W-9 and 1099-NEC: what contractors give and file

A W-9 gives a business customer your taxpayer details. A 1099-NEC reports certain payments for your services after the year ends. Contractors handle both sides: giving their own W-9 to business customers and collecting W-9s from subcontractors they pay.

What a W-9 is, and where it goes

Form W-9 is a request for your taxpayer identification number. The payer sends it to you, you fill it in and send it back. It is not filed with the IRS — the payer keeps it in their vendor file and uses it to fill out an information return later.

A disregarded single-member LLC is an LLC whose business income is reported by its owner rather than on a separate corporate return. This is the usual federal income-tax treatment when a single-member LLC has not elected corporate taxation. It changes whose name and taxpayer number belong on the W-9.

Address and signature finish it. Two lines do the real work. The classification checkbox helps determine whether reporting applies; payment type, amount and method also matter. The TIN is what the IRS matches against your name, and a mismatch turns into a notice months later. Download a fresh copy from IRS.gov rather than reusing an old scan — the form gets revised.

When you are the one getting paid

Business payments have different reporting rules from personal payments. The request comes from someone paying you in the course of a trade or business — a GC, a property manager, a restoration company, a commercial client. A homeowner paying for personal work generally has no 1099-NEC reporting obligation.

Delaying costs you twice. The practical cost is a check sitting in accounts payable. The tax cost is backup withholding: fail to furnish a correct TIN and the payer may be required to hold back a slice of your payments and send it to the IRS instead of to you. The current backup withholding rate is 24%. It is credited against your tax, but reduces the payment you receive now.

Use the right taxpayer's number. A sole proprietor can generally use an SSN or their EIN. For a disregarded single-member LLC, use the owner's name on line 1 and the LLC name on line 2, with the owner's SSN or EIN, rather than the LLC's separate EIN. Follow the W-9 instructions for your classification. Send the form through a secure portal or encrypted file.

Then expect a 1099-NEC early in the new year. If that payer paid you at least the reporting threshold for services during the calendar year, they should send you a Form 1099-NEC — Nonemployee Compensation. The threshold sat at $600 for years and was raised by recent federal legislation, with indexing. Which figure applies depends on the payment year, so check the current IRS Instructions for Forms 1099-MISC and 1099-NEC before you decide a payment fell under the line.

Three things about the form when it lands. It does not set your tax bill: you report all business income whether or not a 1099 shows up, including income from personal homeowner jobs. The amount is usually gross — if you supplied materials on a service job, the payer generally reports everything they paid you, and your material costs come off as expenses on your return. And if the number is wrong, ask for a corrected 1099-NEC rather than quietly reporting a different figure. As you reconcile, watch for dollars that also appear on a payment processor's Form 1099-K, or you will count them twice.

When you are the one writing the checks

You paid a framer, a debris hauler and a bookkeeper this year. Which of them gets a form from you? The rule has four parts: you issue a 1099-NEC for payments for services, in the course of your trade or business, to a non-corporate payee, totaling at least the annual threshold.

Use the W-9 and your payment records together. A payment app is not automatically a qualifying third-party network: an ordinary bank transfer may still require a 1099-NEC. Check how the payment was processed.

The deadline is tight. Form 1099-NEC is due to the recipient and to the IRS on the same date — January 31 following the payment year, moving to the next business day when that falls on a weekend or holiday. Unlike some other information returns, the IRS copy gets no extra time. Late filing and wrong TINs carry penalties that scale with how late you are and change each year, so confirm the current date and amounts in the IRS instructions.

Two more things before January. The threshold for mandatory electronic filing dropped sharply a few years ago, and it counts all your information returns together rather than per form type — a contractor with a few 1099s plus W-2s can be over it. And your state may want its own copy. Some accept it through the IRS Combined Federal/State Filing program; some want a direct filing on a different date.

Request the W-9 during subcontractor onboarding

Request a W-9 before work and payment begin, alongside the subcontract and any required license or insurance documents. Track missing forms during onboarding. If payment becomes due before the form arrives, check your payment obligations and the IRS backup-withholding rules rather than treating a missing W-9 as an automatic right to withhold the entire check.

Ask for a new one when a sub incorporates, changes their business name, or moves. Otherwise keep the signed copy. The IRS expects payers to hold W-9s for several years in case a TIN question comes up, so confirm the retention period with your CPA.

Sending a 1099 does not make someone a contractor

Whether the person is genuinely an independent contractor is a separate and much harder question, and the form does not settle it. If you set their hours, supply their tools, direct how the work is done and they work only for you, a state labor agency may treat them as your employee no matter what you filed. The tests differ between the IRS and your state, and some states apply a stricter ABC test. That is a conversation with a CPA or an employment attorney in your state, not a checkbox.

Match your name and number everywhere

Make it clear which legal entity is contracting and how its trading name relates to the W-9. A disregarded LLC can correctly appear on a quote while its owner appears on W-9 line 1.

DoneQuote lets you save your company name and EIN for use on quotes. Check the customer-facing document before sending, and explain any different tax-reporting name to accounts payable. Keep the same explanation with invoices created in your accounting tool; do not put a personal SSN on a customer-facing quote.