uses the online payroll service. During tax season, accountants can add 1099-only customers in addition to filing for current payroll clients.
Is it necessary for me to purchase those distinctive, pre-printed forms with red ink?
Nope! That is one of the numerous benefits of electronic filing.
Which form do I need to submit, and how do I select it?
QuickBooks will select an appropriate form. If you know what kind of payments you’ve made, you can have the relevant form(s) automatically filled up and filed on your behalf.
Which 1099 forms am I permitted to use?
Associates accept 1099-MISC and 1099-NEC forms.
What about state formalities?
The majority of states either collaborate with the IRS to gather data or do not require separate 1099 files. Check with your state to discover if you are required to furnish 1099 information.
Can I import my data from QuickBooks if I now use it?
If you use QuickBooks Online Simple Start, Essentials, Plus, or QuickBooks Online Payroll, you can effortlessly transfer your data. To begin, navigate to Payroll, then Contractors, and finally Prepare 1099s. We may provide physical and online copies of your 1099s to your contractors as well as electronically submit them to the IRS on your behalf after they have been created.
Completing a W-9 from a partner or bank and sending out 1099s at the end of the year are routines for businesses. You should not let the fact that you must fill out either form deter you from investigating all potential business opportunities because both are feasible.
- Clients of independent contractors and freelancers must complete IRS Form W-9. The form may also be required from someone who contributes to an IRA or pays mortgage interest. The W-9’s principal function is to supply the requester with information on the taxpayer identification number and a few other vital facts.
- Form 1099 may be used by businesses to record a number of payments. They must disclose copies of Form 1099-NEC to the IRS and the payees by January 31 of the year after the year in which the payments were made if they paid contractors, freelancers, or other nonemployees $600 or more in remuneration.
If you’re a contractor who often works for various companies, you may save an unsigned, scanned W-9 on your computer or in the cloud. The final phases are to print, sign, and scan one whenever you need it.