If you’re an independent contractor or business who hires freelancers, you may know that tax forms can be confusing. For instance, understanding the difference the between W9s and 1099s is vital to ensure taxes are filed correctly at the end of the year. As a trusted accountant in Checotah, OK, Joe Heard, CPA shares a brief guide to make this process easier. 

What Is a W9?

A W9 is considered an input document because it’s used to collect information on a taxpayer once they begin working for a company. Any independent contractor that earns over $600 must report their earnings to the IRS. Much like a W2, a W9 contains essential taxpayer information, so the IRS can keep track. This includes the person’s name, contact information, and social security number. This document will be kept on file with the employer you’re working for, but you should also keep a copy for your accountant for tax season. 

What Is a 1099?

If you work as a freelancer, 1099s are a crucial aspect of tax return preparation. These documents are used to report earnings accrued as an independent contractor, as opposed to a full-time employee of a business. Unlike W9s, they are considered an output document, which means the contractor receives this report of their income at the end of the year. There are a few different types of 1099s with specific functions. 

For instance, 1099-MISC is the most common for accountants and business owners and is used to report many different types of income. A 1099 DIV is used to report dividend earnings like stocks or bonds. The 1099-INT reports interest earned, and a 1099-S is used to report earnings related to real estate transactions.

For more information about W9 or 1099 forms, contact the accountant at Joe Heard, CPA. He has been providing reliable business consulting advice for more than 15 years and has established himself as a trusted resource among Checotah entrepreneurs. He also assists with personal tax matters, bookkeeping, and financial planning. Visit his website for more information about his services. Call (918) 473-1492 to schedule a consultation with this accountant.