Introduction
Every January, a predictable wave of small businesses scrambles to track down missing contractor tax information — a problem that's almost always avoidable, and almost always traces back to confusing when a W-9 should be collected versus when a 1099 actually gets filed.
Table of Contents
- The Core Distinction
- Form W-9: The Intake Form
- Form 1099-NEC: The Reporting Form
- How the Two Forms Work Together
- The $600 Threshold
- What Happens Without a W-9
- A Simple Timeline
- FAQ
- Conclusion
The Core Distinction
The simplest way to hold onto this: a W-9 flows from the contractor to you; a 1099 flows from you to the IRS and the contractor. A W-9 is collected before payment begins, to gather tax information. A 1099 is filed after the tax year ends, to report what was actually paid. They're related — the 1099 gets built using the information the W-9 provided — but they happen at opposite ends of the working relationship.
Form W-9: The Intake Form
A W-9 (Request for Taxpayer Identification Number and Certification) is a form you collect from a contractor, vendor, or service provider — gathering their legal name, business name (if applicable), address, and Taxpayer Identification Number (TIN), along with their tax classification (individual, LLC, corporation, and so on). You never file a W-9 with the IRS — it stays in your own records, used later to prepare the correct 1099 if one is required.
Form 1099-NEC: The Reporting Form
Form 1099-NEC ("Nonemployee Compensation") is the form you file with the IRS, and also send a copy of to the contractor, reporting the total amount paid to them during the calendar year. Unlike the W-9, this form does get submitted to the IRS — it's how the government cross-references reported contractor income against what that contractor reports on their own tax return.
How the Two Forms Work Together
- A contractor begins working for you → you collect a W-9, ideally before their first payment
- You make payments throughout the year → tracked in your accounting system
- At year-end → you review total payments made to each contractor
- For any non-corporate contractor paid $600 or more → you prepare and file a 1099-NEC, using the information already on file from their W-9
The $600 Threshold
A 1099-NEC is generally required when total payments to a non-corporate contractor reach $600 or more within a calendar year. A few genuine exceptions worth knowing:
- Corporations are generally exempt from this requirement — though this has notable exceptions, including payments to attorneys, which typically require a 1099 regardless of the recipient's entity type
- The W-9's tax classification section is specifically what tells you whether a given payee is exempt or not — without it, you genuinely don't know which rule applies
What Happens Without a W-9
If a contractor doesn't provide a W-9, or provides incomplete information, you can still be required to report payments made to them — and without a valid TIN, you may be obligated to apply 24% backup withholding on their payments, remitting that amount directly to the IRS rather than paying it to the contractor. This is precisely why collecting the W-9 before the first payment, and making it a condition of that first payment, is the reliable way to avoid this entirely — chasing it down after the fact is genuinely harder and riskier.
A Simple Timeline
| When | Action |
|---|---|
| Before first payment | Collect W-9 from contractor |
| Throughout the year | Track total payments made |
| End of calendar year | Review totals against the $600 threshold |
| By January 31 | File 1099-NEC with IRS, send copy to contractor |
FAQ
A W-9 collects tax information from a contractor before you pay them, and stays in your internal records — it's never sent to the IRS. A 1099 reports the total payments you made to that contractor over the year, and it is filed with the IRS as well as sent to the contractor, typically after the tax year ends.What's the main difference between a W-9 and a 1099?
Before issuing the first payment, ideally as part of onboarding a new contractor or vendor. Waiting until year-end to request it creates real risk — if the contractor is slow to respond or the information is incomplete, you risk missing the January 31 filing deadline for the corresponding 1099.When should I collect a W-9 from a contractor?
Generally, when total payments to a non-corporate contractor reach $600 or more within a calendar year. Corporations are generally exempt from this requirement, with some exceptions — such as payments to attorneys, which typically require a 1099 regardless of the recipient's entity type.At what payment amount is a 1099-NEC required?
January 31, for both filing with the IRS and providing a copy to the contractor. Missing this deadline can trigger IRS penalties, which start around $60 per form and increase the longer the filing remains outstanding.When is the 1099-NEC filing deadline?
No — a W-9 remains valid indefinitely, as long as the contractor's information (name, address, TIN, tax classification) hasn't changed. You keep the same W-9 on file for as long as it stays accurate, rather than needing to collect a new one each year.Does a W-9 expire?
You can still be required to report payments to them, and without a valid TIN on file, you may be required to withhold 24% of their payments as backup withholding and remit it to the IRS. Requesting the W-9 before the first payment — and making it a condition of payment — is the most reliable way to avoid this situation entirely.What happens if a contractor won't provide a W-9?
Conclusion
The businesses that sail through January without a scramble are almost always the ones that treated the W-9 as a non-negotiable first step, not year-end paperwork — collected once, before the relationship even starts, so the actual 1099 filing three, six, or twelve months later is simply a matter of pulling numbers that were already tracked correctly.
Want your contractor payments and 1099 filings handled correctly and on schedule, every year? Get in touch for a free consultation.