W-9s and 1099-NECs, both directions

You finished a job for a general contractor three weeks ago. The office manager emails: "We can't release your check until we have a W-9 on file." Meanwhile a framer is waiting on his own check from you, and all you have from him is a phone number.

Those are the same two forms, pointed in opposite directions.

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.

Address and signature finish it. Two lines do the real work. The classification checkbox decides whether the payer owes you a 1099 at all. 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

Businesses ask; homeowners do not. 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 you to replace a water heater has no reporting obligation and never asks.

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 rate has been 24 percent since the 2017 tax law — confirm the current figure in the IRS instructions for Form W-9. It credits against your tax when you file, but that is your cash, gone for a year.

Use an EIN, not your SSN. A sole proprietor is allowed to put an SSN on the W-9, and plenty do. That means every GC you work for holds a signed page with your Social Security number on it. An EIN is free from the IRS and takes minutes online. Put that on the form instead, and send it back through a portal or an encrypted file rather than a plain email attachment.

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, and a homeowner never sends one. 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.

The W-9 you collected is what tells you which row you are in. Without the entity checkbox you are guessing.

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.

Collect it before the first check, not in January

One habit separates a calm January from a week of chasing phone numbers: no W-9, no first payment. Put it in the packet you already hand a new sub — certificate of insurance, license number, signed subcontractor agreement, W-9 — and require all four before the first check clears. A sub who wants his check on Friday will fill out a form on Tuesday. The same sub in January, three jobs later and possibly out of business, will not answer the phone.

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

The name and EIN you certified on a W-9 have to match what the payer sees everywhere else. If the W-9 says the LLC name and your estimate and invoice say your own name, payment sits while a bookkeeper works out which one is real. Set your legal business name, DBA and EIN once in DoneQuote, so the details you certified are the details that print on every estimate and invoice you send instead of being retyped job to job.