Difference Between W9 and 1099

Tax filing can often be confusing with an abundance of related paperwork that bears various names and identifiers. W9 and 1099 are such two forms used for tax filing under the regulations of Internal Revenue Service (IRS). The key difference between W9 and 1099 is that W9 is a form filed by third party companies such as independent contractors who provide services to companies, upon the request from the respective company whereas 1099 is a form used to provide information to the Internal Revenue Service (IRS) regarding specific types of income from non-employment related sources.

CONTENTS

1. Overview and Key Difference
2. What is W9
3. What is 1099
4. Side by Side Comparison – W9 vs 1099 in Tabular Form
5. Summary

What is W9?

W9 is a form filed by third party companies such as independent contractors who provide services to companies, upon the request from the respective company. Request for Taxpayer Identification Number and Certification Form is another name given to the W9 form. Three main sections can be seen in W9 form with the following components.

General Information

• Name of the taxpayer
• Business/entity name
• Federal tax clarification (to indicate the type of the business)
• Address and zip code

Taxpayer Identification Number (TIN)

TIN is a unique 11 digit numeric code issued for vendors and dealers who are liable to pay VAT (Value Added Tax).

Certification

In this section, the taxpayer certifies that the correct TIN is provided in the form.

W9 is an IRS form; however, this is not sent to the IRS, but is maintained by the individual who files the information return for verification purposes. W9 also serves as an important identification of the TIN of the taxpayer. Companies who obtain services from third parties has to request the W9 from a U.S. citizen or a foreign national. The information in this form becomes useful when the company is reporting to the Internal Revenue Service to indicate the amount of funds third party companies.

Form W9 PDF

What is 1099?

1099 is a form used to provide information to the (IRS) regarding specific types of income from non-employment related sources. A number of variations can be found in 1099 forms depending on the source of non-employment, where they are technically called information return since the objective of 1099 is to encourage taxpayers to reports all their means of income and pay taxes. Most commonly used types of 1099 are mentioned below.

• 1099 MISC (Miscellaneous Income) – to be filed by independent contractors
• 1099 DIV (Dividends and Distributions) – to be filed by owners of ordinary shares or mutual funds
• 1099 INT (Interest Income) – to be filed by interest earners from a bank account
• 1099 R (Sources of retirement) – to be filed by retirement income earners from annuities, insurance contracts, individual retirement accounts (IRA), and pensions

In general, 4 copies of 1099 has to be made; for the payer, payee, IRS and the State Tax Department. IRS also specifies regulations regarding filing tax return based on the number of 1099 forms. If the number of forms is less than 250, paper copies must be filed. When the number of forms exceeds 250, they must be filed electronically with the IRS.

What is the Difference Between W9 and 1099?

Summary – W9 vs 1099

The difference between W9 and 1099 is that W9 is a form filed by third party companies such as independent contractors who provide services to companies while 1099 is a form used to provide information to the Internal Revenue Service (IRS) regarding specific types of income from non-employment related sources. However, both share largely similar aims where the IRS attempts to ensure that tax is collected from all types of incomes.

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References:

1. Fontinelle, Amy. “The Purpose Of 1099 Forms.” Investopedia. N.p., 25 Aug. 2014. Web. Available here. 23 June 2017.
2. “What is an IRS 1099 Form?” Intuit TurboTax. N.p., n.d. Web. Available here. 23 June 2017.
3. Perez, William. “What You Need to Know about Form W-9.” The Balance. N.p., n.d. Web. Available here. 22 June 2017.

Image Courtesy:

1.”Form W-9, 2005” By Unknown – (Public Domain) via Commons Wikimedia
2. “Form 1099-R, 2015” By United States Internal Revenue Service – irs.gov (Public Domain) via Commons Wikimedia