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Taxes Made Easy: The Difference Between Form W-4 and Form W-9

The difference between tax Form W-4 and Form W-9 is that Form W-4 authorizes a certain amount of money to come out of an employee's paycheck as a payment of taxes to the IRS (i.e. tax withholding).  Form W-9 does not.

The money withheld from a paycheck gets sent to the IRS by the employer on behalf of the employee. The employer must keep records of who is paid, taxes withheld, and taxes paid, etc. After the end of the year, the employee receives a Form W-2  (from the employer) showing the total money earned and paid as well as the total amount of taxes that were withheld and paid.

Form W-9 collects certain required information - for a company's records- of the persons paid by the payer, but are not employees. Generally, independent contractors and freelancers (yes, they are self-employed) are required to fill out and submit the Form W-9 to the payer. After the end of the year, the payer sends a Form 1099 to the persons paid. The 1099 is the same type of financial statement as a W-2 showing the total amount of money paid to the recipient by the payer. The W-9 is so that a payer can have record of who is being paid. The payer must (required to) have a W-9 Form on record for each individual to whom is paid more than $600 USD per year.

Businesses and individuals (whether employed or self-employed) must pay taxes. A business does not necessarily have to withhold taxes from the pay to an independent contractor or freelancer. The independent contractor is responsible for paying his or her own taxes. Which, by the way, is why a 1099 is not likely to show any taxes paid...and this is where making estimated tax payments comes into play and benefits the independent contractor.

Be aware that scammers and identity thieves might also request that you fill out and submit a Form W-9 in order to appear legitimate. (ALWAYS check into whether or not a business or payer is legitimate before submitting the information requested on a Form W-9.)

Furthermore, copies of Forms W-2 and 1099 are required to be sent to (and actually do get sent to) the state tax authority and the IRS by the payer/employer. Thus, if you're not filing your taxes when required to do so; the IRS may already know!

To your success,

Carol M. Marchetti



Just a note: At http://www.pinktickles.com you will not be required to fill out a W-4, or a W-9 ! Why, because you'll be in business for yourself 100%. You will not be my employee, or an independent contractor. You simply purchase the items from http://www.pinktickles.com  for your own personal use, or as items to resell to your own customers for your own profit. If, on the other hand, I create an affiliate program...I would then require you to fill out and submit a Form W-9, so that I have a record of who I am paying commissions to.


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