Understanding the difference between the W-9 and the W-8 series forms is key to staying compliant and avoiding penalties. In this article, we’ll walk you through what the W-9 form is, who needs to fill it out, and how it differs from the various W-8 forms that apply to foreign contractors and entities.
You’ll also learn when and how to use these forms to report payments correctly and meet your tax obligations.
Simple answer: You don’t need W-9 for international contractors
The W-9 form is not for international contractors. It is only for independent contractors, freelancers, and other service providers who are U.S. citizens, resident aliens, or U.S.-based business entities. Businesses use it to collect taxpayer information like a taxpayer identification number (TIN) or social security number (SSN).
For international contractors, platforms like Useme offer a streamlined outsourcing and payment solution. The platform ensures compliance for both parties, even if the contractor is based outside the U.S. Check Useme’s freelancer base and reach out to your new contractor!
Understanding form W-9
The W-9 form is essential for ensuring proper tax reporting and compliance with IRS regulations. It helps businesses manage contractors’ payments and information accurately and allows contractors to meet their own tax obligations. By collecting the correct information up front, you can avoid issues with tax withholding, backup withholding, and IRS audits.
Who needs to fill out form W-9
You have to be aware of the form W-9 if you hire independent contractors or freelancers or work with other non-employee service providers who are U.S. persons. This includes U.S. citizens, resident aliens, and business entities operating within the United States. If you pay any of these contractors $600 or more in a tax year, you’re required to collect a completed W-9 form from them.
Is the form W-9 the same as the form 1099? No, W-9 information is necessary to prepare form 1099-NEC, which reports payments made to independent contractors.
When to collect form W-9
Businesses should collect form W-9 before making the first payment to a contractor and whenever a contractor’s information (such as name, address, TIN) changes.
Collecting the form at the start of the relationship helps avoid issues with payments and IRS reporting later. Contractors should submit the completed form to the business that will pay them – not to the IRS – so the business can use it to prepare the 1099-NEC.
What information is collected
The W-9 form gathers essential taxpayer information to help businesses stay compliant with IRS reporting rules. It ensures payments can be properly reported on the 1099-NEC form.
Contractors provide their:
- Full name (as shown on the contractor’s tax return);
- Business name (if different from the name above);
- Federal tax classification (sole proprietor, LLC, partnership, corporation, etc.);
- Taxpayer identification number (TIN) – either Social Security Number (SSN) for individuals or Employer Identification Number (EIN) for businesses;
- Address (including street, city, state, and ZIP code).
Does form W-9 expire?
Form W-9 itself does not have a set expiration date. Once you collect a W-9 from a contractor, you can keep it on file indefinitely, unless the contractor’s information changes. This helps ensure that the 1099-NEC you file with the IRS contains accurate information.
Although the form doesn’t expire automatically, always make sure you’re using the latest version from the IRS website.
Legal and compliance requirements
The W-9 form plays a key role in tax compliance for businesses. The IRS requires businesses to collect a W-9 form from any U.S.-based independent contractor before issuing payments of $600 or more in a tax year.
The business uses the information from the W-9 to complete Form 1099-NEC, which reports the contractor’s income to both the contractor and the IRS. Failure to collect and properly maintain W-9 forms can expose businesses to IRS penalties and complicate tax reporting.
Penalties for non-compliance
Failing to collect a correct and complete W-9 form can result in significant penalties for both businesses and contractors. If a contractor provides incorrect information or fails to provide their TIN, the IRS may require the business to withhold backup withholding on payments made to that contractor. The current backup withholding rate can be found on the IRS website at irs.gov, as rates may change annually.
Additionally, businesses that do not file required 1099-NEC forms because they lacked the correct W-9 can face penalties that vary based on how late the filing is and the size of the business. Civil and even criminal penalties may apply for willful violations.
To avoid these risks, collect W-9 forms from contractors before issuing payments and verify that the forms are filled out accurately and completely.
