You will encounter various tax forms in your business, including comparing the W-2 vs. W-9 forms. Businesses issue W-2s to employees at the end of each tax year to report their earnings and tax withholdings. Conversely, a W-9 collects identifying tax information from non-employees. Understanding the additional differences between these forms will prepare you for the tax season.
What Is Form W-2?
Form W-2, or the IRS Wage and Tax Statement, summarizes an employee’s earnings and tax withholdings for the calendar year. It details paid wages, deductions, and retirement contributions.
Most employees receive a W-2 from their employers, with only a few exceptions. For example, church employees who take a vow of poverty or foreign workers under certain visas may not receive W-2s.
Employers send a copy to the IRS by January 31 to report Federal Insurance Contributions Act (FICA) taxes paid to employees. They also file it with the Social Security Administration (SSA) for Social Security and Medicare records by the same date.
Meanwhile, employees rely on their W-2s, which they also receive by January 31, to prepare their individual income tax returns by April 15.
What’s Included in Form W-2?
Form W-2 lists the following information:
- employer’s Employer Identification Number (EIN), name, and address
- employee’s tax identification number (TIN), legal name, and address
- annual earnings and tips
- tax withheld, including federal income, Social Security, and Medicare tax withheld
- state and local wages and income tax
What Is Form W-9?
Form W-9, or the Request for Taxpayer Identification Number and Certification, collects essential tax information from independent contractors, service providers, and other non-employees.
The requested information is essential for businesses, as it lets them accurately report payments to the IRS and the payee using a 1099 form, such as 1099-NEC or 1099-MISC, at the end of the year.
When to Use Form W-8 Instead of W-9
Form W-9 is only for US citizens and resident aliens. Foreign individuals must complete Form W-8 BEN (or Form W-8 BEN-E for foreign entities).
What Information Does Form W-9 Collect?
A W-9 form collects a non-employee’s name, address, and Taxpayer Identification Number (TIN) or Employer Identification Number (EIN) for businesses. It also lets the payee specify their current tax classification—whether they operate as an individual, partnership, sole proprietor, or corporation.
The end of a W-9 includes a certification statement that non-employees review before signing and dating the form. The statement certifies that the signer:
- has provided the correct TIN
- is not subject to backup withholding (unless the IRS has told them otherwise)
- is a US person or US entity
- is exempt from reporting under the Foreign Account Tax Compliance Act (if applicable)
W-2 vs. W-9: Key Differences
Understanding the differences between a W-2 and a W-9 will help you correctly handle employee and contractor payments in your business.
Purpose
A W-2 reports employee earnings and taxes withheld so employees can correctly fill out their tax forms at the end of each tax year.
A W-9 is for information-reporting purposes—it lets businesses collect TINs and other tax information from payees who aren’t employees.
When to Use
Businesses complete W-2s at the end of the tax year and distribute them to their employees. On the other hand, businesses request W-9s from non-employees when they hire them. They collect W-9s when they anticipate paying a non-employee at least $600 in a calendar year.
Businesses must also collect W-9s if the IRS requires backup withholding, so collecting a W-9 from all non-employees is good practice even if they earn below the $600 minimum. Up-to-date W-9s let you keep accurate records and have the appropriate information available if a non-employee exceeds the threshold in future payments or is subject to backup withholding.
Who Completes It
Employers review their payroll records to complete employees’ W-2s.
There is an exception for household employees. Employers don’t usually procure W-2s for household employees who complete tasks like gardening or babysitting. Instead, employers report household employment taxes on Schedule H of Form 1040.
The situation is a bit different for W-9s. Business payers initiate the request for information from payees, but payees are the ones who actually fill out the W-9s.
Who Receives the Final Copy
Employees and the IRS receive copies of the completed W-2 from employers. Employers also store copies in their records.
Business payers receive completed W-9s from their payees. However, a completed W-9 doesn’t go to the IRS. Instead, a business keeps it in its records to complete 1099 forms accurately.
Due Date
The W-2 form is due January 31 of each year to the employee, the IRS, and the SSA.
Technically, the W-9 doesn’t have a due date, but a business should ask a non-employee to complete it before they pay them for their services.
