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  • Stubbuilder
  • May 20, 2024

W-9 Vs W-4 Forms: What’s The Difference?

The Internal Revenue Service (IRS) in the United States offers a vast array of tax documents, exceeding 800 in number. It is crucial to familiarize yourself with the relevant forms and accurately fill them out as the tax year concludes.

Among the various tax documents, Forms W-4 and W-9 hold significant importance as they serve as the foundation. However, due to their similarities, individuals often find themselves bewildered when dealing with these forms.

In this blog, we shall highlight the differences between Forms W-9 and W-4 as well as how to fill them out and generate them easily online. Let’s get started.

A Remainder on the Internal Revenue Service (IRS)

Responsible for the collection of federal taxes and the enforcement of tax laws, the Internal Revenue Service (IRS) is a government agency in the United States. President Abraham Lincoln founded this agency in 1862, and it operates under the authority of the U.S. Department of Treasury.

The main motive of the IRS is to grab individual earning and employment taxes as well as the gift and excise and estate taxes.

What is a Form W-9?

Employers often utilize the Request for Taxpayer Identification Number (RTIN) for Certification, commonly known as Form W-9, to acquire the Taxpayer Identification Number (TIN) from self-employed workers and independent contractors. This one-page tax form serves as a means for gathering essential information.

Who is Entitled as an Independent Contractor?

An independent contractor is a person who does the following:

  • Workers who have the majority of hold over when and how they finish a task.
  • Those who do not receive health insurance, 401(k) and other benefits from the employers.
  • Individuals who pay all of their taxes.

 

Independent contractors are also known as vendors and freelancers in common terms.

Some examples of independent contractors are consultants, writers and repair persons.

A key characteristic of independent contractors is that they are paid non-employee compensation by the companies they are contracted with.

The W-9 form additionally furnishes personal information to employers, including the name and address of independent contractors.

The Form W-9, unlike other tax forms, is not required to be filed with the IRS. Instead, it should be submitted to the supervisor of the independent contractor. Additionally, independent contractors must submit a 1099-MISC form to the IRS if their earnings exceed $600 in a given year. It is crucial to remember that the Form W-9 needs to be submitted to employers prior to the deadline of January 31st.

Form W-9 and Tax Implications

The Form W-9 acts as an agreement that independent contractors are responsible for withholding taxes from their own income. Full-time employees have their federal income taxes, Medicare and Social Security taxes withheld from their paychecks by their employers.

Independent contractors, although self-employed, are not subject to having their withholdings made by employers on their behalf.

What Do Independent Contractors Include on a W-9 Form?

  • Name of the payee
  • Payee’s federal tax classification. This can be a single-member limited liability firm (LLC), C Corporation
  • Payee’s current, whole mailing address
  • Payee’s taxpayer identification number that includes either an Employer Identification Number or a Social Security Number

What is a Form W-4?

The Employee’s Withholding Allowance Certificate, commonly known as the W-4 form, is a federal form that employees must fill out when beginning a new job. Employers rely on the Form W-4 to specify the appropriate amount of income tax to withhold from their employees’ wages.

Employers have a critical responsibility to verify the accuracy and correctness of the information provided on each employee’s Form W-4. Any errors or discrepancies in the withholding amount can lead to severe tax penalties imposed by the IRS, causing financial burden for the employee.

What Do Employees Include on a W-4 Form?

  • Full name, address and ZIP code
  • Social Security Number
  • Marital Status
  • How many dependents they have
  • Any additional money the employer should withhold.

W4 vs W9: The Difference

 

W-9 Form W-4 Form
Independent Contractors fill out W-9 Form Employees fill out W-4 form
Self-employed workers uses the W-9 form to provide their taxpayer with identification number to firms that they do work for Employees use W-4 form to inform their employers of how much income tax to withhold from their paycheck
W-9 forms should be submitted to employers before the 1099 deadline, which is generally 31st January W-4 forms should be submitted to employers within the first month of beginning a new job
Businesses use a blank W-9 form to finish before independent contractors start working for them. Generally, employers should issue their employees with a W-4 Form on the first day
Independent contractors can file a W-9 form annually Employees need to file a new Form W-4 each time they start to a new job

 

A significant variance between these documents is that a Form W-4 is filled out by formal employees, whereas a Form W-9 is completed by self-employed individuals. It is essential to understand that a W-9 form is used to provide a business with personal information of an independent contractor and is not forwarded to the IRS.

Do I Have To Fill Out W-9 Form and W-4 Form?

The self-employed employers do not always have to fill out a W-9 form. However, businesses might ask the independent contractor to finish one to avoid a hefty penalty from the IRS. If an independent contractor refuses to complete a W-9 form then the company that they work for will withhold a limited amount of percentage from their earnings.

Conclusion

As we know about the process of generating and filing out the IRS form can be an overwhelming process and a time consuming process. If you are looking for a check stub maker then Stubbuilder is your tool to move ahead with!