W-9 101: What is a W-9, who gets one, what does it do?

Income tax return requirements, tax identification numbers, and internal revenue service forms can get complicated quickly, especially if your business hires independent contractors or other nonemployees. We break down one of the common forms — the W-9 — and even share tips on managing tax forms with automation.

What is a W-9?

Formally called Request for Taxpayer Identification Number and Certification, the IRS Form W-9 is typically used by employers to verify information for a nonemployee individual receiving payments. The information on this form is used to generate a 1099 tax form.

In plain language, if your business hires contractors, freelancers, or vendors, you must collect a W-9 from them at the beginning of their employment period. If you’re one of those contractors, you can expect to receive a 1099 form to report your income at the end of the tax year. 

A W-9 form collects information like the taxpayer identification number (TIN), employee name, and address. Providing a correct taxpayer identification number is important — it helps the IRS determine who the taxpayer is. Some TIN examples include a social security number (SSN), employer identification number (EIN), and individual taxpayer identification number (ITIN).

When is a W-9 required, and who needs to complete it?

Before independent contractors, gig workers, or freelance workers begin working with a company, they must complete a W-9 form and submit it to the company. In most cases, businesses are required to ask for this form if the independent contractor is not an employee, the payment made is part of the business (the contractor is doing work specifically for the business), and payments meet the threshold of $600 in a calendar year.

IRS forms can be downloaded from the IRS.gov website. You can find the Form W-9 link here.

What’s the difference between a W-9, a W-2, a W-4, and a 1099?

A worker with W-9 status will not have income taxes withheld from their payments. The employer will report the amount paid to the IRS and it’s up to the worker to pay the required taxes.

More traditional employees will fill out a W-4 at the start of their employment. This form collects information used to calculate tax withholding (the amount of income tax that an employer withholds from an employee’s paycheck).

A W-2 is sent to traditional employees at the end of the tax year and includes pay records that the employee uses to complete a tax return.

A 1099 form is used to report nonemployment income to the IRS, including income made as a freelance worker, money from a payment app like Venmo and PayPal, and interest earned from a bank.

How can I more easily manage my employees' W-2s and other tax forms?

Many companies still manage IRS paperwork manually, filing paper copies with sensitive information, and relying on USPS to get important information to the IRS each year. If that sounds like you, there’s an easier way. Automating paperwork like W-2s and 1099s is a more reliable, efficient, and error-proof way to manage important employee documentation.

Avalara 1099 & W-9 is a powerful tax automation solution that makes it easier to collect, manage, and e-file IRS forms — 1099s, W-9s, W-8s, and more. It allows you to store vendor and freelancer information (while performing real-time taxpayer identification number matching with the IRS), import 1099 payee data, and transfer vendor details for quick turnaround — while automatically checking for errors. 

Recent posts
E-invoicing is coming, and it could be great for your accounting practice
What’s the difference between registering your business and registering for sales tax?
Property tax and licensing compliance for mergers and acquisitions
2023 Tax Changes blue report with orange background

Avalara Tax Changes 2024: Get your copy now

Stay ahead of 2024’s biggest tax changes with this comprehensive, compelling report covering seven industries.

Read the report

Stay up to date

Sign up for our free newsletter and stay up to date with the latest tax news.