Ideally, this document should be on file with the business before the end of the tax year so it can accurately report payments with a 1099 form (if needed).
| Characteristic | W-2 | W-9 |
|---|---|---|
| Purpose | Reports earnings & taxes | Collects non-employee tax info |
| When to Use | End of the tax year | Start of a new contract |
| Who Completes It | Employers | Self-employed individuals/entities |
| Who Receives the Final Copy | Employees/IRS/SSA | Business payers |
| Due Date | January 31 of each year | Before 1st payment |
How to Determine Which Form You Need
To determine whether you need a W-2 or W-9, consider the nature of the work relationship and review the differences between an independent contractor and an employee.
Employee Relationship
If you have an employer-employee relationship with a worker, you must give them a W-2. In this case, the individual works for you as an employee and is under your direct supervision and control. They typically use company resources to perform their work and follow your instructions to a tee.
Employees usually receive regular wages or salaries, have taxes withheld by the employer, and may be eligible for benefits like health insurance or retirement plans.
Employees follow the company’s policies and work schedule, which differentiates them from independent contractors who, in some instances, have more autonomy.
Here’s a reminder from Brooke Davis, one of our attorneys here at Legal Templates:
“The distinction between an employee and an independent contractor hinges on the level of control and direction exercised by the employer.
If you dictate how, when, and where the work is performed, and the worker relies on your resources, they are likely an employee and require a W-2.”
Non-Employee Relationship
If you need to pay a freelancer, vendor, or independent contractor, use a W-9 form. These individuals or businesses who are non-employees don’t work under your direct control.
Instead, they have more autonomy over their work. They work on a project-by-project basis and can sometimes control their own hours if they complete the entire project according to the business’s requirements by a certain date.
Other Related Forms
When you handle your business’s tax affairs, you should be aware of several other forms related to the W-2 and W-9. These forms help with reporting various types of income and tax-related information to the IRS:
Forms That Relate to a W-2
Several forms work alongside the W-2 to report employee income, withholdings, and other employment-related details.
- Form 941: Employers use it to report and pay quarterly employee withholdings for income and payroll taxes.
- Form W-4: Employees fill it out to specify their filing status and withholding preferences.
- Form 1040: Employees use the data from a W-2 to complete their individual income tax return.
Forms That Relate to a W-9
Forms related to the W-9 are used for reporting non-employee compensation and other business transactions involving independent contractors or vendors.
- Form 1099-NEC: Reports a non-employee’s compensation from a business, usually for services.
- Form 1099-MISC: Provides payment information for rent, non-service-related awards or prizes, and other miscellaneous business payments.
Legal Considerations
For most businesses, deciding between a W-2 or W-9 is straightforward. However, Legal Templates recommends consulting with a qualified advisor or attorney for guidance tailored to your situation.
Our goal is to provide clear and concise explanations of commonly used IRS tax forms to make it simple to navigate your paperwork. While we don’t offer legal advice, we aim to help businesses with efficient document management and ensure they can access the right tax forms.
How LegalTemplates Helps During Tax Season
Payees, including contractors and other non-employees, can easily fill out and sign their W-9s directly in our PDF editor. From there, they can print them out or download them digitally to send to the payers who requested them.
Similarly, businesses can easily use our PDF editor to create W-2s for their employees and distribute them when they’re ready.
Our red copy of the W-2, available in our editor, is only for informational purposes. You must file with the SSA through their official website. Alternatively, you can obtain an official printed version from the IRS and submit it by mail.
Frequently Asked Questions
Do W-9 workers pay taxes from their paychecks?
No. W-9 workers do not have taxes withheld from their paychecks. Independent contractors or freelancers who fill out a W-9 receive gross pay without tax withholdings. They’re responsible for paying their own income, Social Security, and Medicare taxes.
What is the difference between a W-2, W-4, and W-9?
The W-2 and W-4 forms are for employees. You use the W-4 to collect an employee’s tax withholding information when they first join your company or when their tax status changes. At the end of the year, you provide employees with a W-2 to summarize their earnings and tax withholdings. This way, they can file their personal tax return.
A W-9 is for requesting a non-employee’s tax information and classification. Most companies ask new vendors and independent contractors to complete a W-9 during the initial onboarding stage.
What is the difference between a W-2, W-9, and 1099?
A W-9 and 1099 concern vendors and other non-employees of your business. W-9s collect the tax identification numbers of non-employees and other entities outside your company. Meanwhile, a 1099 identifies the total payments you made to them. Depending on the payment type, you may issue a 1099-NEC or 1099-MISC.
On the other hand, a W-2 goes to your employees. It’s their annual earnings statement, which they use to complete their tax returns. You’ll also share the W-2 with the IRS so everyone is on the same page regarding employee pay.
