When it comes to tax reporting, Forms W-2 and W-9 serve distinct purposes and are used in different scenarios. Understanding the differences between these forms is crucial for accurate tax filings, whether you’re an employer, employee, or contractor.
In this guide, we’ll break down the key differences between Form W-2 and Form W-9 to help you navigate the requirements and ensure compliance with IRS regulations.
Form W2 vs W9: What are the differences?
Form W-2 generally summarizes employee's annual wages and the taxes withheld from their paychecks throughout the year. In contrast, Form W-9 is utilized to collect essential information from independent contractors or entities hired to perform services for an organization.
Check the below table to understand the key differences between W-2 and W-9 in detail.
| Criteria | Form W-2 | Form W-9 |
|---|---|---|
| Purpose |
Form W-2 is used by employers to report employee wages and tax withholdings to the IRS and employees. E-file W-2 with TaxBandits |
Payers use Form W-9 to collect taxpayer identification information from independent contractors or vendors to file 1099 accurately. Request W-9 from your Vendors Now |
| Who Uses it? | Employers hire the individuals as full-time employees for the business. |
Businesses that hire independent contractors or freelancers. |
| Filing Responsibility | Employers file Form W-2 with the SSA and distribute copies to employees. | Form W-9 is not filed with the IRS; it is retained by the payer for record-keeping purposes. |
| Filing Deadline |
January 31 of each year to file with the IRS and distribute the copies to employees. Click here to learn more about the W-2 deadlines. |
Form W-9 has no filing deadline; businesses should collect it when hiring an independent contractor or filing Form 1099. Click here to learn more about the 1099 deadlines. |
| Information to report | Wages, federal, state, and local tax withholding and the FICA tax (Social Security, Medicare) were withheld. | Name, business name, address, TIN, business entity type, and any tax reporting exemptions. |
| Tax Withholding | Involves federal & State income tax, Social Security, and Medicare taxes withheld. | Involves backup withholding (if not provided correct TIN to payer) |
Difference between employees and contractors
Employees are individuals who have a formal and often long-term relationship with their employer. They are eligible for company benefits, including health insurance, retirement plans, and paid time off.
On the other hand, contractors, often called independent contractors or freelancers, are individuals or businesses hired on a temporary or project-specific basis. They are not considered regular employees. Independent contractors do not receive employee benefits from the businesses that hire them.
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