W-8 forms for international non-employees
When working with international contractors, you should not use form W-9. Instead, you must request the correct W-8 form. The W-8 series is designed for non-U.S. individuals or entities that work with U.S.-based companies. These forms help establish the contractor’s foreign status and determine the appropriate United States tax withholding rate.
You must collect a completed W-8 form before the first payment to a foreign contractor – so the same as with W-9 form. Failing to do so can result in a mandatory withholding tax on payments to the contractor. By collecting the right form, you ensure compliance with IRS regulations and avoid unnecessary penalties.
💡 Check out our independent contractor guide: taxes, compliance, and important definitions
W-8 series tax forms
While there is only one W-9 form, the W-8 series includes five separate forms:
- W-8BEN,
- W-8BEN-E,
- W-8 ECI,
- W-8 IMY,
- W-8 EXP.
Each one serves a specific purpose depending on the type of foreign contractor and their tax situation, including tax-exempt organizations that may qualify for different withholding treatment. This distinction is crucial because asking the wrong form can lead to incorrect tax withholding and reporting.
In most cases, businesses handle the W-8BEN and W-8BEN-E more frequently than other W-8 forms.
W-8BEN
The W-8BEN form (Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting) is for individual foreign contractors. This form is used to:
- certify the contractor’s foreign status;
- claim any applicable tax treaty benefits that might reduce the default withholding tax;
- provide the contractor’s foreign tax identification number (if required).
The form is valid for the year it’s signed plus the next three calendar years, unless information changes. Contractors must sign and date the form to validate it.
W-8BEN-E
The W-8BEN-E form is for foreign business entities, such as corporations or partnerships. It helps:
- certify the entity’s foreign status;
- establish tax classification and potential tax treaty benefits;
- meet Foreign Account Tax Compliance Act (FATCA) reporting requirements.
This form is also valid for the year signed plus three additional years unless information changes.
W-9 vs. W-8 forms comparison
If you need a brief comparison of W-9 vs. W-8, check this table:
| Form W-9 | Form W-8 series | |
| Who fills it | Independent contractors, freelancers, and business entities who are U.S. citizens or resident aliens | Non-U.S. companies, entities, independent contractors, organizations, and individuals |
| Used by | U.S.-based companies hiring contractors for remote work or on-site services within the United States | U.S.-based companies working with foreign independent contractors and companies |
| Purpose | Collect taxpayer identification number (TIN) or social security number (SSN) to help U.S.-based companies issue the correct 1099-NEC form and report non-employee compensation to the IRS | Certify foreign status, claim treaty benefits under a tax treaty, and establish correct tax withholding and reporting for foreign contractors |
| Key information collected | Name, business name, taxpayer ID number (TIN), federal tax classification, address, contractor’s information | Beneficial owner status, country of residence, foreign tax identification number (if applicable), foreign person’s claim to treaty benefits |
| Legal compliance | Businesses must ensure they collect information correctly and use accurate forms for tax purposes; failure can lead to IRS penalties | Businesses must collect information and select the correct forms to avoid tax withholding errors and comply with IRS regulations |
| When to collect | Before the first payment in the tax year, to ensure tax compliance and avoid penalties; renewed if the contractor’s information changes | Before the first payment to foreign independent contractors or foreign entities; renewed every three years or if the contractor’s foreign status changes |
| Validity period | No expiration, but updates are required if the contractor’s information changes | Valid for the year signed plus three additional years; must be updated if contractor’s foreign status or information changes |
| Role in payments | Helps businesses report contractor payments and comply with tax obligations under IRS regulations | Helps calculate correct tax withholding and apply treaty benefits to reduce taxes for foreign individuals and other foreign organizations |
W-8BEN vs. W-9 summary
Form W-9 is for U.S. contractors and businesses to report payments and collect a taxpayer identification number. In contrast, form W-8BEN is for foreign individuals to confirm their foreign status, claim treaty benefits, and reduce tax withholding. Use the correct form based on the contractor’s residency status to ensure tax compliance.
