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W-9 vs. W-2: A Simple Breakdown

Read on to discover the differences between W-9 vs. W-2 forms to save time and make business tax filing easier for you here.

If you work in the United States, you probably need some sort of tax form. The IRS uses these forms to keep track of what everyone makes in the country, and you don’t want to get it wrong.

A common comparison to make would be a W-9 vs W-2 form. However, their names can be misleading since they aren’t that similar.

But what’s the big deal with tax forms anyway? And why are the two forms so different?

 

Basics of Tax Forms

In the United States, the IRS has many forms that it uses to track income, expenses, and other financial information. Employers, employees, and independent contractors use some of those forms.

If you run a business or work as an independent contractor, you may want to compare a W-2 vs W-9.

 

W-9 vs W-2: Overview

When doing your business taxes, you need to know which forms you need. The W-9 and W-2 forms are probably some of the most common tax forms you’ll encounter.

However, they’re quite different from each other, and they do different things. If you understand the difference between W-2 and W-9 forms, you can determine which you need.

Both forms are important for different things, and you can contact the IRS or an accountant if you have questions. Then, you can make sure you choose the correct form come tax time.

 

What Is a W-9?

A W-9 is a form that freelancers, business owners, and independent contractors use to give their tax information to clients. If you and your client are both in the United States, you should fill out a W-9 form when working with them.

Of course, you’ll need to know how to fill out a W9 as an independent contractor. In most cases, all you need to include on the form is your name, address, and social security number.

If you have a business, you can substitute your Employer Identification Number (EIN) for your SSN. And whether you’re a freelancer or business owner, you’ll need to select the right box based on your business structure.

The W-9 is also important if you own a business and hire contractors. You’ll need their tax information so that you can have a record of it when you need to report the income that you paid out.

 

Who Should Fill Out the W-9 Form?

If you work as an independent contractor, you should fill out the W-9 form. Luckily, it’s not too long or complicated, and you should be able to complete it quickly.

You should fill out a W-9 any time you take on a new client. Then, you can make sure you provide them with up-to-date information for their records and yours.

If you ever move to a new state, you should inform your current clients and provide them with an updated W-9.

Even if you work for an employer, any time you work as an independent contractor, you should complete and submit a W-9. Then, you and your client can both keep track of finances.

 

Who It Goes To

Once you fill out a W-9 you should give it to your client. They will need your basic information so that they can report the income they pay you on their taxes.

If you hire independent contractors, you should request a W-9 from them when you begin working together.

At the end of the year, you can use the information from the W-9 for taxes. The IRS can use the information to record income and payroll for the contractor and client.

 

What Is a W-2?

Despite the similar name, the difference between W-2 and W-9 forms is big. A W-9 is more common for independent contractors and businesses who hire them.

On the other hand, a W-2 is what a traditional employer uses to report the income and tax withholdings for an employee.

You can use the W-2 for earnings by part-time and full-time employees. The W-2 also applies when income tax would have been withheld if an employee didn’t claim an exemption on their W-4 form.

If you’ve ever been an employee, you’ve probably received a W-2 at the end of the year. It states how much you earned overall as well as how much income was taken out for things like social security and other income taxes.

 

Who Should Fill Out the W-2 Form?

If you have part-time or full-time employees (not contractors), then you should fill out a W-2 for each of them. It doesn’t matter if someone was an employee for the whole year or a few weeks.

And it doesn’t matter if the employee worked full-time or only a few hours each month. If they were on your employee payroll and if you used a free pay stub template for them, you need to complete a W-2 form.

The IRS will use the W-2 when calculating that employee’s income. It can also be helpful when reporting your business’s expenses.

Of course, if you have a lot of employees, it may take time to fill out each W-2 form. In that case, you can have an accountant go through the payroll and fill out the forms for you.

 

Who It Goes To

Once you fill out a W-2 form, you should give it to the respective employee. Each form will have the employee’s name and their contact information and income.

You should provide employees with a W-2 for each year so that they can file their taxes accordingly. The deadline for giving out W-2s is January 31st in the year after the tax year in question.

You can send the W-2 form to your employees either digitally, such as through email, or you can give them out in person. However, make sure the delivery method is secure so that your employees get the information and that no one else can access it.

 

The Right Report

If you run a business or work with clients, you need to use the right tax forms. Because of this, you should know about W-9 vs W-2 forms.

The two are quite different, but they’re equally important when it comes to reporting income. So if you know what forms you need, you can prepare for the end of the year ahead of time.

Did you learn something from this article? Check out our blog for other topics!

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