Form W-9 vs. W-2: Key Differences Every Worker Should Know

People are often confused when comparing Form W-9 vs. W-2, since both documents are used for tax purposes. However, the difference is significant, since Form W-9 is used as a request for the taxpayer’s identification number, while Form W-2 is used to report wages and taxes for employees.

In this article, we’ll break down the biggest differences when comparing W-9 vs. W-2 tax forms, and outline how and when you should use each form. Furthermore, we’ll compare W-9 vs. W-2 vs. 1099 forms to provide you with a clear understanding of their distinct purposes.

Key Takeaways

• Employers use Form W-2, Wage and Tax Statement to report their employees’ earnings and deductions throughout the year.
• Form W-9, Request for Taxpayer Identification Number and Certification, is used to provide companies with taxpayer information needed to fill out Form 1099-NEC and report nonemployee payments.
• Whether you need a Form W-2 or W-9 depends on your worker classification.
• You can generate Form W-2 and other business and tax documentation at Paystub.org.

What is a Form W-2?

Form W-2 is officially titled the “Wage and Tax Statement.” It’s a document that employers must prepare for each employee that they have on the payroll before sending one copy to them and the other to the Social Security Administration (SSA).

In essence, Form W-2 shows the worker’s annual wage, as well as federal, state, and other taxes withheld from their paychecks for the year. As such, it represents a critical document that helps employees file their tax returns. The deadline for sending Form W-2 is typically January 31st each year.

Here are the main aspects of the Form W-2:

• Purpose. The main purpose of a Form W-2 is to report employees’ earnings and show how much tax has been withheld from their wages and paid on their behalf. This allows employees to calculate the remainder that needs to be paid (e.g., Social Security and Medicare taxes) and to complete their Form 1040.

• Recipients. Every Form W-2 needs to be sent to an employee (not an independent contractor) and to the Social Security Administration. However, for an employee to qualify for Form W-2, they must receive at least $600 in total payments from the employer in a tax year.

• Usage. Employees will receive their copy of a Form W-2 at the beginning of the calendar year, and they’ll use it to file their tax return by the deadline. The other copy is sent to the SSA and used by the IRS to track and verify an individual’s tax obligations.

What is a Form W-9?

Form W-9 is officially titled the “Request for Taxpayer Identification Number and Certification.” It’s a significantly different document from Form W-2, since its main purpose is to gather tax-relevant details. This includes the name, address, and taxpayer identification number (TIN). Individuals might need to disclose their social security number (SSN), and businesses their employer identification number (EIN).

Unlike a Form W-2, which is an annual statement that needs to be filled out and sent each year, Form W-9 is a one-time document. It’s mainly used by self-employed professionals and contractors before they establish a business relationship with a client company.

Here are the main aspects of a Form W-9:

• Purpose. The main purpose of a Form W-9 is to give a business the information it needs about a vendor or contractor to make a payment and report it to the IRS. The use of this form also certifies that the payee is responsible for their taxes and that funds won’t be withheld from their payments.

• Recipients. Typical recipients for Form W-9 include freelancers, independent contractors, consultants, and self-employed professionals. If they are paid at least $600 by a business within a year, they will be asked to fill out this document and provide it to the paying client.

• Usage. Form W-9 should be filled out by a contractor and sent to the business they are working with prior to engagement or before receiving their first payment. The business will use the information from this document to generate Form 1099-NEC, Nonemployee Compensation, and report payments made to the contractor.

Form W-9 vs. W-2: Key Differences

W-9 is not the same as W-2, since the former is used to request information, and the latter reports employee earnings and tax withholdings.

The main difference stems from the relationship between the parties that are using these forms. When looking at W-9 vs. W-2 from the employee classification standpoint, the first one is given to independent contractors, while the second one is reserved for traditional employees.

Tax forms for employees vs. independent contractors are vastly different, since employees have taxes withheld from their paychecks, and contractors don’t. As a result, a contractor who’s not on the company’s payroll can’t receive Form W-2. Instead, they fill out the Form W-9 and receive Form 1099-NEC from the company at the end of the year.

Here is a concise table that outlines the main differences between a W-9 and a W-2:

Form W-9 vs. W-2 Advantages and Drawbacks

The table below details W–9 vs. W-2 pros and cons from the contractor and employee perspective:

How to Know If You Need a Form W-2 or W-9

Whether you need a Form W-9 or W-2 depends on your employee or contractor classification. The IRS has detailed worker classification guidelines that you can use to determine whether you’re employed by the company or if you’re operating as an independent contractor.

These guidelines encompass three distinct categories to assess the level of control, which are:

1. Behavioral control. Examine whether the company controls where, when, and how you work.
2. Financial control. Does the company provide you with the tools and resources you need to do the job, and does it reimburse your work-related expenses?
3. Relationship of the parties. Does the written contract you have with the company establish an ongoing work relationship with provided benefits, or is it specific to a single project?

In essence, if a hiring company controls how you work and where, provides you with the tools and resources, reimburses your expenses, and expects a long-term relationship while providing numerous benefits, you’re likely an employee. In that case, you will receive Form W-2 toward the end of the year so that you can file your taxes.

However, if you’re an independent contractor who maintains control over your work and is responsible for your taxes and benefits, you’ll need a Form W-9. Filling it out and giving it to your client will allow you to receive Form 1099-NEC and get paid adequately.

Generate the Forms You Need With Paystub.org

At Paystub.org, we developed professional and user-friendly generators for tax and business documentation. Here are the tools that you can use:

• Form W-2 generator. Prepare year-end tax documentation for your employees in just a few minutes.

• Form 1099 generator. Report payments made to independent contractors.

• Invoice generator. Bill your clients and optimize your cash flow with an intuitive invoice generator.

• Pay stubs generator. Create professional pay stubs to keep track of payments and tax withholdings for your employees.

Final Thoughts

A W-9 vs. W-2 comparison mostly boils down to employee classification. Form W-2 is used by employers to report wages and taxes withheld for their employees toward the end of the tax year. On the other hand, Form W-9 is used to provide taxpayer information to clients to help them fill out Form 1099-NEC and report nonemployee payments.

Recognizing which of these two forms you need is essential for filing taxes correctly and planning your finances throughout the year. Don’t forget to use our software generators, as they can help you, whether you’re running a small business, acting as a self-employed professional, or simply looking to enhance your record-keeping.

Form W-9 vs W-2 FAQ

#1. Can someone receive both Form W-2 and W-9?

Yes, it is possible to receive both Form W-2 and W-9 in the same tax year. This typically happens if you work as an employee while also being an independent contractor, or if your status within the company changes from a contractor to employee and vice versa.

#2. Is a W-9 the same as a 1099?

No, Form W-2 is not the same as Form 1099. A worker completes a Form W-9 to give their taxpayer details to the client. The client then uses that information to fill out a Form 1099 and report payments made to the worker.

#3. Who provides a W-9 form?

A client (business or individual who pays for your services) provides a contractor or vendor with a blank Form W-9. The contractor then fills out this form and returns it to the client.

#4. How do I know if I’m an employee or contractor?

To know if you’re an employee or contractor, you should examine how much control the employer has over your work. If they are controlling most aspects, like work location, resources, and hours, you are likely an employee. The IRS provides detailed guidelines on worker classification that you can use.

#5. Who is exempt from providing a W-9?

C-corporations and S-corporations are exempt from providing Form W-9, as well as some tax-exempt organizations and government agencies. Foreign entities also typically don’t receive Form W-9 but use Form W-8 instead.