W9 Collection FAQ
Throughout the year, we collect W-9 information for the contractors you pay so we can determine who requires a Form 1099 and have everything ready when it’s time to send them out.
What is the difference between a W9 and 1099?
W-9s and 1099s are tax forms that are required when you work with an independent contractor. Form W-9 is completed by the independent contractor and provides details like their name, current address, and SSN or EIN. Form 1099 is used to report to the IRS the total amount paid to a contractor in a calendar year.
Some contractors are missing from this list. Why is that?
There are a number of reasons why a vendor may not be included in the list:
- If the independent contractor made less than $600 this year, then we are not required to send Form-1099.
- If you paid an independent contractor via PayPal, Credit Card, and/or Debit Card, we are not required to send Form-1099.
- If you paid an independent contractor via Gusto, Paychex, ADP, or any other payroll provider, Form-1099 will be handled by your payroll provider.
- If we already have the independent contractor’s Form-W9 from prior years, we will not request their information again.
One or more of the independent contractors listed in the email request is a Limited Liability Company (LLC). Do we need to send Form-1099 to them?
LLCs are exempt if they've elected to be taxed as an S-Corp. The most legitimate way to determine whether an LLC has elected to be taxed as an S-Corp is to have the independent contractor fill out Form-W9. If they are taxed as an S-Corp, we will not process Form-1099 for that vendor.
One of the names on the list is my landlord. Do we really need to 1099 them?
Yes. We realize it may be uncomfortable to send Form-1099 to your landlord, but please know that it is perfectly acceptable and commonplace to send Form-1099 to your landlord for the business use of your home. We have a separate email template that we use when we’re sending out a W9 request to landlords.
One or more of the independent contractors on my W9 list should not receive Form-1099. What do I do?
If you believe anyone on the W9 request list does not require Form-1099, please do the following:
- Provide their email address.
- In column D of the W9 request list, share your reasoning for not wanting the contractor to fill out From W-9.
I do not want to send Form-1099 to one or more of the independent contractors listed. What are the implications of that decision?
The decision to not send Form-1099 to an independent contractor is entirely up to you. It is our understanding that if an independent contractor is not sent Form-1099, the chances of the IRS noticing are quite small, but it is still possible. In the unlikely event that you are audited, the independent contractor that you decided not to send Form-1099 will likely be excluded from your tax return as an expense. As a result, you will have to pay the difference in taxes, plus any penalties and interest. This is why we recommend not excluding any contractors who qualify to fill out Form W-9 from your list of contractors.