How W-9 correlates to 1099-MISC: is it obligatory to use both forms?

W-9 & 1099 are so-called levy forms used by payers alongside with payees to deliver info on diverse prospects of income. Main distinction between those two is: MISC form includes total amounts of payments and fillable W-9 serves for 1099 fill out forth putting.

While W forms are completed with the help of third party and contacts IRS directly, 1099-Miscellaneous outline information stated in W form to deliver data.

Regarding tax docs similarities and their purpose it might be confusing to understand why miscellaneous one is obligatory to be sent and other one not.

Basic differences

  1. Miscellaneous blank copy downloaded from Internet cannot be used while W-9 PDF can be loaded from Internal Revenue Service or
  2. While this specific W form doen’t have any specific fill out deadlines — other one does.
  3. There are no variations of w9 while other document has numerous ones (for dividend, income and retirement services).
  4. Payer should have 4 copies of MISC sheets and 2 examples of W-9.
  5. Penalties differ in cost plus in weight of the consequences.

One detail pays crucial role providing more clear view on correlation between papers and people who use them: backup withhold policy remains the turning point in comparison analysis.

Federal income taxes withholding problems

In US backup withholding can be the reason you got less payment that you had hoped for. The reasons may vary but the way it affects tax return is varied when it comes to those docs.

All and sundry are required to make annual 1040 and make payment accordingly. Everybody should do this regardless if they have or have not completed the stated papers.

This situations may happen due to several reasons:

  • SSN or TIN default in providing or failure to complete leads to almost immediate consequences.
  • Suppressing the fact of being not a subject for BW from vendor.
  • Interest or dividend pay IRS notification or email notification on BW status change from the government.

How 28 percentage of withheld affects both of the sides

If independent contractor does not deal with W papers at all it doesn’t affect the fact that money are still going to be provided and all the financial information filled out into MISC doc. This way vendor has to withhold 28% to ensure that levy are paid even though Internal Revenue Service can’t find out who is the owner. To avoid such situation all you have to do is complete the sheets, providing TIN.

Conclusion: Papers are used for different purposes but one can’t exist without the other. It is possible to arrange payment procedure without W one but no way to escape BW problems afterwards.